Layoffs refer to the temporary or permanent termination of employment by an employer, usually for reasons unrelated to the employee's performance. They are often a cost-cutting measure taken due to financial difficulties, changes in business strategy, economic downturns, or operational needs such as downsizing or restructuring
. Key points about layoffs include:
- Nature : Layoffs can be temporary or permanent. Temporary layoffs imply the possibility of recall when conditions improve, while permanent layoffs mean the position is eliminated with no expectation of return
- Reasons : Common causes include economic problems, competitive market pressures, company mergers, loss of funding, or technological changes that make certain roles obsolete
- Impact on employees : Laid-off workers lose their jobs and wages but typically qualify for unemployment benefits and may receive severance pay or outplacement services. They usually retain investments in retirement plans and can continue health coverage under laws like COBRA at their own expense
- Difference from firing : Layoffs are not due to employee fault or performance issues but are decisions based on broader business needs
- Terminology : Layoffs are also called downsizing, workforce reduction, or reduction in force (RIF). A RIF usually implies a permanent termination, whereas layoffs may be temporary with potential rehiring
In summary, layoffs are employer-initiated job terminations primarily driven by business or economic factors, affecting groups of employees and aimed at reducing costs or adjusting workforce size
