As you’ve likely seen in the posts dotting your LinkedIn timeline recently, mass layoffs have been happening worldwide, especially in tech. In fact, in 2023 alone, tech startups across the globe have laid off over 55,000 employees (2022 saw over 155,000 cuts). Even tech giants like Meta and Shopify aren’t safe, having laid off around 11,000 and 1,150 people in 2022 respectively.
If you’ve just been laid off, or you think you could be getting laid off soon, you’re likely going through a confusing and emotional time. To help, we’ve put together this guide answering common questions and providing guidance on how to move forward in this transformative period, all for you to bounce back stronger than before. Feel free to read the whole article, or jump to a specific topic by using one of the links below:
- Why do layoffs generally happen?
- Why are layoffs currently happening, primarily in the tech space?
- What types of companies are being most impacted in the tech space and why?
- What are some signs my company is about to make layoffs?
- What happens to my benefits after a layoff?
- Will I get severance pay if I’m laid off?
- Are noncompete agreements enforceable after a layoff?
- Should I ask for a reference after a layoff?
- What mental health support is available for laid off employees?
- Additional questions to ask if your company laid you off:
- What types of companies are hiring right now?
- Steps to take to find employment after being laid off:
- How do I talk about being laid off in an interview?
Why do layoffs generally happen?
Layoffs can happen at a company for a variety of reasons, from needing to cut costs to meet market demands or restructuring whole departments. Here’s are a few of the most common reasons for layoffs and why they occur:
Cost reduction: One of the main reasons companies make layoffs is to cut costs; they might not have enough revenue to sustain wages, or they might have lost financial backing from investors.
For software companies specifically that rely on investments to grow, some might need to cut costs to extend their runway (the time they have before running out of funds) in a market where it’s hard to raise funding.
Closures or restructuring: Depending on how a company is structured, it might need to layoff employees if it’s closing off a portion of the business, or when restructuring a department to meet current market needs. Additionally, organizations may have layoffs due to overhiring for specific projects, where priorities shifted or funding fell through.
In the tech industry, the market you’re in can also be an indicator of structure. Companies will spread their wings in a bull market, investing in projects that have a longer term horizon and thus increasing costs. In a bear market, though, the projects might be considered risky investments and are often cut.
Mergers and Acquisitions: Layoffs can happen when companies merge due to department overlap, and previously deemed essential roles become unnecessary (this isn’t always the case, though – mergers can also lead to creating new teams and positions.) Also, companies acquired by investment firms might be looking to cut costs to improve profitability, which can lead to layoffs.
Why are layoffs currently happening, primarily in the tech space?
Tech companies are currently the most impacted by this round of layoffs. There are a few reasons why, which starts with the demand created during the pandemic. During the waves of lockdowns, companies realized they needed to invest more into digital transformation. Factors like more people working from home and comfort around digital experiences, like ordering food or groceries, also accelerated the digitization of customer interactions. In fact, some companies implemented digital changes, like increasing spending on data security, the use of advanced technology, and working remotely between 19 and 43 times faster than previous years.
Investors saw this increased demand for digital technologies and deployed more capital than normal into the market, which in November 2021 reached a peak of $70 billion in VC funding. At the same time, though, supply chain, and geopolitical issues were creating an economic problem. And, with inflation at an all time high in 40 years and central banks increasing our interest rates, the cost of capital has gone up.
The macro economic challenges and recession risk both make growth and raising money harder, so tech companies are cutting costs by implementing layoffs and hiring freezes across the board. There is also a valuation correction happening, and companies in the tech industry who received high valuations last year are in the toughest spot.
What types of tech companies are being most impacted by layoffs and why?
Both public and private tech companies have been affected by mass layoffs and hiring freezes, but late-stage startups specifically have felt the impacts the worst. As of last month, 55.79% of the layoffs in the US were at a late-stage startup, while only 18.95% were at the early stage.
Late-stage startups tend to be capital-intensive businesses. They are not yet profitable, but they still need to invest in order to grow, so they aren’t as nimble as earlier stage companies. It’s harder for these tech companies to raise capital and to get the positive cash flow they might need, so in a tough market, they may need to implement cost cutting measures like layoffs.
What are some signs my company is about to make layoffs?
While nothing can 100% tell you that layoffs are coming, if you see multiple of the following signs at your company, you might want to start thinking ahead:
There’s a sense of belt tightening and drastic budget cuts: If a company starts implementing restrictive budgets, and expenses that previously didn’t need approval from higher ups now need a sign off, it could mean that it might need to start cutting back on employees soon, too. This might all be done in an effort to avoid layoffs, though, so don’t rely solely on this indicator.
Executives are leaving: If the upper leadership in your organization starts leaving, it could be a sign of instability in the organizational structure, or that they know something other employees don’t. While one or two executives leaving might not be an indication of instability, more than that in a short period of time could mean the company isn’t operating as well as it should.
