RSUs when you change jobs or get laid off: what happens

When you leave a job — whether you quit, get laid off, retire, or get fired — the question that keeps you up at night isn't usually about your salary. It's about your equity.

How much of it do you keep? What happens to the unvested portion? Are there ways to negotiate? And once you're gone, what tax obligations remain?

This post walks through every scenario.

The default rule

The starting principle, true at almost every US-headquartered company:

You keep all vested RSUs. You lose all unvested RSUs unless your employer says otherwise.

This is the rule that drives everything else. Vested = yours forever. Unvested = belongs to the company until it vests.

Now the variations.

Scenario 1: You quit voluntarily

The clean version. You decide to leave, give notice, and exit on your last working day.

What happens

Type	Outcome
Vested RSUs	Stay in your brokerage account. You keep them.
Unvested RSUs	Cancelled. Reverted to the company's pool. You receive nothing for them.
ESPP shares already purchased	Stay yours (already vested by definition).
ESPP contributions in current period	Refunded as cash (no purchase happens).

What you do

• Confirm vest schedule and which shares are technically vested as of your last day. Some plans use end-of-pay-period vesting; others use end-of-calendar-month. The exact day matters.
• Consider whether to delay quitting until just after a vest date. If you're leaving in 6 weeks anyway and a major vest is in 3 weeks, wait. You'll capture the vest, then leave.
• Update your brokerage account to remove employer-employee link.

The "quitting just before a vest" trap

If you quit on January 14 and the next vest is January 15, you forfeit that vest. The plan administrator looks up your last day; it's January 14; the January 15 RSUs are unvested as of that date; cancelled.

Plan timing carefully. Don't accidentally walk away from ₹15 lakh of vesting RSUs because you accepted a new offer on a Tuesday instead of a Wednesday.

Scenario 2: You get laid off

A more common scenario in 2025–26 than people would have guessed in 2020. Layoffs are governed by the company's severance policies and the equity plan documents.

What happens to RSUs

The default: same as quitting. Unvested = cancelled.

But some companies offer severance benefits that include accelerated vesting:

• A "severance package" might include an additional 3–6 months of accelerated RSU vesting.
• Mass layoffs sometimes trigger more generous accelerated vesting (called "good leaver" treatment).
• Senior employees often have negotiated termination protections in their offer letter.

What you do

• Read your offer letter and equity plan documents carefully.
• Negotiate with HR. Layoffs are a negotiation; severance terms are flexible. Ask for:
  • Cash severance (typically 2–6 months of base salary).
  • Equity acceleration (3–12 months of additional vesting).
  • Extended COBRA / benefits coverage (US-specific).
  • Early-vest exception for shares that would have vested in the next 60 days.
• Sign whatever ELD (Employment Termination Document) the company provides only after reviewing it carefully — sometimes including with a lawyer.

The "good leaver / bad leaver" distinction

Some equity plans distinguish:

• "Good leaver": laid off, retired with notice, certain medical exits. Get accelerated vesting or favorable treatment.
• "Bad leaver": terminated for cause, resigned without proper notice. Usually no acceleration; sometimes loss of vested shares too (rare but possible).

Your offer letter or equity plan should specify which scenarios trigger which treatment. If it's vague, ask HR to clarify in writing.

Scenario 3: You get fired for cause

Rare but possible. "For cause" means a serious violation: misconduct, fraud, gross policy violation.

What happens

Some equity plans clawback vested RSUs in for-cause terminations. This is unusual but exists. Read your plan documents.

If your termination is for cause and clawback applies, you can lose vested shares you thought were yours forever. The company may also pursue restitution for any sale proceeds.

Consult an employment lawyer if facing this.

Scenario 4: Acquisition / Merger

Your company gets acquired. What happens depends on the deal structure.

Cash acquisition (your company gets bought for cash)

RSU status at announcement	What happens
Vested	Sold at the acquisition price; cash deposited
Unvested (still vesting)	Either: continued vesting at acquirer (with possible accelerated portion), or cancelled, or converted to acquirer stock

The merger agreement specifies. Sometimes employees keep vesting at the acquirer with the same schedule. Sometimes vesting accelerates by 6–24 months as part of the deal. Sometimes employees are essentially terminated and cash-paid out.

Stock-for-stock acquisition

Your company's stock converts to acquirer's stock. RSUs convert proportionally — your unvested RSUs continue vesting in the acquirer's stock.

This is generally the cleanest outcome — you keep accumulating equity in the new entity.

"Double trigger" acceleration in M&A

Many private and public companies have "double trigger acceleration" clauses for senior employees:

• Trigger 1: change-of-control (merger/acquisition).
• Trigger 2: termination "without cause" within X months post-merger.

If both triggers fire, all unvested RSUs accelerate fully. This protects employees who get laid off in post-merger consolidation.

If you're at the senior level, look for this clause in your offer letter. It's a standard ask in negotiations.

Scenario 5: IPO

Your private company goes public. Generally good news for RSU holders:

• Double-trigger RSUs become taxable + sellable at IPO.
• Liquidity event for accumulated time-vested shares.
• Lockup period (90–180 days) before you can sell.

