Updated: May 01, 2023

24 Layoff Best Practices: How to Lay Off Employees with Dignity

Here is a guide to layoff best practices.

Layoff best practices are ways of letting go of workers by following a fair, transparent, and empathetic process. These practices can include the best ways to convey the news to the affected employees and assist them in finding new employment opportunities. Understanding this concept is crucial because it ensures a seamless process that can help to minimize a company’s legal and reputational risks.

These ideas are the opposite of quiet firing and employee attrition. These initiatives are typically part of company cost-saving measures. These practices also show effective team management skills and key leadership skills and competencies for work.

This article covers:

  • how to lay off employees with dignity
  • layoff communication best practices
  • how to lay off seasonal employees
  • how to lay off small business employees
  • how to layoff employees in larger companies

Let’s get started.

How to lay off employees with dignity

Layoffs, also known as dismissals or redundancies, are a standard business practice that may be necessary for companies that want to reduce costs. Layoffs can also be a result of business reorganizations or position redundancies. While the process for handling these activities is clear as per federal and state laws, employers still need to handle layoffs with dignity.

1. Gather the necessary information

The first step to laying off employees with dignity involves promoting fairness in the process. Thus, before laying off any employees, ensure that you have all the necessary information to guide your decision. For example, ensure you know the employee’s job title, duties, relevant skills, years of experience, and other factors that might influence the layoff decision.

2. Focus on a fair layoff

Terminating several workers can be difficult. You risk discriminating against some employees due to unconscious bias. As such, you need to demonstrate why you are laying off some workers and maintaining others. For instance, you could base the layoffs on the most recent hires, low-performing teams, or the highest-paid employees. Be sure to document these decisions and defend against potential claims of discrimination.

Get our free team building toolbox

  • icebreaker games
  • bingo cards
  • DIY guides

heartby teams at FedEx, Amazon, Deloitte and 13,730+ others

Tool Box

3. Have an open discussion about the layoff

While a layoff involves a difficult decision for an organization, we advise company leaders not to brush off employees’ anxieties. Be sure to have an open discussion and allow employees to ask questions and express their concerns. You can use such a forum to inform workers about the reasons behind the layoff. Also, focus on honest answers while still being respectful and empathetic.

Here is a list of internal communication tips.

4. Provide details about the next step

After a layoff, companies can show empathy to the affected workers by providing a guide about the next steps. These details could include available resources or support. At minimum, make a checklist for administrative tasks staff must complete before leaving the company. For instance, some organizations could provide outplacement services. We advise companies to create an outplacement plan, including services such as resume assistance, interview coaching, and job assistance services. You could also ready a referral system so that recommendations are ready for ex-employees’ job searches. Ensuring all workers have such details will promote fairness in the layoff process.

5. Create a follow-up process

As a company leader, you may assume that your work is complete after the layoff process. However, you can show empathy by following up with laid-off employees to ensure they receive the assistance and support they need. A follow-up process is a great way to foster good relationships with former employees and minimize the negative impact of the layoff.

Conducting layoffs with dignity and respect requires careful planning, open communication, and support for affected employees. By following these best practices and treating laid-off employees with care, companies can minimize the negative impact of layoffs and maintain good relationships with former employees.

Layoff communication best practices

A layoff is a difficult endeavor for both an organization and employees. Thus, effective communication is key for managing drastic changes among all stakeholders. Organizations should focus on two-way communication for an easy flow of information from employers and feedback from workers. The best layoff communication strategies will provide and gather information, affect behavior and attitude, and offer support.

Here are some best practices for communicating about layoffs.

6. Timing matters

While the timing may not always be under your control, it is vital to consider the best time to relay the bad news to the affected workers. For instance, conducting a layoff before the holiday season, workers’ milestone celebrations, or after completing a big project may not be the best idea. Furthermore, conducting layoffs at the wrong time, like on a Monday morning, may demoralize the remaining team members. Therefore, we encourage organizations to consider the time of the day, weekday, time of the month, and time of the year.

7. Communicate clearly and directly about the details of the layoff

Be sure to highlight vital details such as the effective date, severance pay, and any other assistance the organization will offer employees. Also, provide advance notice to affected employees, as required by law or company policy. Affected workers can prepare for the change and provide time to seek new employment.

8. Do it in person

One of the best layoff tips for managers is carrying out the practice in person. For in-person workers, ensure that you have a face-to-face conversation with the affected employees. If you have a remote team, then you can carry out the layoff via a video call. Just be sure not to convey the dismissal via group chat, text message, or email.

