Layoff

Layoff vs termination

The difference is the reason. A termination in the usual HR sense is about the individual: performance, conduct or policy violations. A layoff is about the position or the business. The employee did nothing wrong; the job or the headcount went away.

That difference changes practical outcomes. Laid-off employees are generally eligible for unemployment benefits. Many employers offer severance pay in exchange for a release of claims, recall rights in union settings, rehire eligibility and outplacement support. Employees fired for misconduct usually get none of those. Recording the right separation reason matters for unemployment claims and for future reference checks.

Temporary layoff vs furlough vs reduction in force

• Temporary layoff: employment is suspended with an expected return, common in manufacturing and seasonal operations. Employees are usually unpaid and may file for unemployment. Benefits continuation depends on plan terms.
• [Furlough](/glossary/furlough/): an unpaid leave or reduced schedule for a set period, typically with benefits continued. In the US the two words are often used loosely; check what your plans and state unemployment rules say.
• [Reduction in force](/glossary/reduction-in-force/) (RIF): a permanent cut in positions with no plan to recall. Most corporate layoffs are RIFs.

A temporary layoff that runs longer than six months can turn into an employment loss under the WARN Act, so date the expected recall and track it.

Legal requirements in the US

The federal WARN Act applies to employers with 100 or more full-time employees (or the hours equivalent). It requires 60 days' written notice before a plant closing that causes 50 or more employment losses at a single site, or a mass layoff at a single site of at least 50 employees who make up a third of the workforce there, or 500 or more employees regardless of percentage. Pay and benefits in lieu of notice are the usual remedy for violations.

Several states have their own mini-WARN laws with lower thresholds, longer notice or extra requirements, including California, New York, New Jersey and Illinois. Other rules that come up in almost every layoff:

• Older Workers Benefit Protection Act. For a release of age discrimination claims in a group layoff, employees 40 and over must get 45 days to consider the agreement, 7 days to revoke after signing, and written information about the ages and job titles of who was and was not selected in the decisional unit.
• Final pay timing set by state law, sometimes on the last day.
• COBRA continuation notices for group health coverage.

This is a summary, not legal advice. Rules vary by state and country; outside the US, consultation and redundancy pay requirements are often much stricter.

How to conduct layoffs

1. Define the business reason and the scope. Which roles, teams, sites and how many. Write it down; it becomes the backbone of any later defense.
2. Set selection criteria. Position elimination, skills needed going forward, documented performance ratings, or seniority in union settings. Avoid criteria that cannot be measured.
3. Run an adverse impact analysis. Compare selection rates by age, sex, race and other protected groups before final decisions, with counsel involved so the analysis is privileged.
4. Prepare packages. Severance formula (a common structure is one or two weeks of pay per year of service with a minimum), benefits end dates, COBRA, outplacement and the release agreement. Our layoff letter template covers the written notice.
5. Plan notification day. Short private meetings, ideally 10 to 15 minutes, delivered by the manager with HR present. Morning, early in the week, never by mass email. Have access cutoff, final pay and logistics ready.
6. Tell everyone else the same day. Remaining employees need to hear what happened, why and what changes for them. The layoff notification email template helps with the written follow-up.
7. Support the people who stay. Workloads change, and the best performers start taking recruiter calls within a week.

A worked example

A regional logistics company closes one of its three distribution centers, affecting 140 employees. Because it has more than 100 employees and this is a plant closing affecting more than 50 people at one site, WARN notice applies. HR issues notices 60 days before the final day to employees, the state dislocated worker unit and the local government official.

The company offers transfers to the other two sites for 40 roles and runs an internal redeployment process, matching people by shift and skill. 31 accept. The other 109 receive two weeks of severance per year of service with a four-week minimum, a retention bonus for staying through the final day, and on-site job fairs with local employers. The retention bonus matters: without it, a closing site often loses a third of its staff in the first month and cannot fulfill remaining orders.

Common mistakes

• Choosing people first and finding criteria afterward
• Using stale or inflated performance ratings that do not support the selection
• Laying off and then posting the same job title three weeks later
• Mismatched messages from different managers on the same day
• Ignoring survivors, which turns one layoff into two waves of attrition