It’s holiday season. For some, it will mean pink slips

By Jeanne Sahadi, CNN

New York (CNN) — Layoffs are never welcome news to employees. But they bring an extra bite when they are carried out during the holiday season.

Even if they are just signaled as coming in the next few months, the mere concern that you could be let go puts a real damper on plans to enjoy (and spend money on) family and festivities between Thanksgiving and the New Year.

In November alone, Citigroup, Charles Schwab, Vice Media, car parts maker Continental and shipping giant Maersk were among well-known employers that announced job cuts.

And more companies may make similar announcements by year-end.

“We’ve seen an increase in layoffs. We are really busy right now and expect to stay that way through the end of the year,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas, an outplacement firm that employers hire to help their laid-off employees find new work.

The good news is that Challenger said he is not anticipating a wave of big, panic layoffs in any industry like those that took place in 2020 in sectors hard hit by the pandemic. As in most years, layoffs will be specific to individual employers’ circumstances.

The other piece of good news is that the US labor market is still tight, with 1.5 job openings registered in October for every unemployed person.

Still, depending on your position, age and pay grade, it may take you longer than you’d like to land a comparable role.

So, now may be a good time to game out a plan for how to protect yourself mentally and financially if that were to happen.

What you can’t control and what to expect

Remember that you usually can’t reduce your chances of being laid off. That’s because in most instances the rationale for job cuts is far beyond your control. The most typical reasons cited for layoffs are overhiring, automation, business downturns and mergers, according to Randstad RiseSmart, a career coaching and career transition solutions firm.

That said, under the so-called federal WARN Act, companies with 100 or more employees that are planning a mass layoff, which is very specifically defined here, must provide staff with at least 60 days’ notice. Some states have more stringent rules under mini-WARN laws, requiring employers to give more notice (typically 90 days), even if they have fewer than 100 employees.

Should a company fail to provide the minimum required notice — meaning you’re let go without warning and without cause — they must provide you with pay and benefits for the warning period.

While WARN Act payments are not considered severance, let’s be real: It’s money that will help you pay your bills while you look for another job. And some employees may also receive severance on top of that.

How does your employer’s severance policy compare?

US employers are under no legal requirement to provide severance unless you are under a contract that provides for it.

That said, while not legally obligated, many large employers do choose to provide severance when they lay people off, if only for goodwill purposes and to protect themselves from legal claims you might make against them. (Also worth noting: Earlier this year, the National Labor Relations Board restricted the scope of what rights an employer may ask you to forfeit in exchange for severance.)

The average payout for individual contributors (i.e., non-executives), according to Challenger, is two weeks of pay for every year of service at the employer.

That’s based on an analysis of more than 850 severance plans offered last year by its clients, where the average individual contributor’s tenure was seven years. That coverage typically included health care benefits during the severance period, plus outplacement services.

Breaking Challenger’s numbers down further, more than a third (35%) of the employees got between one and nine weeks, while half received between 10 and 24 weeks.

Another 12% got between 25 and 51 weeks. And only 2% got 52 weeks, while 0.6% got between 54 and 99 weeks.

Three things to do now to protect yourself financially

Since layoffs are a feature, not a bug, in corporate life, planning now for any transition period between jobs can alleviate some of your concerns.

Check your employer’s severance policy: See if your employer has posted its severance policy on the company’s internal site. If it has, calculate how much you may receive based on your tenure and whether your employer will continue to subsidize your health insurance during the severance period.

Do this at least once a year, since an employer may choose to alter its severance policy, for better or worse, at any point.

Ballpark your expenses: Estimate how much you spend on essentials every month (food, housing, utilities, etc.). Then think about all the non-essentials you spend money on but which you can cut if need be. You want to develop what financial educator Tiffany Aliche, aka “The Budgetnista,” calls your temporary “noodle budget” — which is simply the bare minimum amount you have to spend in a lean month.

Don’t forget to consider health costs in the essentials category. If your employer won’t continue subsidizing your health plan expenses, and you stay on your employer’s plan through COBRA, legally you may be charged up to 102% of the cost of your plan. That’s a big jump from the average that employees pay today for workplace health coverage: 28% of the total cost for family coverage and 17% for single coverage. The employer usually picks up the rest.

Assess how much you’ll need and the resources available to you: Even if you get severance, it may not last for the entire time it takes you to find a job that pays what you earn now.

“Break down what you’ll need to cover,” said Aliche, author of “Made Whole: The Practical Guide to Reaching Your Financial Goals.”

For example, you may expect three months’ worth of severance, but realistically it may take you six months to get a comparable job.

Covering yourself financially is like making a stew and figuring out how much of each ingredient you have and how much you need, Aliche said. In this case, the ingredients are severance, unemployment benefits, emergency savings and income you can generate from a side hustle.

Go to your state’s labor department site to learn what the rules are for collecting unemployment: when you can apply, how much you’d be paid and when you can expect to receive your first check after losing your job.

Next, figure out how much you’ll have in emergency savings to tide you over if severance and unemployment aren’t sufficient to cover your needs. Ideally, you’d have three to six months’ worth of your salary, said certified financial planner Ann Minnium. If you hold a very senior role, and especially if you’re the sole breadwinner in your household, you might want to have up to a year’s worth of pay.

Since many people find those emergency savings thresholds too difficult to reach, think about the skill sets you have that you can monetize while you look for another job, Aliche said. For instance, when she was laid off from a teacher position during the Great Recession, she realized she could earn some income by tutoring.

“Ideally, it’s something that is similar to what you do now. You’re not trying to learn a whole new skill set,” she said.

The ultimate goal with all these steps is to have a plan in place should you need it, Aliche explained. “You don’t want to be doing the math when you’re in a traumatic experience.”

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