Layoff

"Downsizing" redirects here. It is not to be confused with degrowth or shrinkage.
For the 2017 film, See Downsizing (film).
"Laid Off" redirects here. For the Flash cartoon, see Odd Todd.

Layoff (in British[1] and American English), is the temporary suspension or permanent termination of employment of an employee or (more commonly) a group of employees (collective layoff)[2] for business reasons, such as when certain positions are no longer necessary or when a business slow-down occurs. In the UK, permanent termination due to elimination of a position is usually called redundancy.

Laidoff workers or displaced workers refers to workers who have lost or left their jobs because their employer has closed or moved, there was insufficient work for them to do, or their position or shift was abolished.[3][4]

Originally the term layoff referred exclusively to a temporary interruption in work, as when factory work cyclically falls off. In late 20th and early 21st century North America, layoff usually means the permanent elimination of a position, requiring the addition of "temporary" to specify the original meaning.

Many synonyms such as downsizing exist, most of which are euphemisms or doublespeak and more abstract descriptions of the process, most of which can also be used for more inclusive processes than that of reducing the number of employees. Downsizing is defined as the "conscious use of permanent personnel reductions in an attempt to improve efficiency and/or effectiveness".[5] Since the 1980s, downsizing has become increasingly common. Indeed, recent research on downsizing in the U.S.,[6] UK,[7] and Japan[8][9] suggests that downsizing is being regarded by management as one of the preferred routes to turning around declining organisations, cutting costs, and improving organisational performance,[10] most often as a cost-cutting measure.

Terminology

Euphemisms are often used to "soften the blow" in the process of firing and being fired.[11] The term "layoff" originally meant a temporary interruption in work (and usually pay). The term became a euphemism for permanent termination of employment and now usually means that, requiring the addition of "temporary" to refer to the original meaning. Many other euphemisms have been coined for "(permanent) layoff", including "downsizing", "excess reduction", "rightsizing", "delayering", "smartsizing", "redeployment", "workforce reduction", "workforce optimization", "simplification", "force shaping", "recussion", and "reduction in force" (also called "RIF", especially in the government employment sector).

"Mass layoff" is defined by the United States Department of Labor as 50 or more workers laid off from the same company around the same time. "Attrition" implies that positions will be eliminated as workers quit or retire. "Early retirement" means workers may quit now yet still remain eligible for their retirement benefits later. While "redundancy" is a specific legal term in UK labour law. When an employer is faced with work of a particular type ceasing or diminishing at a particular location,[12] it may be perceived as obfuscation. Firings imply misconduct or failure while layoffs imply economic forces beyond the employer's and employees' control, especially in the face of a recession such as the one that began in the late 2000s.

Common abbreviations for reduction in force

Unemployment compensation

The method of separation may have an effect on a former employee's ability to collect whatever form of unemployment compensation might be available in their jurisdiction. In many U.S. states, workers who are laid off can file an unemployment claim and receive compensation. Depending on local or state laws, workers who leave voluntarily are generally ineligible to collect unemployment benefits, as are those who are fired for gross misconduct. Also, lay-offs due to a firm's moving production overseas may entitle one to increased re-training benefits. Some companies in the United States utilize Supplemental Unemployment Benefits.[13] Since they were first introduced by organized labor and the Department of Labor in the early 1950s, and first issued in a Revenue Ruling by the IRS in 1956, SUB-Pay Plans[14] have enabled employers to supplement the receipt of state unemployment insurance benefits for employees that experience an involuntary layoff. By establishing severance payments as SUB-Pay benefits, the payments are not considered wages for FICA, FUTA, and SUI tax purposes, and employee FICA tax. To qualify for SUB-Pay benefits, the participant must be eligible for state unemployment insurance benefits and the separation benefit must be paid on a periodic basis.

Certain countries (such as Belgium, Netherlands, Portugal, Spain, Italy, France and Germany), distinguish between leaving the company of one's own free will, in which case the person is not entitled to unemployment benefits, but may receive a onetime payment and leaving a company as part of a reduction in labour force size, in which case the person is entitled to them. A RIF reduces the number of positions, rather than laying off specific people, and is usually accompanied by internal redeployment. A person might leave even if their job is not reduced, even though the employer has strong objections. In this situation, it's more beneficial for the state to facilitate the departure of the more professionally active people, since they are less likely to remain jobless. Often they find new jobs while still being paid by their old companies, costing nothing to the social security system in the end.

There have also been increasing concerns about the organizational effectiveness of the post-downsized ‘anorexic organization’. The benefits, which organizations claim to be seeking from downsizing, centre on savings in labour costs, speedier decision making, better communication, reduced product development time, enhanced involvement of employees and greater responsiveness to customers (De Meuse et al. 1997, p. 168). However, some writers draw attention to the ‘obsessive’ pursuit of downsizing to the point of self-starvation marked by excessive cost cutting, organ failure and an extreme pathological fear of becoming inefficient. Hence ‘trimming’ and ‘tightening belts’ are the order of the day (Tyler and Wilkinson 2007)

See also

References

  1. ↑ "layoff noun - definition in British English Dictionary & Thesaurus - Cambridge Dictionary Online". Dictionary.cambridge.org. Retrieved 2012-03-13.
  2. ↑ "Redundancy: your rights". www.gov.uk.
  3. ↑ "Labor force characteristics". Labor Force Statistics from the Current Population Survey. Bureau of Labor Statistics. October 18, 2010. Retrieved 20 October 2010.
  4. ↑ "Glossary". Bureau of Labor Statistics. Retrieved 20 October 2010.
  5. ↑ Budros 1999, p. 70
  6. ↑ Baumol, W. J., Blinder, A. S. & Wolff, E. N. (2003). Downsizing in America: Reality, Causes and Consequences. New York: Russell Sage Foundation. See also the American Management Association annual surveys since 1990.
  7. ↑ Sahdev et al. 1999; Chorely 2002; Mason 2002; Rogers 2002
  8. ↑ Mroczkowski, T. and Hanaoka, M. (1997), ‘Effective downsizing strategies in Japan and America: is there a convergence of employment practices?’, Academy of Management Review, Vol.22, No.1, pp. 226–56.
  9. ↑ Ahmakjian and Robinson 2001
  10. ↑ Mellahi, K. and Wilkinson, A. (2004) Downsizing and Innovation Output: A Review of Literature and Research Propositions, BAM Paper 2004, British Academy of Management.
  11. ↑ (Wilkinson 2005, Redman and Wilkinson, 2006)
  12. ↑ "Employers Redundancy procedure, Redundancy Policy, Redundancy compliance". Citation.co.uk. Retrieved 2013-08-01.
  13. ↑ "SUB-Pay Plan Legal Precedent". Subpay.com. Retrieved 2012-03-13.
  14. ↑ Archived June 10, 2011 at the Wayback Machine

Further reading

External links

Look up layoff in Wiktionary, the free dictionary.
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