layoff

A layoff is the termination of employees due to business conditions rather than individual performance. It typically results from a decline in demand, company restructuring, or cost-cutting measures. Layoffs can be temporary (a furlough) or permanent, depending on the outlook for the business. They are distinguished from firing, which generally results from an employee's performance or misconduct.

Layoffs can be classified as mass layoffs or selective layoffs. A mass layoff affects a large number of employees, while selective layoffs target specific roles or departments. Temporary layoffs may include recall rights if demand recovers; permanent layoffs end the employment relationship. Furloughs involve unpaid time off while keeping the employee on payroll or benefit plan.

Legal and procedural considerations vary by country and region. Employers may be required to provide advance notice under laws such as the WARN Act in the United States, or similar statutes elsewhere. Severance pay, continuation of benefits, and unemployment benefits are not guaranteed by law in all jurisdictions but are commonly offered or negotiated. Employment contracts, collective bargaining agreements, and human resources policies may establish additional requirements, notice periods, and recall rights. Employers should ensure non-discriminatory reasons and consistent application to avoid legal risk.

Process and outcomes: Layoffs typically involve notification, final compensation for accrued leave and earned wages, clarification on benefits, and information about unemployment insurance and potential outplacement services. Some programs include severance packages, job placement assistance, and references. Employers may implement voluntary separation or early retirement programs to reduce involuntary terminations.

Impact and alternatives: Layoffs can affect survivors, morale, and the organization’s reputation. Companies may explore alternatives such as hiring freezes, reduced hours, pay reductions, temporary shifts in responsibilities, or voluntary separation before resorting to layoffs. Maintaining clear communication, fairness, and support services can help mitigate negative effects.