9. Communicate the layoff individually

If you are laying off a large group, it may seem a waste of time to communicate the news to each individual. Just like you carry out personal interviews, we advise that you communicate layoffs individually. Laying off workers in a large group setting denies the affected teams the ability to discuss the termination and express individual opinions. Sitting down with each employee is also a great way to show empathy and an easy way to see each employee’s reaction.

Check out this guide to virtual one to one meetings.

10. Explain the next steps

Layoffs directly affect the livelihoods of workers. We advise that you discuss the next steps instead of just handing workers their severance packages. For instance, consult with the workers how the company will support them.

Examples:

  • Provision of reference letters
  • Eligibility for rehire in case the company’s financial position improves
  • Recommendation for work opportunities with the company’s partners or vendors

Communicating the next steps after a layoff will help workers know specific areas they should focus on.

11. Be strategic about how you define the layoff

It can be challenging to define the reasons behind the layoffs, especially when you do not want to demoralize the affected employees. We advise you to be transparent and honest about the reasons for the layoff and the broader context, such as changes in the company’s strategy or market conditions. It can be comforting for employees to know they are not at fault for a company’s poor financial performance. Rather than blaming workers for the circumstance, thank the team members for their efforts within the company. Employees often take comfort in knowing that the layoff is not a fault of their own.

12. Have strategic activities to rebuild morale for the remaining workers

A layoff can be demoralizing to employees who remain after the practice. In addition, workers may wonder when the next layoff is likely to happen, and you risk losing your top talent. As such, company leaders need to host a meeting after a layoff. While you should not make unreasonable promises, be sure to take actions that will encourage the remaining workers. For instance, you could explain new company routines, share business plans, and let workers express concerns.

Effective communication is crucial for conducting fair and transparent layoffs. By providing advance notice, being honest, and offering support, companies can minimize the negative impact of the layoff on affected employees.

How to lay off seasonal employees

Seasonal employment provides work opportunities during certain times of the year. While seasonal employment enables businesses to fill up roles as per demand, laying off these groups of workers can be challenging. Affected employees may have difficulties in finding new employment during the off-season period. The process of laying off seasonal employees depends on the particular state and the type of employment agreement in place. However, employers can take simple steps to ease seasonal workers’ transition during a layoff.

Here is a guide on how to lay off seasonal employees

13. Carefully plan and consider the decision to lay off seasonal employees

While laying off seasonal employees is often necessary for most companies, rushing to make such a quick decision can affect a company’s operations. As such, we advise organizations to carefully plan the layoffs rather than make a haste decision. You could consider factors such as the impact on the business, the potential impact on remaining employees, and any legal obligations.

14. Communicate the layoff to your employees

Be sure to provide a written notice to the affected employees per the law or company policy. Some main points to include are reasons for the layoff, the duration, and the employee’s rights and benefits during the period. In addition, providing advance notice to affected employees allows affected workers to seek new employment during the off-season.

15. Let workers know of any available support

As an employer, you could offer workers assistance with navigating seasonal employment issues. For instance, you could help affected workers find new employment opportunities, prepare resume and interview, and provide career counseling.

16. Communicate the next step

Have an open and transparent discussion about the next step after the layoff. While we advise against making promises, you can provide information about the company’s plans for the upcoming season and any potential opportunities for rehiring in the future.

Laying off seasonal employees requires careful planning, communication, and assistance to help affected workers transition to new employment during the off-season. These tips can help organizations minimize the negative impact of the layoff on all parties involved.

How to lay off small business employees

Layoffs in small businesses can be extremely difficult for employees and the business. As such, business leaders need to handle the situation with respect and compassion.

Here is a guide on how to lay off small business employees

17. Consider the needs of your business

While the decision to let off some employees is never easy, you need to consider the needs of your business. You can start by outlining the pros and cons of letting each employee go. For instance, letting off a group of workers may result in fewer financial obligations. However, you may lose on major business opportunities, especially if you get understaffed. Be sure to factor in how the layoffs will affect the remaining staff, investors, customers, and your brand reputation.

18. Understand compliance

As a small business owner, it is crucial for your company leaders to understand compliance regarding layoffs and also adhere to the regulations. If you do not have the correct information on layoff regulations, then do not shy off from seeking external consulting services. Be sure to follow all applicable laws and regulations related to layoffs, including notice periods, severance pay, and unemployment benefits.

19. Have all layoff details before the actual practice

You do not want to cause panic in your workforce when planning a layoff. Hence, be sure to have all details ready before the layoff. For instance, know which employees to let go, the communication plan, the effective date, and the support you will offer. Be sure to have a transparent discussion with employees about the reasons for the layoff, the process, and any available resources or support.

It may be more difficult for a small business to provide the same level of support and assistance compared to a larger company. However, it is still important to approach the layoff process respectfully and give as much support and assistance as possible.

