A layoff is when an employer terminates an employee for reasons unrelated to their performance. In many cases, layoffs are the result of budget cuts, downsizing, restructuring or reorganization, the need to boost cash flow, and because the business no longer needs the position.
Therefore, layoffs are unlike firing, which results from misconduct, fraud, and poor performance. In fact, around 22 million workers lost their jobs through layoffs in 2018. With the growing need for businesses to lay off employees, you should adopt these tips so you can do it respectfully.
1. Identify Your Business Needs
Before you lay off an employee, you need to weigh the pros and cons. Remember, the layoff process will not only harm the people you are laying off but also hurt the remaining staff, investors, customers, reputation, and brand. On the other hand, if you don’t lay off workers, your business could end up in a hole of negative cash flow.
First, consider the alternatives to laying off workers. These include:
- Cut out overtime
- Reduce employee hours
- Put a hold on giving bonuses or raises
- Implement furlough
One of the best alternatives to laying off workers is implementing furlough. Furlough is the mandatory time off for workers without pay. A worker on furlough still has their job. To implement a layoff, identify your business needs by creating a budget. The budget helps you project profits, business revenue, and expenses. Additionally, your budget will help you determine whether there are other expense areas you can reduce instead of laying off employees.
2. Comply With the Warn Act
If you must lay off workers, make sure you do it in accordance with the law. The Worker Adjustment and Retraining Notification Act (WARN) sets out the rules for layoffs. Actually, according to the WARN Act, you should give your workers 60 days’ notice about mass layoffs and plant closings. Also, the notification must be in writing. The Act applies to employers with 100 or more workers.
The Worker Adjustment and Retraining Notification Act protects soon-to-be laid-off workers by allowing them sufficient time to apply for other roles or seek additional training. Therefore, if the Warn Act applies to you, ensure you give your workers sufficient warning regarding upcoming layoffs. Furthermore, you should notify relevant parties like your local government’s chief elected official. Business owners who fail to comply with the Act are subject to a penalty of up to $500.
3. Prepare for the Notification Meeting
A notification meeting is also called a Reduction In Force (RIF) notification. This is where you give your employee a layoff notification. It’s crucial to prepare for the notification meeting. First, choose a setting that will give you and your employee some privacy. Also, pick a time with limited disruptions to business affairs and allow the employee to leave their position privately.
You can notify your staff in advance about details of the meeting and the sequence of events through digital signage. Apart from the affected employee, the staff that should be present at the meeting include a representative from the human resource department, the employee’s manager, and a member of the security team.
Finally, you need to gather the necessary materials for the meeting. These include a final paycheck, items related to the severance package, COBRA paperwork, and an employee termination letter.
4. Discuss Unemployment Insurance and COBRA Coverage
One of the things you should discuss with your employees when laying them off is COBRA continuation coverage and unemployment insurance. A laid can seek unemployment insurance benefits while they search for new employment. Unemployment benefits allow workers to receive a portion of their paycheck. In fact, in March 2020, job losses led to around 6 million workers filing for unemployment benefits.
Your state will send you a notification letter when an employee seeks unemployment benefits. Also, your unemployment tax rate may increase. The laws on unemployment benefits vary depending on state law. Make sure you guide an employee on how to claim unemployment before laying them off.
COBRA stands for Consolidated Omnibus Budget Reconciliation Act. The Act protects employees who have lost their health insurance. This Act allows laid-off workers to continue their health insurance coverage for 18-36 months.
You should provide COBRA coverage to your workers if you:
- Employ 20 full-time equivalent workers
- Provide a private-sector group health plan
5. Provide Outplacement Assistance and Support
When you lay someone off, showing your appreciation helps build professional goodwill. You should try and offer outplacement assistance to employees affected by the layoff. Third-party outplacement services help employees affected by the layoff get assistance with career-transition consulting, job search assistance, and resume writing.
Moreover, employees will appreciate it if you provide letters of recommendation. Taking the time to help workers find their next role makes the transition more positive and exposes them to employment opportunities. You never know; you may rehire them someday, so ensure you maintain supportive relationships with workers who leave.
Rewriting the End
According to the Peak-End rule in psychology, we judge an experience based on how we felt at its peak and end, as opposed to the total sum of the experience. It helps to plan your layoff strategy using digital signage to ensure the process runs as smoothly as possible. So, applying the Peak-End rule to layoffs helps you terminate an employment contract on a positive and supportive note. As you lay off employees, do your best to leave them the impression that your company truly values them.