Growth has halted: Periods of downward growth for two quarters or more could be a sign that the company isn’t financially stable, and might need to cut down on their workforce to match market demand.
New projects are being postponed: If you’re used to getting many new projects but now they’re getting postponed or canceled, it could be a sign that priorities are shifting to make sure that enough revenue is being generated and reduce costs.
A shift in the environment: When things aren’t going well for a company, you’ll likely have a feeling that something is off with the environment and corporate culture. HR teams or other leaders might operate behind closed doors more often than normal, and there might be less communication than you’re typically used to. Trust your instincts if something feels off.
You’re no longer kept in the loop: If new projects are being pushed out, and you’ve started being kept out of the loop, that could be a sign that your role is on the chopping block. Try to connect with your supervisors to see if you can provide assistance for these projects to gauge whether or not you are intentionally being kept out. See here for some best practices to keep in mind while asking for more responsibility.
What happens to my benefits after a layoff?
Benefits: What happens to your benefits like health or dental insurance after a layoff will depend on your employer and country, but generally your benefits will end once your employment does. Some employers might extend them for laid off employees, which could give you some leeway until you find another position. If it isn’t laid out in your termination package, be sure to ask the HR department or your employer when your benefits will end.
Stock options and equity: If you received stock options or equity as part of your compensation package, and want to hold onto them, then you will generally have to exercise them before leaving. How this works can vary depending on the company and country, but generally you’ll have a 90 day window after your departure, and if you don’t decide what to do with your shares or equity before then, they’ll go back to the organization. Companies aren’t likely to let you know that you haven’t exercised your stock options, so make sure you’re proactive about it and ask your previous employer or benefits provider for help if you have questions.
401K: It’s important to figure out what to do with the money you accrued in your 401K while you were employed. Taking it out early can leave you paying income tax and other fees, which can be hefty. You could also roll over your 401K into an individual retirement account (IRA) to avoid paying fees and continue to save – talk to your plan administrator to see if this is a possibility.
Will I get severance pay if I’m laid off?
Severance pay is a contractual offer from a company which usually offers money or benefits in order to waive liability when cutting your contract short. Whether or not you get severance pay, and how much of it you get, depends on a variety of factors that can vary between countries and companies.
For example, in Ontario, employees need to have been employed for at least five consecutive years, and employers need to have a payroll of $2.5 million, or be laying off at least 50 employees within a 6 month time period, before severance pay is legally required.
You might also be entitled to termination pay, which is a separate payment meant to compensate workers for the time it would take to find a new position. Generally, this payment is given instead of the legally required length of notice.
Are noncompete agreements enforceable after a layoff?
Essentially, yes, noncompete agreements are still enforceable if you’re laid off. But, noncompete agreements can be difficult to enforce in general. And, if you’re taken to court, the judge will consider all aspects of the situation before deciding on whether or not to enforce the agreement, including whether or not you were laid off. That doesn’t mean you can try to take customers from your previous employer, though; the courts will consider these actions too when making their decision.
Should I ask for a reference after a layoff?
In general, yes: It’s a good idea to ask your employer for a reference, and for what information they’ll provide on a reference check after you’re laid off, so you can be prepared for how they would answer. Some severance packages might already include a positive reference in the terms, especially if you’re being laid off because of downsizing or a correction in the market. That being said, make sure that you ask anyone you’d like to have as a reference for their preferred contact information before you depart. See here for information that should be included in an employer reference letter.
If you were laid off for performance reasons, though, you might want to reconsider asking for a reference from your superior, especially if their response wouldn’t paint you in the best light. Consider another person if possible – you could try a different supervisor at the same company who you had a better working relationship with.
What mental health support is available for laid off employees?
Being laid off can be shocking and stressful for anyone, so it’s important to get the mental health support needed to get through difficult times. The Government of Canada offers an Employee Assistance Program (EAP) that laid off individuals who need mental health support can call or live chat, and they’ll be connected to an experienced counselor, who can provide short-term professional guidance and make referrals where necessary. In the US, the Centers for Disease Control and Prevention (CDC) has a wealth of online resources and professionals to contact to help with depression, stress, and other workplace ailments.
Some companies will offer their own mental health support programs when laying off employees, and have mental health professionals available to meet with when needed. In some cases, these professionals support the employers through the process as well, giving guidance for how to properly deliver the news, or they might even be present in the room during a layoff meeting to provide immediate support to either party. If you think you’ll need mental health support from your employer, be sure to ask what’s available in your layoff meeting.
Additional questions to ask if your company laid you off:
Being laid off can feel like a whirlwind, so it’s easy to forget important questions you should ask your employer before your departure. Here are a few useful questions to keep in mind, if they aren’t already outlined in your termination package:
Am I eligible for rehire? While this might not be an option if your layoff was performance based, there might still be an opportunity for rehire in the future if the company hires for your role again. Asking upfront can show your interest, which your employer might remember when it’s time to hire again, and could also save you the time applying for nothing later on if they say no.