How to lay off employees in larger companies

Laying off employees in a larger company often involves a significant number of workers. As such, the process may involve more complex processes.

Here are some steps on how to layoff employees in larger companies

20. Plan the layoff carefully

If you have determined that a layoff is inevitable for your organization, then the next step is a strategic plan for carrying out the process. First, you could alert all organizational leaders to create a comprehensive plan. Let the leaders include all legal aspects and communication strategies to the affected workers. Also, consider factors such as the impact on the business, the potential effect on remaining employees, and any legal obligations. This may involve consulting with legal and HR experts and seeking input from other stakeholders.

21. Create a communication plan

When laying off workers in a large company, you must ensure that all stakeholders have the correct information. Therefore, we advise company leaders to coordinate the layoff announcement in a professional setting.

Here is a guide to communicating layoffs in a large company:

  • Determine details to include in the announcement
  • Know which departments to alert about the layoff
  • Alert remaining workers about changes such as the postponement of bonuses

Having a clear communication plan will prevent misinformation among workers and other stakeholders. You can use multiple channels to reach many employees, such as email, newsletters, and town hall meetings.

22. Check for protected cases

Choosing which staff to lay off can be a difficult task. Even considering performance review ratings, attendance and skill sets, or job classification, you still need to factor in protected classes. For instance, you can ensure that the layoffs are not biased towards persons living with disability, older employees, or minority races. Laying off a higher number of protected classes of workers may result in a discrimination lawsuit.

23. Offer severance pay and outplacement assistance

A severance package is one of the best ways to reduce the impact of layoffs on employees. You could opt for financial payouts or non-monetary plans such as paying for health insurance for some time. You can also offer outplacement services to help laid-off employees transition to new jobs. For instance, you could provide access to career counseling, resume writing services, and job search resources.

24. Consider the impact of mass layoffs on the remaining staff

A mass layoff can be difficult for the remaining staff. Workers may be unsure of how the future holds and may harbor concerns and fears that can affect their productivity. Be sure to discuss the company’s future openly and how the layoff will affect the remaining employees.

In a larger company, it may be necessary to implement more structured processes and procedures for conducting layoffs.

Conclusion

Laying off employees is often a difficult and sensitive process for both the company and the affected individuals. The feelings affected teams have after a layoff is a form of grief and sadness. Before you lay off workers, we advise organizations to look for alternatives. For instance, eliminating overtime, holding off on bonuses, or cutting employees’ hours may prevent a mass layoff. However, it may be necessary for the business to make difficult decisions to remain competitive. Companies need to approach layoffs with strategies that will minimize the negative impact on all stakeholders.

Next, check out our list of employee retention strategiesconstructive feedback examples, and change management books.

Book wildly fun team building events with expert hosts

View experiences
team building event banner

FAQ: Layoff best practices

Here are answers to common questions about layoff best practices

What are best practices for layoffs?

Best practices for layoffs are steps that organizations can take to ensure a fair and transparent process. Some specific best practices for conducting layoffs include holding open discussions, explaining the next steps, and carrying out the layoffs at an ideal time.

How do you lay off employees with dignity?

The process of laying off employees with dignity includes careful consideration of the decision, open and transparent communication, and provision of support to the affected workers. Companies should also provide advance notice and follow all applicable laws and regulations. For some organizations, the layoff process can be complex and may even entail consultation with legal and HR experts.
During the layoff process, allow workers to ask questions and express their concerns. As an organization, provide detailed information about the next steps in the process and any available resources or support. The last step to laying off employees with dignity involves following up with laid-off employees to ensure they receive the assistance and support they need.

How to structure layoff conversations?

When conducting layoff conversations, it is important to approach the discussions sensitively and professionally.

Here are some steps for structuring layoff conversations:

  • Begin the conversation by explaining the reasons for the layoff and the broader context, such as changes in the company’s strategy or market conditions.
  • Inform the employee that they are being laid off and provide any relevant details such as the effective date and any severance or outplacement assistance available.
  • Allow the employee to ask questions and express their concerns.
  • Provide information about the next steps in the process such as the timeline for transitioning out of the company and any available resources or support.

Be sure to thank the employee for their contributions to the company and wish them well in their future endeavors.

Share:
  • Twit
  • Linked
  • Email Share
Author avatar

Author:

People & Culture Director at teambuilding.com.
Grace is the Director of People & Culture at TeamBuilding. She studied Industrial and Labor Relations at Cornell University, Information Science at East China Normal University and earned an MBA at Washington State University.

LinkedIn Grace He

We lead wildly fun experiences for teams with 1,000,000+ players to date.

google reviews icon

4.96 / 5.0 rating on

50,225 Google Reviews