What is Layoff | How to handle | Alternative's to layoff | Akrivia HCM

What is layoff?

Layoff refers to a temporary or permanent termination of employment by an employer. It typically occurs when a company needs to reduce its workforce due to financial difficulties, restructuring, or other reasons. Employees may be entitled to severance pay, unemployment benefits, and outplacement services when laid off. 

 Why does layoff’s occur?

  • Economic downturn: When the economy is doing poorly, businesses often have to cut costs to stay afloat. This can lead to layoffs as companies look for ways to reduce expenses.
  • Competition: In a competitive market, businesses may need to lay off employees to stay ahead. This can happen when a company is trying to reduce costs or when it is trying to focus on its core services.
  • Technology: Technological advancements can sometimes lead to layoffs. This is because new technologies can automate tasks that human workers previously did. As a result, businesses may need to lay off no longer-needed employees.
  • Reorganization: Sometimes, businesses undergo reorganizations that lead to layoffs. This can happen when a company merges with an acquired company or is restructuring its operations.
  • Performance issues: In some cases, employees may be laid off due to performance issues. This can happen if an employee is consistently underperforming or has violated company policies.

What are the types of layoff’s?

Layoffs can be classified into different types


  • Temporary: Employees are laid off for a specific time period and then recalled to work.
  • Permanent: Employees are laid off permanently, and their positions are eliminated.


  • Involuntary layoffs: Employees are laid off without their consent.
  • Voluntary layoffs: Employees choose to leave the company in exchange for a severance package.


  • Economic layoffs: Layoffs are due to economic factors, such as decreased demand for products or services or company restructuring.
  • Performance layoffs: Layoffs are due to employee performance issues.
  • Disciplinary layoffs: Layoffs are due to employee misconduct.

Here are some specific types of layoffs that are commonly used:

  • Downsizing: This is a type of involuntary lay-off that is typically used to reduce costs or streamline operations.
  • Right-sizing: This is a type of involuntary lay-off that is used to adjust the size of the workforce to match the current needs of the company.
  • Performance improvement plans (PIPs): Performance improvement plans are used as a last resort for employees to improve their performance before they can get laid off. However, employees must meet the goals of their PIP to avoid being laid off.
  • Mass layoffs: Mass layoffs occur when a company lays off a significant number of employees at once. This is typically due to economic factors, such as a recession.

How to handle layoff’s

For employees

  • Seek assistance: Talk to a friend, family member, therapist, or career counselor about what you are going through. Talking about your feelings can help you to process them and start to move on.
  • Use this opportunity to take stock of your career: What do you want to do with your career next? What are your skills and interests? Layoffs can be an opportunity to make a change for the better.
  • Be professional: Even if you are angry or upset, it is important to remain professional during the layoff process.
  • Ask questions: Don’t step back in asking questions about your severance package, benefits, or the reason behind the layoff process in general.

For employers

  • Plan ahead: Employers should take the time to carefully consider their options and develop a layoff plan that is fair and equitable.
  • Be transparent and honest: Employers should be honest with affected employees about the reasons for the layoff and their separation date.
  • Offer severance and other support resources: Employers should offer affected employees a severance pay and other support resources, such as outplacement services and career counseling. This can help employees transition to new jobs.

What are the alternatives to layoff’s?

  • Furlough: A furlough is a temporary leave of absence from work without pay. It is used when a company needs to reduce costs but does not want to lay off employees permanently. During a furlough, employees may be required to take unpaid leave, or they may be asked to work reduced hours.  Furloughs can be a difficult experience for employees, but they can be a better alternative to lay-offs, which can lead to permanent unemployment.
  • Job sharing: Employers can allow employees to share jobs. This can be a way to reduce costs and provide employees with more flexibility.
  • Voluntary buyouts: Employers can offer voluntary buyouts to employees. This is a way to reduce costs and eliminate positions that are no longer needed.
  • Reduction in bonuses, hikes and perks: Cut all the other monetary benefits or reduce the current CTC for the employees for a few days instead of permanent termination.

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