navigating-layoffs

Laid Off in India? Your Complete Checklist (2026 Rules)

Kathir Kathir • 6 min read

Rules last checked: November 2026. This guide is general information, not legal or financial advice.

Losing a job is hard, and the days right after can feel chaotic. This checklist walks you through what to do, in order: protect your money and documents first, then get your resume, portfolio and LinkedIn ready, then start searching. It's written for India and updated for the new labour codes that came into force on 21 November 2025.

What a layoff means in India

In everyday use, "layoff" means losing your job because the company is cutting costs or restructuring, not because of anything you did. Indian labour law uses more precise terms:

Term

What it means

Lay-off (legal sense)

A temporary inability to give work, for example due to a shortage of materials or power. You stay employed.

Termination

Ending employment for cause, such as misconduct.

Resignation

You choose to leave. Companies sometimes offer this route during cuts.

Why it matters: the label affects your notice, compensation and the wording on your relieving letter. If you're asked to resign during a round of cuts, ask what you'd be entitled to under each option before you agree.

First 48 hours: your to-do list

Your access to company systems can end the same day. Do these first, before anything else.

  • Get the terms in writing. Ask HR for an email or letter confirming your last working day, notice pay, leave encashment, any severance, and when each will be paid.
  • Save your documents. Download your payslips, Form 130 (earlier Form 16), offer letter, appointment letter, appraisal letters and any ESOP grant letters to a personal drive. Save only your own records, never company files.
  • Ask for your relieving and experience letters. You'll need them for background verification at your next job. Ask when they'll be issued and check the wording.
  • Note your PF and UAN details. Confirm your UAN is active and linked to your Aadhaar and bank account on the EPFO portal.
  • Know the settlement deadline. Under the Code on Wages, 2019, wages due when you leave must be paid within two working days of your exit. If they're late, follow up in writing.
  • Read before you sign. If you're handed a separation agreement, you don't have to sign it on the spot. Ask for time to read it and, if the amounts are large, to get advice.

Your money: settlement, gratuity, PF

Full and final settlement

Your full and final settlement (F&F) covers salary for days worked, leave encashment, bonus and reimbursements, minus any recoveries. Under Section 17(2) of the Code on Wages, the wage part, such as salary for days worked and leave encashment, must be paid within two working days of your last day. Gratuity, statutory bonus and PF follow their own timelines. Ask for an itemised breakdown and check it against your payslips. (India Briefing)

Notice pay

  • Notice: your contract sets your notice period. If you're asked to leave without serving it, you're usually paid for it instead.

Gratuity

  • Who qualifies: regular employees need five years of continuous service. Fixed-term employees now qualify after one year, paid pro rata. (Business Today)
  • How it's calculated: last drawn wages × 15/26 × completed years of service. Wages now follow the labour codes' broader definition, which can raise the payout.
  • When it's paid: within 30 days of becoming due. Check that it's listed in your settlement.

Provident Fund

  • Withdraw: after a job loss, you can withdraw up to 75% of your EPF balance after one month without a job. The remaining 25% becomes available after 12 months of continuous unemployment. (Business Standard)
  • Or transfer: if you expect to join a new job soon, consider leaving it in place and transferring it to your next employer. That keeps your service continuous, which matters for your pension.

Health insurance

Your company's group health cover usually ends when you leave. Ask the insurer whether you can convert it to an individual policy, or buy one before the group cover lapses, especially if you have dependants.

ESOPs

Unvested options usually lapse when you leave. Vested options must be exercised within a window set by your company's ESOP plan, which can be as short as a few weeks. Read your grant letter and plan document now so you don't miss it.

Tax

If you join a new company in the same financial year, declare your previous employer's income to them (using Form 122, which replaced Form 12B from April 2026). Otherwise too little tax may be deducted, and you'll owe the difference when you file.

Get ready to apply

Rewrite your resume around results

Startups and SMBs hire for what you can own, not for the title you held. For each role:

  • Lead with outcomes: "Cut API response time by 40%" beats "Responsible for backend performance".
  • Add numbers wherever you can: users, revenue, time saved, team size.
  • Keep it to one or two pages, in a simple layout that applicant tracking systems can read.
  • Tailor the top summary and first few bullets for each job you apply to.

Show your work with a portfolio

Build a free Prosona360 portfolio at yourname.huntyourtribe.com and share one link with recruiters instead of a stack of attachments.

Update LinkedIn

  • Ask for recommendations now. Your manager and teammates remember your work best in the first few weeks. Ask two or three of them for a short LinkedIn recommendation, and offer to write one back.
  • Turn on "Open to work". You can show it to everyone or to recruiters only.
  • Update your headline. Lead with what you do and what you're looking for, for example: "Backend engineer | Python, AWS | Open to startup roles in Bengaluru".
  • Consider a short post. A few lines on what you worked on, what you're looking for and a thank-you to your team often brings referrals.

Browse 15k+ live startup and SMB jobs, build your free Prosona360 portfolio, and see which companies are cutting jobs in our India Layoffs Tracker.

Explaining the layoff in interviews

Interviewers hear about layoffs often. Keep it short, factual and positive:

"My role was part of a company-wide restructuring that affected about 500 people. In my two years there I led the payments integration, which cut failed transactions by 30%. I'm now looking for a startup where I can own a product area end to end."

State what happened in one sentence, move to what you achieved, then to what you want next.

Look after yourself

A layoff usually reflects a company's budgets, not your ability. It's normal to feel shaken. Keep a daily routine, set small weekly goals (for example, ten tailored applications and three referral requests), and talk to people you trust. If you need a reminder of why this can be a turning point, read A layoff can open a new door.

Layoff glossary


Layoff: in everyday use, losing your job because the company is cutting costs or restructuring. In Indian law, "lay-off" means a temporary inability to give work.

Full and final settlement (F&F): the last payment from your employer, covering salary for days worked, leave encashment, bonus and reimbursements, minus recoveries.

Notice period: the time your contract requires you or your employer to give before employment ends.

Notice pay: salary paid in place of serving your notice period.

Gratuity: a lump sum paid when you leave after the qualifying service: five years for regular employees, or one year for fixed-term employees.

Severance pay: any extra payment a company offers when it lets you go, beyond what the law requires. It depends on company policy.

Relieving letter: a letter confirming you've been released from your duties and cleared your exit. New employers often ask for it during background checks.

Experience letter: a letter confirming your role, dates of employment and sometimes your responsibilities.

Garden leave: a period where you're still employed and paid but asked not to work, usually during your notice period.

Bench period: time between projects at an IT services company when you're employed but not assigned to client work. Long bench periods often come before layoffs.

Frequently asked questions

How soon must my full and final settlement be paid? Wages due on exit must be paid within two working days of your last working day under the Code on Wages, 2019. Gratuity is due within 30 days.

Am I eligible for gratuity if I'm laid off before five years? If you're a regular employee, you generally need five years of continuous service. Fixed-term employees qualify after one year, paid pro rata.

Can I withdraw my PF after a layoff? Yes. You can withdraw up to 75% of your EPF balance after one month of unemployment, and the remaining 25% after 12 months of continuous unemployment.

Is severance pay mandatory in India? There's no general severance law covering all employees. For most professional roles, any severance depends on your contract and company policy.

Should I mention a layoff in interviews? Yes, briefly. One factual sentence about the restructuring, then move to what you achieved and what you're looking for.

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