Layoff Letter: Everything You Need to Know
A layoff letter is a communication from an employer to an employee informing them that their employment is being terminated.3 min read
A layoff letter is a communication from an employer to an employee informing them that their employment is being terminated. The layoff letter should explain the reason or reasons for the layoff clearly, concisely, and in a respectful manner.
What Information Should a Layoff Letter Contain?
The layoff letter will explain the reason for the layoff in the most straightforward terms possible and provide as much information as necessary. Common reasons for a layoff include the following:
- Financial difficulties
- Increased competition from other companies
- The elimination of a department
- A pending merger
- Going out of business
The layoff letter should include the criteria used for selecting which workers would lose their jobs. The layoff letter should also explain clearly the company policy about layoffs and any collective bargaining rules that may apply when laying off an employee.
In the event that employees may be rehired or recalled, an explanation of the criteria to do so should be included in the layoff letter. The employee should also receive a copy of the specific section of the company policy or agreement that covers rehires and recalls along with the layoff letter.
When a layoff occurs, there are several areas that should be addressed within the layoff letter to benefit the employee:
- Continuation of benefits
- Severance packages
- The handling of final pay
- 401(K) plans
- COBRA benefits
The layoff letter should include relevant telephone numbers that employees can call to get information and ask questions.
What Is the Best Way to Write a Layoff Letter?
There is no good way to write a layoff letter. No matter how well it's written, employees will most likely respond with anger, especially if the employees had no idea layoffs were going to be implemented.
When creating a layoff letter, understand that the employees who are being laid off call for an employers' care and attention during what can be a difficult situation. The letter should reflect the right tone and convey empathy, letting the employee know they are valued without using superfluous sugar-coating.
Avoid any straightforward boilerplate corporate-speak, verbiage, or phrasing that would come across to the employee as being impersonal, insulting, and condescending.
To avoid any confusion or complications that may involve the layoff of an employee, it is recommended that an attorney knowledgeable in labor law review the layoff letter (or letters, if more than one employee is being terminated) before delivering them in person to each employee.
What Should Be Avoided in a Layoff Letter?
The layoff letter needs to reflect in a clear manner why the layoff is taking place. If an ambiguous explanation is given or no explanation is given to employees as to why they are being let go, the company will find it difficult to defend itself should the employee choose to take his employer to court.
In court, rulings have come down stating that an organization is correct in using criteria such as length of employment and productivity levels as reasons for layoffs. The court has also noted that a layoff cannot conflict with a company's union agreement or with company policy.
It's important for the letter to be clear that the criteria for the layoff is based solely on business matters and are not linked to any protected category such as race, religion, age, or gender.
How Should Employers Communicate a Layoff to an Employee?
Unfortunately, according to a survey, about 10 percent of U.S. employees have been notified via email they were being laid off. In addition, 17 percent of employees noted that their bosses preferred to use e-mail to inform them of a layoff to avoid having a difficult face-to-face conversation.
Regardless of how uncomfortable it may be to deliver bad news of an impending layoff to an employee in person, it is the right thing to do. In the best circumstances, the employee will have a meeting with their manager or supervisor and Human Resources personnel. A layoff letter should be the follow-up to a face-to-face meeting.
At the time of the meeting, an invitation should be extended to employees to discuss outplacement services with a representative of Human Resources.
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