How to Approach Layoffs

How to Approach Layoffs

Young businessman carrying his staff and leaving his workplace after getting layed off

In a perfect world, companies would take proactive steps to shield their employees from large-scale layoffs. However, there are instances where layoffs can no longer be avoided. As such, businesses need to know how to approach layoffs strategically and with grace. 

2022 saw an onslaught of layoffs across many industries. That number is well over 75,000 people in the startup world, and it’s still growing. Companies as big as Snap, Peloton, and Shopify have had massive layoffs, cutting thousands of jobs. Odds are, you’ve come across posts on LinkedIn from those affected by these events. 

Unfortunately, layoffs will likely continue with the economy in its current state. So perhaps your business will have to make some difficult decisions soon too. If layoffs are unavoidable for your business, you or your HR team must enter that process with empathy and clarity. 

This blog explains how to approach layoffs as an employer. When done correctly, you can take care of your former employees and even avoid a burnt bridge. 

WARN Act compliance

First, review the WARN Act and any “mini-WARN” in your state. The WARN Act, or the Worker Adjustment and Retraining Notification Act, applies to employers with over 100 full-time employees who are laying off at least 50 workers who make up 33% of their workforce or are closing a plant. 

The WARN Act requires employers to provide workers with a 60-day notice. However, the fallout from COVID-19 unearthed an exception for “unforeseeable business circumstances.” 

To comply with the WARN Act, you must:

  • Explain if the layoff is permanent or temporary.
  • State the expected date of the first layoffs.
  • Lay out the schedule for the job losses.
  • Provide an official contact for further information.
  • If you give under 60 days’ notice, include an explanation of the circumstances behind that.

Non-compliance carries a potential penalty of $500 per day under the 60-day requirement, and you would owe affected employees back pay and benefits for the period of the violation. Hopefully, your layoffs won’t hit the mass-layoff threshold, but don’t leave yourself open to legal action here. Instead, work the WARN Act into your strategy. 

Business colleagues having a conversation.


Determine employees for layoff 

Deciding who to lay off depends on the needs of your organizational structure moving forward. Despite losing talent, you still need to work towards your goals. Therefore, you need to identify top performers and employees with specific skills you can’t afford to lose. 

Some factors to consider include seniority, skill set, and job performance. Moreover, be careful about who you select for layoffs and why, or you’ll risk exposing your company to lawsuits. If you are unsure, consult HR or employment law experts for guidance. Overall, be mindful of protected classes in your state, such as race, religion, age, gender, and more. 

Although cuts may need to take place, that doesn’t mean you should abandon strategic initiatives such as diversity, equity, and inclusion. For example, perhaps your DEI hiring efforts were relatively recent. If that’s the case, targeting newly hired employees for layoffs could be a massive setback for inclusivity at your organization. Of course, there is no one-size-fits-all approach to layoffs, but don’t let important initiatives fall to the wayside in an effort to appear more impartial. 

Build severance package and other services

Though employers are not legally required to offer severance packages under federal law, we highly recommend you do so when appropriate. They can soften the blow of the job loss and help the affected employee stay afloat during their transition. 

Additionally, they show you care about your people and can even reduce the likelihood of legal action. While your offerings are dependent on what your business can afford, we recommend including some combination of the following:

  • Salary continuation 
  • Paid out PTO 
  • Maintaining employer-paid benefits for a period 
  • Outplacement services 
  • Resume workshops

We encourage you to get creative with your severance package and lean towards more generous options when possible. Of course, if the terminations are a result of poor performance or behavior, a severance package may not be necessary. Outside of those instances, they’re a great show of good faith on your end. 

Shot of a businesswoman consoling her colleague after a layoff


Conduct layoffs with empathy and consistency

Layoffs are never easy, but they’re much harder for the people on the receiving end. In your layoff sessions, be empathetic and prepare for hard feelings. Though you may be stressed giving bad news, these people are losing their jobs. Be patient and levelheaded. When you conduct an empathetic termination, you may even be able to salvage the relationship and welcome back this employee when your company’s situation turns around. 

During these conversations, maintain a consistent line of reasoning for the layoffs with each employee, and explain it very clearly. Otherwise, you can open yourself up to discrimination suits and other legal issues. 

Review the impact on health benefits with the employee, explain COBRA election procedures, and what will happen to their 401(k). Then share any relevant outplacement services, and if possible, lay out a rehiring process. 

Leave time to answer questions, but remember that it may be challenging to think of any at the moment. So make sure your internal contact is prepared to answer questions from terminated employees for a few weeks. 

Finally, make it easy to return equipment. Whether your employee is in a remote, hybrid, or in-person setup, they shouldn’t have to worry about overly complicated reimbursement processes. Pre-pay for shipping if possible. 

Communicate with current employees

Finally, level with your current employees in the aftermath. Take the time to hear people out because layoffs affect morale. There’s no way around that. Still, you don’t want the people that remain in your organization feeling paranoid or unmotivated, so create an open environment where everyone can share concerns constructively. 

Clearing the air is the best way forward. Communicate your commitment to company goals and provide an honest assessment of your financial situation. Moreover, sharing an endpoint for layoffs puts an end to some feelings of unease and halts the potential spread of rumors. Don’t skimp on this step because it’s a crucial time to reset expectations and move forward. 

Organizational planning is an ADDA expertise! 

Your company can avoid layoffs like we’ve seen this year. ADDA’s consultants can help you think long-term and prepare for hard times to protect you and your people. Schedule a call today to learn more!

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