Already covered in detail in the pre-IPO RSU post.

Scenario 6: Performance-Based RSU non-vesting

Some companies grant performance-based RSUs (PRSUs) in addition to time-based RSUs. PRSUs vest only if certain performance metrics are hit (revenue, stock price, individual KPIs).

If PRSU performance metrics are missed, the unvested PRSUs cancel without ever vesting. You're not entitled to anything. This is a feature of the grant.

For senior executives whose RSUs are mostly PRSUs, this can be a major hit if performance lags.

The Indian tax cycle continues after job change

Post-departure, your relationship with the company ends. But your relationship with the tax authority on your accumulated RSUs continues:

The shares you kept are still your assets

Vested RSU shares sitting in your brokerage account are foreign equity, just like any US-listed stock. You're responsible for:

1. Schedule FA disclosure annually until you sell.
2. Capital gains tax when you eventually sell.
3. Form 67 if dividends are paid (depending on the underlying stock).

This responsibility doesn't transfer to your new employer or end with your old job.

Selling timing matters

You may now have time to optimize:

• Hold past 24 months from vest for LTCG.
• Coordinate with tax-loss harvesting opportunities elsewhere.
• Repatriate proceeds for known INR expenses.

Without the urgency of "the company stock is performance-linked to my job," you can be more deliberate about sale timing.

Continued W-8BEN

If your old broker (Fidelity, E*TRADE) keeps your account active post-departure, your W-8BEN remains relevant. Renewal cycles continue. Address updates, etc.

Some brokers force account closure or rollover when the employer relationship ends. Check with the broker.

What to do with the shares from your old employer

Post-departure, your former employer's stock is now just "a stock you happen to own" — not anchored to your career anymore.

The case for selling

• Concentration: you're no longer working there, but the stock probably represents a meaningful % of your wealth.
• Information: you no longer have insider perspective on the company; your "edge" (whatever it was) has diminished.
• Diversification: redeploy into broad-market ETFs.

The case for holding

• Tax efficiency: if you're past 24 months, LTCG @ 12.5% is much better than slab rate.
• You still believe in the company: as an external observer, you might still think it's a good investment.
• Currency exposure: if you wanted USD diversification, keeping the shares maintains it.

For most people: sell down to a small position over 6–18 months post-departure, redeploy to diversified ETFs. Keep maybe 10–20% of the original position if you have residual conviction.

A specific scenario: laid off with concentrated exposure

You worked at a tech company for 5 years. You have ₹40 lakh of vested company stock from accumulated RSUs (currently your largest single holding). You just got laid off; severance is 3 months base salary.

Immediate actions:

1. Confirm severance terms in writing.
2. Confirm vested RSU treatment (none should be at risk; verify).
3. Update brokerage account address / employment status.

Short-term (next 1–3 months):

1. Find new employment (or extended runway plan).
2. Review tax brackets for the year. If your total income for FY 2025-26 is now lower, consider realizing some LTCG (if shares are > 24 months) — your effective rate on capital gains may be lower in this transitional year.

Medium-term (next 6–12 months):

1. Sell down concentration. ₹40 lakh in single stock is risky; aim to bring it to under ₹15 lakh over 12 months.
2. Redeploy proceeds to broad-market ETFs (VTI, Indian index, international).
3. Maintain Schedule FA disclosure for the remaining shares.

Long-term:

1. By Year 2 post-departure, your portfolio should reflect "a person who happens to have some of [old company]'s stock" rather than "an employee who's heavily concentrated in [old company]."

Multiple employers, multiple plans

If you've worked at 3 US multinationals over 10 years, you might have:

• 3 sets of vested RSU shares at 3 different brokerages.
• 3 different W-8BEN forms in 3 different states of currency.
• 3 sets of Schedule FA disclosures to maintain.

This compounds quickly. Recommendations:

Consolidate where possible

Some brokerages allow transferring shares from old plan administrators to a self-directed account (your IBKR or Vested account). Once shares are transferred, you have one place to track.

The drawback: transfers can take 1–2 months. Some plan administrators charge fees. Sometimes the share transfer triggers tax events if not done correctly.

Maintain a master spreadsheet

Across all old jobs, keep one cost-basis spreadsheet (covered in cost basis tracking post). When you sell, you have one place to look.

Schedule FA per entity

Each old employer's stock is a separate Schedule FA entity. Disclose each.

The summary

When you change jobs, the rules are:

• Vested RSUs: yours. Stay in your account.
• Unvested RSUs: forfeited unless severance includes acceleration.
• Tax obligations: continue on the shares you hold, regardless of current employment.
• Concentration risk: now disconnected from your career; lean toward selling down.
• Severance negotiations: real opportunities to capture some unvested value.

Most people leave RSU value on the table at job changes — either by quitting badly-timed (just before a vest), failing to negotiate severance acceleration, or holding old-employer stock in concentration without re-evaluating once they're no longer at the company.

The practical default: time job changes around vest dates, negotiate severance acceleration if relevant, and sell down old-employer concentration once you're elsewhere.