What is Layoff?


Layoff is a temporary or permanent termination of a job for one or more employees due to operational or financial reasons at a company. When a company is struggling to survive and reducing worker numbers is the only way to minimize costs, layoffs can often be used as a last resort.


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1. What are the reasons for Layoffs?


Layoffs can happen for various reasons, following are some of the common reasons::


  • Economic crisis: During a time of recession, businesses may face a reduction in revenue and need to cut costs to stay profitable.


  • Restructuring: Businesses may choose to restructure in order to improve efficiency, which may result in layoffs.


  • Progress in technology: As technology progresses, companies may require fewer employees for performing certain tasks, resulting in layoffs.


  • Mergers and acquisitions: When two organisations merge or buy another, redundancies might emerge, resulting in layoffs.


2. What are the types of Layoffs?


Layoffs can be of numerous types; the following are some examples:


  • Temporary Layoffs: When a company temporarily suspends an employee’s job, it is usually for economic or business reasons. When the situation improves, the employee is usually called back to work.


  • Permanent Layoffs: When a company terminates an employee’s job due to a business or department reduction, restructuring, or closure. Usually, the termination is permanent, and the individual is not expected to return to work.


  • Voluntary Layoffs: When a company provides employees with the option of voluntarily accepting a layoff in exchange for some type of compensation or benefit, such as severance money or extended health benefits, this is referred to as a voluntary layoff.


  • Involuntary Layoffs: When an employer terminates an employee’s employment without the employee’s acceptance, it is usually for reasons such as poor performance, misconduct, or a violation of business policies.


  • Furloughs: This is a sort of temporary layoff in which a company asks employees to take unpaid leave for a specified amount of time, commonly for economic or business reasons. When the situation improves, the employee is usually called back to work.


  • Mass Layoffs: This occurs when an employer fires a large number of employees, typically more than 50, within a 30-day period for economic or business reasons. Employers are bound by law to provide impacted employees advance notice and may be subject to extra laws depending on how much staff was affected by the layoff.


3. How to Handle Layoffs as an Employer?


Laying off employees is never easy, but there are steps you can take to make the process as smooth and fair as possible:


  • Plan properly: Make sure you have a good plan in place, including a clear reason for why layoffs are required and how they will be implemented.


  • Be open and honest: Communicate clearly with employees about the reasons for the layoffs, the picking process, and the assistance that is available.


  • Provide assistance: Employees affected by layoffs should be given services and support, such as career counseling, job search assistance, or severance money.


  • Follow the rules: When carrying out layoffs, make sure to follow all applicable rules and regulations, including those related to severance pay, notice periods, and discrimination.


4. How to Handle Layoffs as an Employee?


Layoffs can be a stressful and uncertain time for employees. Here are some tips on how to handle a layoff:


  • Be calm and professional: Even if you are outraged or angry, it is important to maintain calm and professionalism during the layoff process.


  • Ask questions: Ask your company for as much information as possible regarding the layoff, including the reasons behind it, available support, and your options.


  • Seek assistance: Seek emotional support from your network, which includes friends, family, and coworkers. You might also be eligible for financial assistance, such as unemployment or severance pay.


  • Consider the future: Use the layoff to reevaluate your career goals and take action to find a new job or start a new business.


5. What is the difference between Layoffs and Retrenchment?


  • Layoff is a temporary or permanent suspension of an employee’s employment, usually for economic or business reasons. In the case of a temporary layoff, the employee may be recalled to work when the situation improves, but not in the case of a permanent layoff.


  • Retrenchment refers to the permanent termination of an employee’s position as a result of a business or department reduction, restructuring, or closure. Typically, the termination is permanent, and the individual is not expected to return to work.

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