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How to Handle Layoffs
Dec 11, 2024 9:00:00 AM
As the holidays come to an end, some employers may be faced with a difficult task: layoffs. Also known as a reduction in force (RIF), layoffs are when employees are let go from their positions and dismissed from a company. January is a busy time of year for layoffs due to many businesses finding it necessary to restructure or reorganize as they start the new year.
Explore Alternatives
While layoffs may be necessary at times, employers should explore alternatives to laying off workers first:
- Hiring freeze: As employees leave the company, hold off on filling their positions. Make sure you evaluate the remaining workforce and their needs to avoid burnout or gaps in different areas of the company. If necessary, reorganize the remaining workforce to avoid these issues.
- Pay reductions: According to a survey by the National Bureau of Economic Research (NBER), over half of US employees would take a 10% pay cut to avoid losing their jobs. Employers should communicate to their employees that the pay reductions are in an effort to avoid layoffs, are expected to be temporary, and that company leaders are also taking pay cuts.
- Reduced work schedules: Employers can also consider having employees work fewer hours as a way to save both money and jobs. Make sure you explore if this decision would have an impact on benefits, such as health insurance, and communicate to employees if these will be affected.
- Furlough: Instead of engaging in permanent layoffs, consider putting some employees on furlough for a month or two. As previously mentioned, discuss with employees how their benefits would be affected by this decision.
Conducting a Layoff
If it is determined that a layoff cannot be avoided, here are some steps to take in the process:
1. Carefully decide which positions to eliminate. The team involved in conducting the layoff should develop a selection process. Some of the most common criteria to consider are performance reviews, seniority, skillsets, and job function. Be mindful of who is selected for layoffs to avoid the perception of discrimination or retaliation. Be prepared to support your selections for layoffs, such as poor performance reviews or lowest seniority.
2. Review legal requirements. The Worker Adjustment and Retraining Notification Act, or WARN Act, requires certain steps to be taken when conducting certain plant closings or mass layoffs. Employers with 100 or more employees (not including employees who work less than 20 hours per week) are covered by the WARN Act and can trigger the Act by closing a plant that would affect 50 or more employees, a mass layoff of 500 or more employees, or layoffs of 50-499 employees and these layoffs constitute 33% of the total workforce. Employers should also be aware of any mini-WARN Acts that some states have enacted, such as New York and Illinois.
3. Create a communication strategy. Determine how you will inform affected employees of the layoff decision, when employees will be informed, who will deliver the news, and what the specific messaging will be. Creating a script will help ensure that the right message is delivered and that the manager delivering the message is prepared.
4. Be mindful while breaking the news. After death and divorce, losing a job is one of the top three difficult major life events so it should not be taken lightly. Be empathetic. If possible, meet face-to-face with each employee in private. For remote workers or larger workforces, consider conducting video calls. Be sure to deliver the news to all affected employees quickly before the rumor mills start and employees not affected begin to worry that they might be laid off.
5. Provide support. Offer outplacement services, career counseling, and other support to help the employees’ transition out of the company. Consider providing a severance package if feasible and review any severance agreements with an employment attorney prior to presenting them to your employees. Reach out to your HR Consultant with FrankAdvice for an outplacement service referral if needed.
6. Be transparent with the remaining employees. Communicate the reasons behind the layoffs and address any concerns that they may have. Employees will want some reassurance and will want to know what the company is doing to overcome its challenges so be prepared to have these honest conversations.
7. Document everything. Maintain thorough records of the company’s decision-making process, selection criteria, and communication with employees.
