I Got Laid Off. What Happens to My Unvested and Vested Equity?
Being laid off doesn't change the basic mechanics: vested options still follow your termination exercise window. Unvested options and RSUs are still forfeited, unless your agreement says otherwise.
A layoff is an involuntary departure, but for equity purposes, the standard plan terms generally apply the same way they would if you’d resigned, with two important exceptions worth checking closely: acceleration clauses that specifically trigger on involuntary termination, and severance agreements that sometimes offer better equity terms than the standard plan requires. This post covers what typically happens to both vested and unvested equity in a layoff, and where the real differences from a voluntary departure show up.
What happens to my vested options after a layoff?
Vested options generally follow the same post-termination exercise window that applies to any departure, voluntary or not; 90 days is standard, though your company’s plan may specify something different or longer. The involuntary nature of a layoff doesn’t automatically extend this window on its own; whatever window applies to departing employees generally applies to you too, unless your severance agreement specifically changes it.
What happens to my unvested options and RSUs?
Unvested equity is forfeited on your last day of employment, the same as it would be for any other departure, unless a specific acceleration provision in your plan applies. This is true even though a layoff wasn’t your choice. The standard plan language usually doesn’t distinguish between “you left” and “we let you go” for the purposes of what counts as vested versus unvested on your last day.
Does a layoff ever trigger accelerated vesting?
Sometimes, but only if your specific option plan includes a provision that applies. The most common scenario is double-trigger acceleration tied to an earlier acquisition. If your company was acquired and your options include a double-trigger clause, a layoff within the specified post-acquisition window (commonly 9 to 18 months) can be exactly the “qualifying termination” that triggers acceleration of your remaining unvested shares. Outside of that specific acquisition-linked scenario, most standard vesting plans don’t include acceleration for an ordinary layoff.
Do severance agreements ever change my standard equity terms?
Yes, sometimes. A severance agreement is a separate document from your option plan, and companies can, though aren’t required to, offer more favorable equity terms as part of a severance package, most commonly an extended exercise window beyond the standard 90 days. During large layoffs, some companies have voluntarily extended exercise windows for affected employees as a matter of policy, though this isn’t guaranteed and varies considerably company to company. It’s worth reading any severance or separation agreement closely for equity-specific language, since it can differ from what the standard plan document alone would provide.
What if I was laid off before my one-year cliff?
The cliff rule applies regardless of why you’re leaving. If you’re laid off before your first-year cliff date, you generally have zero vested equity, the same as if you’d resigned or been terminated for any other reason. There’s no special exception for layoffs that changes this baseline mechanic on its own.
Worked example
Say you were granted 40,000 options on a standard four-year schedule with a one-year cliff, and you’re laid off at month 20, 8 months past your cliff.
Vested: 10,000 at the cliff (25%) plus 8 months × roughly 625/month (the remaining 30,000 spread over 36 months) ≈ 15,000 vested options
Forfeited immediately: the remaining roughly 25,000 unvested options, unless an acceleration clause applies
Exercise window for the 15,000 vested options: typically 90 days from your last day, unless your severance agreement specifies something different. Check that document specifically, since it may not match the standard plan terms
FAQ
Does getting laid off give me a longer window to exercise my options? Not automatically. The standard exercise window (commonly 90 days) usually applies the same way it would for any departure, unless your severance agreement specifically extends it.
Do I lose my unvested options if I’m laid off? Generally yes, the same as with any departure, unless a specific acceleration clause in your plan applies, most commonly one tied to a prior acquisition.
Is a layoff the same as the “termination” trigger in double-trigger acceleration? It can be, but only if your company was previously acquired and your options include a double-trigger acceleration clause with a window that covers your layoff date. A layoff at a company that hasn’t been acquired doesn’t have this kind of trigger to activate.
Should I expect my company to extend my exercise window during a layoff? Not by default. Some companies have done this voluntarily during broader layoffs, but it’s not standard or guaranteed. Check your specific severance paperwork.
What if I was still within my one-year cliff when I was laid off? You’d generally have zero vested equity, the same as any other departure before the cliff date.
What to do next
The specific numbers and any extended terms are in your grant agreement and your severance paperwork. Read both closely, since severance terms can differ from the standard plan. You can model your own vested-share numbers and exercise costs at movewealth.io.
MoveWealth is not a broker-dealer, investment adviser, or lender. This is educational content, not financial, tax, or legal advice. Consult a qualified professional about your specific situation.