HR Terminology

Layoff

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  7. Layoff: Definition and Meaning

A layoff is the suspension or permanent termination of employment of workers by their employer.

A layoff does not occur because workers did something wrong. People are laid off because the commercial enterprise’s sales have declined, it is in financial trouble, has gone bankrupt, or is unable to obtain a crucial component or raw material for the production of goods.

FAQ

While both involve the cessation of employment, a layoff is typically a company-wide action affecting multiple employees due to reasons beyond individual performance. Termination, on the other hand, usually results from poor performance, misconduct, or violation of company policies.

Employees impacted by a layoff may be entitled to certain rights depending on local labor laws and company policies. These may include severance pay, continuation of benefits, access to reemployment services, and compliance with notice periods.

The criteria for selecting employees for layoffs vary by company and situation. Common factors may include job performance, skills and experience, seniority, job function, and the company's strategic objectives. Employers must ensure that layoff decisions comply with anti-discrimination laws.

Depending on the circumstances, some employees may be rehired by the company after a layoff, especially if business conditions improve or new roles are created. Rehiring former employees can offer advantages such as familiarity with company culture and reduced recruitment costs.

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