Laying off employees is never easy, but it is sometimes an essential order of business. Employers that have to make the tough decision to lay off employees must understand their legal obligations regarding the process. Additionally, the way you communicate layoffs to your remaining team can have an impact on the future success of your company.
How to communicate an employee layoff
Effective communication is integral to employee layoffs. The best way to communicate a layoff is both verbally and in writing. This strategy allows you to clearly explain the situation and document the occurrence.
Although the laws and notice requirements regarding employee layoffs vary among states and industries (e.g., the WARN Act requires certain businesses to provide at least a 60-day written notice for plant closures or mass layoffs), it is always best to communicate and document the layoff to all involved parties.
Before laying off employees, make sure you have well-documented, legitimate business reasons for the reduction in your workforce. It is also wise to speak with an attorney before starting the process.
"Employers should use objective, consistently applied criteria when selecting employees for the layoff, and these criteria should be clearly communicated in a layoff letter," Dani Fontanesi, founder and managing partner of Fontanesi Legal Consulting, told business.com. "Layoffs often trigger legal claims based on discrimination or retaliation, so decisions regarding layoffs should be made carefully and communicated clearly."
What should a layoff letter include?
While the specifics of your layoff letters depend on your unique situation, every layoff letter should clearly outline a few basics.
- Criteria: Make it clear that the employee is being laid off, and list the criteria that the company used to make the layoff decision. Don't discuss why the employee was specifically selected.
- Thanks: Say "thank you" for the employee's contribution to the company. Don't include information about the employee's specific contributions or performance.
- Next steps: Explain what comes next for the employee – such as whether and how they need to return company property, when their last day of work is, and when they'll receive their final paycheck.
- Benefits: Provide details on employee benefits and rights for this situation, such as severance pay, unemployment assistance and COBRA coverage.
- Assistance: List any outplacement assistance programs available in the employee's area to help them find and transition to a new job.
Employee layoff letter template
Fontanesi created the following employee layoff letter template for you to reference and customize to suit your needs. Only include details that are accurate and relevant to the employee you are laying off.
To: [Employee Name]
RE: Layoff notification
Dear [Employee Name],
As discussed in our meeting today, due to [insert business reasons], our business has been impacted significantly. As a result, we've had to make some very difficult decisions. It is with a heavy heart that we made the decision to eliminate certain positions within the company.
This notice is to inform you that your position is included in our reduction of force. Your last day of employment will be [date]. Your health benefits will continue through the end of the month, following which you will be eligible for continuation of coverage through COBRA. You will also be eligible to file for unemployment benefits following your separation. More information on state unemployment benefits is available here: [insert a link to applicable state website]
Your final paycheck will be issued to you by [date], which will include all accrued but unused vacation and paid time off (if applicable) [amend based on state laws and company policies]. You will also be receiving a COBRA election notice with your separation paperwork.
Please keep us updated on any changes to your address or phone number. We deeply appreciate all your contributions to the company, and we wish you the best in your future endeavors. If you have any questions, please feel free to contact me [or insert other contact] at the contact information below.
Additional layoff letter templates
Some online services offer free templates for employee layoff letters, but you will likely need to tweak them to fit your situation.
- Betterteam provides a suite of business letter templates, including layoff letter templates, which you can download instantly. In addition to a standard layoff letter, it has letter templates specifically for employers laying off employees because of COVID-19, including temporary layoff letters, voluntary layoff letters and layoff warnings.
- HR Service is a company that provides HR outsourcing, compliance, and benefits administration, and it also offers a free sample layoff notification letter. You can download the letter by entering your name and email; once you provide your information, you'll receive the link in your inbox.
- The University of Massachusetts Amherst offers multiple sample layoff letters that you can download as PDFs. These letters can give you an idea of where to start with your layoff letter.
You should have an attorney review your employee layoff letters before you send them out to your team.
How and what to communicate with laid-off employees
An employee layoff is essentially a termination. However, it differs from a traditional employee termination in that the reason for severing the employment relationship is not the employee's fault (e.g., poor performance or misconduct). Instead, layoffs are typically due to a lack of available work or funds.
Since layoffs can be challenging for both the employer and the employee, it is important to have an open dialogue about the situation in addition to written documentation like a layoff letter.
"The employer should meet with each employee being laid off in a confidential setting to communicate the decision and explain the selection criteria used to make the decision," said Fontanesi. "Employers should be empathetic and honest, while avoiding any discussion around subjective criteria used to make the decision. The dialogue should remain general and should focus on the objective business and economic reasons for the decision rather than the individual's performance."
Employers also need to discuss essential details about the employee's next steps involving things like company property, benefits and final payment. Waldon Fenster, director of business development at Venture Studio, said you can convey this information with a written checklist as well as verbally.
"A safe practice is to provide a list of the company property that you require the worker to return after termination, such as ID cards, computers or business accounts," he said. "Subjective components you appoint to the worker must also be included in the checklist (e.g., COBRA details and employee layoff letter)."
Keep in mind that the layoff process may differ for employees with a collective bargaining agreement, also known as union employees.
How and what to communicate with remaining employees
The employees being laid off are not the only ones impacted – your remaining employees are affected too. Employee layoffs (especially mass layoffs) often put strain on the employees who are keeping their jobs, as they might face restructuring and additional tasks that their departing colleagues previously handled.
This added responsibility, combined with the fear of additional layoffs, can cause stress, anxiety and burnout in your retained employees. To reduce this friction and rebuild trust, you must inform your remaining employees of what has happened. Announce the decision to all remaining employees in a company meeting (after holding individual discussions with the laid-off employees).
"Communications should focus on the company's improved health and viability and how the remaining employees play a crucial role in rebuilding the company," Fontanesi said. "Following a company meeting, employers will often follow up with an email recapping the reasons for the decision, the difficulty of the decision, and the company's plans for the future."
In the meeting, relay critical information that directly impacts the remaining employees. For example, if employee roles are being restructured, explain the new responsibilities and whether they are temporary or transitional. It is also important to talk about any new rules and restrictions.
"Although things like limiting overtime and cutting incentives aren't the easiest way to win over staff, these are often reasonable [during layoffs]," Fenster said. "Explaining to staff that certain steps are being taken by the company to discourage mass layoffs can ease the blow. However, before acting, it is important to check with a lawyer to ensure that none of these steps breach relationships with personnel, manufacturers or leasing companies."