layoffs

Layoffs refer to the involuntary termination of employees or a substantial reduction in a company's workforce to cut costs, restructure, or respond to declines in demand. They differ from terminations for cause and voluntary departures and can affect a single unit, multiple units, or the entire organization. Layoffs can be temporary or permanent and may be planned in anticipation of economic conditions or reactive to market shocks.

Types include mass layoffs, which affect a large number of workers in a short period, and selective layoffs, where positions are eliminated based on criteria such as role, seniority, or performance. Plant or facility closures are related outcomes. The choice of approach often reflects financial objectives, legal constraints, and operational considerations.

Processes typically involve strategic planning, determining criteria for who is laid off, providing notice, and arranging severance or transition assistance. In many jurisdictions, laws require advance notice or severance payments for mass layoffs. Employers may offer severance packages, continued benefits, outplacement services, and access to unemployment insurance.

Impacts include income disruption for workers, potential skill erosion, and reputational effects for the employer. Short-term cost savings may be offset by costs associated with rehiring, training, and lowered productivity or morale. Layoffs can affect remaining employees, customer relationships, and organizational knowledge.

Alternatives to layoffs include attrition, hiring freezes, voluntary buyouts, redeployment, or retraining programs. Transparent communication, fair criteria, and support services are recommended to reduce negative outcomes. The use and design of layoffs vary by national law, sector, and corporate governance standards.