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The Empuls Glossary

Glossary of Human Resources Management and Employee Benefit Terms

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A layoff is the temporary or permanent termination of employment by an employer due to a variety of reasons such as economic downturns, restructuring, or cost-cutting measures. It is a situation where an employer decides to terminate a group of employees or even entire departments, as opposed to firing individuals for cause. 

Layoffs are usually a result of factors beyond the employee's control and may be due to the employer's financial situation, market conditions, or changes in the organization's structure or business needs.

What is a layoff?

A layoff is the temporary or permanent termination of employment by an employer due to a variety of reasons such as economic downturns, restructuring, or cost-cutting measures.

What is the difference between a layoff and a termination?

The main difference between a layoff and a termination is that a layoff is typically temporary, while termination is permanent. A layoff is usually due to factors beyond the employee's control, such as an economic downturn or restructuring, whereas a termination may be due to performance issues, misconduct, or other reasons related to the employee's behavior or actions.

In a layoff, the employee may be able to return to work when conditions improve, while in a termination, the employee's employment is permanently terminated. Additionally, layoffs are often conducted on a large scale, affecting multiple employees or even entire departments, whereas terminations are usually specific to individual employees.

Listen, recognize, award, and retain your employees with our Employee engagement software  

What are some reasons for layoffs?

Layoffs can occur for a variety of reasons, including:

  1. Economic downturns: When an organization is facing financial difficulties due to declining revenue or market conditions, it may resort to layoffs to reduce costs.
  2. Technological changes: With the increasing use of automation and artificial intelligence, some jobs may become redundant, leading to layoffs.
  3. Mergers and acquisitions: In the event of a merger or acquisition, the acquiring company may eliminate redundant positions or departments, resulting in layoffs.
  4. Restructuring: When an organization undergoes restructuring to improve efficiency, it may result in the elimination of certain positions or departments.
  5. Cost-cutting measures: When an organization wants to reduce costs, it may lay off employees to decrease payroll expenses.
  6. Seasonal changes: In industries where demand fluctuates based on the season, such as retail or tourism, layoffs may occur during slow periods.

How are employees selected for layoffs?

Employers must use a fair and objective method to select employees for layoffs. This could involve considering factors such as:

  1. Job performance: Employers may choose to retain employees with the highest job performance ratings.
  2. Seniority: Employers may choose to retain employees who have been with the company the longest.
  3. Skills and experience: Employers may choose to retain employees with skills and experience that are critical to the organization's success.
  4. Cost: Employers may choose to retain employees who have a lower salary or benefits package.

It's important for employers to establish clear and objective criteria for selecting employees for layoffs and to communicate this information to employees as soon as possible. The selection process should also be documented to ensure compliance with labor laws and regulations.

What are some legal considerations for layoffs?

There are several legal considerations that employers must take into account when conducting layoffs. These include:

  1. Compliance with federal and state laws: Employers must comply with federal and state laws governing layoffs, including the WARN Act, which requires employers to provide advance notice of mass layoffs.
  2. Discrimination: Employers must ensure that the selection process for layoffs does not discriminate against employees based on their race, gender, age, disability, or other protected characteristics.
  3. Collective bargaining agreements: Employers must comply with any collective bargaining agreements that may dictate the terms of layoffs.
  4. Severance pay: Employers may be required to provide severance pay to employees who are laid off, depending on state and local laws and the terms of the employee's contract.
  5. Unemployment benefits: Laid-off employees may be eligible for unemployment benefits, which can vary by state and may have different eligibility requirements.
  6. Employee notifications: Employers must provide clear and timely communication to affected employees regarding the reason for the layoff, the selection process, any severance or benefits, and their rights and obligations.

Employers should consult with legal counsel to ensure compliance with all relevant laws and regulations when conducting layoffs.

What are some alternatives to layoffs?

There are several alternatives to layoffs that employers can consider when faced with financial difficulties. These include:

  1. Reducing work hours: Employers can reduce work hours to cut costs while still retaining employees.
  2. Salary cuts: Employers can reduce employee salaries as an alternative to laying off workers.
  3. Hiring freeze: Employers can freeze hiring for non-essential positions to save costs.
  4. Voluntary time off: Employers can offer voluntary time off programs, where employees can take time off without pay or use vacation time to reduce payroll costs.
  5. Job sharing: Employers can allow employees to share job responsibilities and work part-time to reduce payroll costs.
  6. Retraining: Employers can retrain employees to take on different roles within the organization.
  7. Early retirement: Employers can offer early retirement packages to employees who are nearing retirement age.

How can employers support employees during a layoff?

Employers can take several steps to support employees during a layoff, including:

  1. Provide advance notice: Whenever possible, employers should provide advance notice of a layoff to give employees time to prepare and plan.
  2. Offer severance pay and benefits: Employers may consider providing severance pay and benefits to help employees during the transition period.
  3. Provide outplacement services: Employers may offer outplacement services to help employees find new employment opportunities, such as resume writing, interview coaching, and job search assistance.
  4. Provide career counseling: Employers may offer career counseling services to help employees identify their skills, interests, and career goals.
  5. Offer employee assistance programs: Employers may offer employee assistance programs (EAPs) to provide counseling and support services to employees who may be struggling with the emotional impact of a layoff.
  6. Maintain open communication: Employers should maintain open communication with employees throughout the layoff process, providing regular updates and information about the situation and the company's plans.

It's important for employers to treat laid-off employees with respect and dignity, and to provide as much support and assistance as possible during this difficult time.

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.


eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

  • Promoters
    Employees who have responded positively or agreed.
  • Detractors
    Employees who have reacted negatively or disagreed.
  • Passives
    Employees who have stayed neutral with their responses.

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