Layoff

HR Glossary for HR Professionals

Glossary of the most common HR terms and acronyms to assist professionals navigating the ever-growing and ever-changing world of HR terminology.

Layoff

What is a Layoff?

A layoff is when an employer either temporarily or permanently dismisses an employee, usually as a result of an organizational restructuring, downsizing, or economic pressures that impact the industry.

What is a Mass Layoff?

According to the Worker Adjustment and Retraining Notification Act (WARN), a mass layoff occurs when a place of business does not shut down but lays off at least 33% of its employees, at least 50 of its employees, or at least 500 employees within a 30-day period. These numbers exclude part-time employees. 

According to the Department of Labor, covered employers must “provide at least 60 calendar days advance written notice of a plant closing and mass layoff affecting 50 or more employees at a single site of employment.”

Layoff vs. Furlough: What’s the Difference?

There are four key differences between a furlough and a layoff

  1. Furloughed employees have an expectation that they’ll return to work. An employer typically gives furloughed employees a specific date or condition for resuming work duties. 
  2. Furloughed employees typically retain their benefits. 
  3. Furloughed public employees retain their employment rights—this means that they have a presumptive right to return to their position if they choose and if it still exists. 
  4. Furlough is relatively seamless. Laying off employees requires a significant process, as does hiring new staff—both of which can be costly. In contrast, furloughed employees come and go fairly easily. 

An employer will typically use a furlough to retain staff that they can’t afford but don’t want to layoff.

Layoffs and Severance Pay

Severance pay is the amount of money or benefits given to an employee as that employee leaves an employer either voluntarily or involuntarily. Severance is often offered to terminated employees in order to lighten the burden of unemployment.

In most cases, severance pay is not required by law. However, there are two primary exceptions. These exceptions include:

  • Severance mandated by state laws
  • Commitment to offer severance

Related Terms: Furlough, COBRA

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