Layoffs are an unfortunate reality. It seems like just yesterday that we were talking about the more than 6,000 layoffs of Canadian workers due to restructuring at Bombardier Inc. and General Motors. Today, of course, it’s the coronavirus-related layoffs that has everyone on edge.
Sure, some of us are able to work from home thanks to the convenience of the internet and video conferencing, and many healthcare workers are logging more hours than ever before.But there are many Canadians, especially those in the hospitality, entertainment and tourism industry, who have been temporarily or permanently laid off due to coronavirus coronavirus while self-isolation and quarantine measures have been put into place.
Knowing what to do after getting laid off due to coronavirus can make a huge difference in how well you adapt to this change. With this in mind, here’s some advice for “what to do when laid off in Canada” because of events like the COVID pandemic.
10 Steps to Take Following a Coronavirus Layoff
According to Bloomberg, nearly one million Canadians joined the unemployment line due to COVID-19. The report shows the pandemic-induced shutdown of the economy has resulted in job loss or reduced work hours for 44% of Canadian households. So what are those cash-strapped Canadians to do?
The first thing you need to do is take a deep breath. Part of knowing how to deal with being laid off is taking a step back and getting into the right mindset before making any big plans.
With that in mind, here’s how to develop your own layoff survival game plan.
1. Make Immediate Preparations
Getting laid off work in Canada generally comes with a “heads up” from your employer, but the coronavirus has changed all that, with many workers learning of their layoff without any notice at all. However, if you just got laid off suddenly, you may want to brush up on your rights regarding terminations, dismissals, or layoffs in Canada, although not all may apply during these unusual times.
As soon as you learn about your layoff, it’s time to begin saving wherever you can. If you’re social distancing and staying home, this could mean canceling online subscriptions or memberships, digging into the pantry instead of ordering delivery or take-out, cutting back on smoking and drinking, switching from pricey coffees and sodas to more affordable options, or stopping any frivolous online shopping.
Our Budget Calculator can show you areas where you may be able to cut back and how much you could save in doing so.
2. Seek Government Assistance
Seeking government assistance is nothing to be ashamed of, especially not under these circumstances! If you’ve been laid off as a result of the coronavirus (or another reason through no fault of your own), you should contact Employment Insurance (EI).
To help those who are self-isolating or are in quarantine, EI is waiving the one-week waiting period for accessing benefits. The Government of Canada has also set up a new dedicated toll-free phone number at 1-833-381-2725, which you can call if you are in quarantine and would like the one-week waiting period to be waived.
Considering a new career path? Now might just be the best time to start doing your research. The Government of Canada offers resources that can further your education while you're unemployed to help you pick up a job in another industry. You can check out the Government of Canada’s Skills Boost initiative here.
Of course, most programs are likely paused while the dust settles around this pandemic, but it doesn't hurt to start doing your research now, so you can hit the ground running once we all get the green light.
Lastly, you should check out the Government of Canada’s COVID-19 Economic Response Plan, which sheds light on child benefits, tax credits, mortgage support, and more during the coronavirus pandemic. If you just got laid off due to coronavirus or other issues, this can be an invaluable support.
3. Contact Your Creditors
While having outstanding debt with creditors can feel overwhelming right after a layoff, the reality is that it’s an expense for them to institute collections efforts and/or sue clients for payment. So it makes it easier for everyone involved if you reach out to them to let them know of your circumstances right off the bat — especially since coronavirus has created financial hardships such a common occurrence.
While you would still owe the money, they may be able to offer temporary relief while you find another job. This could include lower monthly payments or even a pause in payments for a set period of time. This way, you’d be able to protect your limited cash flow, while at the same time preserving your credit score.
In addition, if you have student loans, be aware that as of April 1, 2021, no interest can be charged on Canada Student Loans and Canada Apprentice Loans. You should also call your lender to see if you can pause payments altogether while you get back on your feet.
4. Put Away the Credit Cards
It’s tempting to use credit cards after a layoff to help keep your cash safely tucked away. While this strategy makes sense in theory, it’s ultimately a bad idea because the interest you pay on credit cards quickly adds up, costing you more in the long run. If you can't pay off your credit cards in full every month, your debt will grow and the chances of it eventually becoming unmanageable debt increases.
If you can, put the credit cards away and dip into that emergency savings fund if you have one – that’s what it’s there for – or other savings you might have, like a tax-free savings account (TFSA). (If you've been saving up for a vacation, now's a good time to use those funds for your immediate needs instead.)
You should also contact your creditors, as many are offering coronavirus debt relief in the form of deferred payments. However, they’re only doing this on a case-by-case basis, and they’re not going to call you to make it happen. So, pick up the phone and see what they can do for you given the situation. Making arrangements can also help you keep your credit score intact, which is important for when we come out on the other side of this crisis.