What happens to my vacation pay? Every country and province has its own way of handling vacation pay, so if you’re unsure of the process, or you think something is off in your termination package, ask your employer or a lawyer. In Ontario, for example, those employed for less than five years would have two weeks of vacation days available, at a rate of 4% of gross wages, and those employed for more than five years get three weeks of vacation days, at a rate of 6% of gross wages. These would be paid out to you if eligible and unused.
Lastly, confirm anything unclear about your termination package. If you’ve read through your termination package and have any questions, like about your severance pay or benefits, be sure to clarify anything you’re unsure of before your last day.
What types of companies are hiring right now?
Layoffs and hiring freezes can happen in any company, but there are a few business stages that are more likely to survive a correction in the market. As we mentioned, late stage tech companies are among the hardest hit, but earlier stage companies can be more nimble and they don’t have the same valuation challenges since theirs are more recent and accurate. Some public companies have some extra padding as well, especially if they’re profitable, but that doesn’t mean they aren’t being affected by this market correction.
Where the job opportunities are will change, but firms that either help companies make or save money, and solve mission critical problems, are generally the most secure in a harsh economic environment. Also, some of the companies who have laid off employees might still be hiring for critical roles to pull them through this tough period and weather the storm, so keep your options open when applying.
If you’re looking for some specific companies in Canada to apply to, see here for a list from LinkedIn, and here for a list of companies and organizations recruiting (and who to contact there!) There’s also a B2B tech hiring tracker you can use to search for jobs worldwide.
Steps to take to find employment after being laid off:
After being laid off, it’s important to take a few days to process what happened. It’s perfectly normal to feel shocked or angry, so take some time to cool off so that you don’t carry that energy into the job hunt. Once you feel ready, freshen up your resume, practice your interview skills and start thinking about your next move. These tips can help you through the process:
Network: Word of mouth is one of the best ways to find a job, so your first step should be to network as much as possible. If you’re comfortable sharing your story, post about your layoff experience on LinkedIn to let your network know that you’re actively looking for a new role. Otherwise, reach out to your connections individually and chat over some coffee to test the waters.
Look for others offering help: Many workers and employers feel compelled to help others throughout a time when companies are undergoing layoffs. Wiseful.co has a list of laid off employees available from a wide range of industries, which companies can search through when looking to hire (see here to add yourself to the list).
On LinkedIn, you can look through the #layoffs page to see who is offering their help, whether they’re holding office hours to help with your resume or offering to put a word out in their network for you. You can also tag your posts with #OpenToWork to let recruiters and employers know you’re in the market and give yourself some extra visibility.
Connect with a recruitment firm: Recruiters are experts at filling open roles, and many of them are looking to help place laid off candidates in a new position. So, reach out to the recruitment firms operating in your area to see if they can help. Some firms focus on specific industries and others are more general, so do some research to see the types of roles they fill before reaching out. If you’re looking for a new sales opportunity, you can contact us here.
Browse job boards: Once you’ve exhausted your social resources, it’s time to start applying to new positions yourself to get your name out there, and a job board is the perfect place to find relevant roles. If you’re looking for a new sales career, take a look through our job board for available openings – some other popular spots to browse are LinkedIn, Glassdoor and Monster.
How do I talk about being laid off in an interview?
Be honest, and bring it up yourself: The main question your interviewer would likely have is how the layoff would affect your performance in a new role. Don’t give them time to worry about it – bring up the layoff yourself, and address any potential concerns they might have. The interviewer might think that the layoff was based on performance, so be sure to mention if it wasn’t. Or, they might think that the experience left you bitter at the workforce, so stay upbeat and enthusiastic while you discuss.
Stay positive, and highlight your work: No matter the circumstances, try to stay positive when talking about your previous employment, and don’t say anything negative about your departure. And, make sure to talk about your successes in the role, such as implementing a useful system or crushing a sales quota, and use numbers where you can to quantify your feats. You might also want to put together a portfolio of the work you did there, depending on your profession, to further showcase your talents.
Don’t dwell on it: Overall, it’s important to not spend too much time discussing the layoff. Once you’ve successfully brought it up and highlighted the positive aspects of your time there, it’s best to move onto other more important topics. Spending too much time talking about your layoff might come across as bitterness, or it might seem like you have trouble rolling with the punches.
Lastly, mass layoffs are stressful for everyone involved, but there could be a silver lining.
It’s easy to fall into the trap of negativity and self doubt after a layoff, even if you know that it was based on the market and not performance. But, once the confusion or anger ends, remember that this is a transformative time in your life that could lead to better opportunities. For example, if your situation allows for it, you could use the time off to take a break and recharge with your family before launching into a new job search, or even use the time to learn and practice new skills. Your wellbeing is key, so be kind to yourself and remember that you’re not alone. There’s a community of people sharing this experience with you, and also a community of people looking to help.
With this guide in hand, we hope that you’ll bounce back when you’re ready and land a new role that you love.