5. Set Up an Emergency Fund
Ok. So this one may make you want to roll your eyes a little bit. After all, getting laid off due to coronavirus kind of makes it really difficult to set aside money. However, Canada Labour Code establishes that if your employer has no intentions of recalling you back to work, you may be entitled to severance pay if you have worked with the company for at least 12 consecutive months.
The amount would be two days' regular wages for each full year that you worked for the company, with a minimum benefit of five days’ wages. If termination of employment involves 50 or more employees within a four week period, you are entitled to at least two weeks’ written notice or a payment of two weeks of your regular wages.
Granted, this amount may not be enough to live off, but it may still let you set up an emergency fund. Also, depending on your province, you may be entitled to higher payments.
In addition, if you are able to, you should set aside whatever portion you can from the Employment Insurance (EI) program, Canada Recovery Benefits, or the Canada Child Benefit Young Child Supplement (CCBYCS), which provides up to $1,200 to families with children under the age of six.
6. Prioritize Your Expenses
When cash is tight (such as after getting laid off), you need to prioritize which bills are most important. Food and shelter are, of course, the most crucial. If you’re concerned about your mortgage or rent payments, you should contact your lender or landlord to discuss payment options. Many lenders are offering options for homeowners to defer mortgage payments for up to six months on a case-by-case basis; however, interest can continue to accumulate, which means higher monthly payments when they resume. No order has been made yet to freeze rent payments, though some provinces have plans to help renters.
If you’re cash-strapped and are able to defer payments or work out a deal with your landlord, you may want to consider holding off on housing payments for as long as you can to maintain your savings. (Just know that you may end up paying more when you can start making payments again to make up the difference.) When it comes to food, stick to the essentials, like non-perishables or longer-lasting perishables. The Globe and Mail put together a list of items to consider for your next shopping trip.
7. Create a Monthly Household Budget
In the past, perhaps you thought you didn’t have time to create a monthly household budget. Well, if you’re self-isolating, now it is the perfect time, and what a difference it can make! A household budget helps you understand where your money goes each month, so you can determine areas where you can cut back.
Housing, utilities, and food are a must of course (although the latter can usually be cut back on), while clothing, salons, gym memberships, dining out and extracurricular lessons for your kids, like piano or ballet, can be (temporarily) eliminated. One expense you should aim to keep? Your internet plan, so you can keep up with coronavirus assistance plans and continue to job search.
Not sure where to start when creating a monthly budget? No worries, we’ve developed a free downloadable Budget Planner + Expense Tracker.
8. Set Up an Expense Tracker
Although this may sound burdensome, make it a practice to track all of your expenses, every single day. This will help you ensure that your expenses are less than your government assistance income and savings set aside to tide you over. If you live with a partner or spouse, it’s crucial to communicate with each other about every expense.
Check in with each other prior to making any purchases. To make the process easier, create a spreadsheet or use a budgeting app. Keep in mind that the apps will come in handy pretty much anywhere — grocery stores, gas stations, pharmacies — whereas a spreadsheet may require you to be near your computer, depending on the program you use to create and update it.
Apps also allow you to customize templates and sync with your significant other.
9. Start Networking
Begin your next job search as soon as you receive notice of the layoff simply by reaching out to those you know. That means family, friends, friends-of-friends, former co-workers, and former bosses. Networking with others can be crucial for quickly recovering from layoffs in Canada (or anywhere else, for that matter)!
For example, although many industries have almost completely shut down, such as the entertainment, hospitality and tourism industries, others are full steam ahead. This includes sectors such as healthcare, manufacturing, delivery services, supermarkets and pharmacies, as well as other essential services.
A new survey on LinkedIn reveals that 85% of all jobs are filled through networking. While in-person networking events used to be a great opportunity to get your name out there, social distancing has put them on hold. Instead, get on social media and attend virtual networking events. Do anything you can to let other people know you’re looking for your next opportunity!
10. Get a Temporary Job
Although there have been many layoffs in Canada as certain jobs close, other jobs are opening up – even if only temporarily. Opportunity abounds in the “gig economy,” with home delivery positions taking the cake. But that’s not all.
For example, Amazon.com has announced plans to add 100,000 new full-time and part-time workers around the world to meet a surge in demand as a result of the widespread impact of the coronavirus. Check out this story from CTV News on some Canadian companies experiencing a hiring surge as a result of COVID-19.
Don’t Face Your COVID-19 Related Layoff Alone
A job layoff isn't your fault, especially when it’s due to the coronavirus pandemic. If you’re wondering what to do after being laid off (or you're worried about a potential layoff), you can speak to a certified Credit Counsellor at Credit Canada for free by calling 1.800.267.2272 and booking a counselling session. One of our experienced financial professionals will review your situation and discuss your debt relief options with you.
All of our counselling is completely free, confidential and non-judgmental. You can also check out our COVID-19 Financial Resource Centre for more information and free webinars on how to weather the storm.
How to Regain Good Credit and Good Financial Health
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