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== Introduction ==
A '''layoff''' (in British and American English)<ref name=camb>{{cite web|url=http://dictionary.cambridge.org/dictionary/british/layoff |title=layoff noun - definition in British English Dictionary & Thesaurus - Cambridge Dictionary Online |publisher=Dictionary.cambridge.org |date= |accessdate=2012-03-13}}</ref> or '''retrenchment''' in (]) is the temporary suspension or permanent ] of an ] or (more commonly) a group of employees (collective layoff)<ref name=govuk>{{cite web|url=https://www.gov.uk/redundant-your-rights/consultation|title=Redundancy: your rights|work=www.gov.uk}}</ref> for business reasons, such as when certain positions are no longer necessary or when a business slow-down occurs.
A '''layoff''' <sup>]]</sup> is the temporary suspension or permanent ] of an ] or, more commonly, a group of employees (collective layoff)<sup>]]</sup> for business reasons, such as personnel management or downsizing an organization. Originally, ''layoff'' referred exclusively to a temporary interruption in work, or ], but this has evolved to a permanent elimination of a position in both British and US English,<sup>]]</sup> requiring the addition of "temporary" to specify the original meaning of the word. A layoff is not to be confused with ]. ''Laid off workers'' or ''displaced workers'' are 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 ] was abolished (Borbely, 2011).<sup>]]]]</sup> Downsizing in a company is defined to involve the reduction of employees in a workforce. Downsizing in companies became a popular practice in the 1980s and early 1990s as it was seen as a way to deliver better shareholder value as it helps to reduce the costs of employers (downsizing, 2015). Indeed, recent research on downsizing in the U.S.,<sup>]]</sup> UK,<sup>]]</sup> and Japan<sup>]]]]</sup> suggests that downsizing is being regarded by management as one of the preferred routes to help declining organizations, cutting unnecessary costs, and improve organizational performance.<sup>]]</sup> Usually a layoff occurs as a cost-cutting measure.


== Terminology ==
Originally, ''layoff'' referred exclusively to a temporary interruption in work, but nowadays it can also mean and more commonly means the permanent elimination of a position in both British and US English,<ref name=camb/> requiring the addition of "temporary" to specify the original meaning.
]s are often used to "soften the blow" in the process of ] and being fired.<sup>]]</sup>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", "leveraging synergies", "]", "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 ] 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 ]. When an employer is faced with work of a particular type ceasing or diminishing at a particular location,<sup>]]</sup> it may be perceived<sup>]'']</sup> as ]. ]s<nowiki/> 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 ].


== Common Abbreviations for R''eduction in Force'' ==
In the UK, permanent termination due to elimination of a position is usually called ''']'''.<ref name=govuk/>
'''RIF''' - A generic reduction in force, of undetermined method. Often pronounced like the word ''riff'' rather than spelled out. Sometimes used as a verb, as in "the employees were pretty heavily ''riffed''".


'''eRIF''' – Layoff notice by email.
''Laid off workers'' or ''displaced workers'' are 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 ] was abolished (Borbely, 2011).<ref name="b1">{{cite web|url=http://www.bls.gov/cps/lfcharacteristics.htm#displaced|title=Labor force characteristics|date=October 18, 2010|work=Labor Force Statistics from the Current Population Survey|publisher=Bureau of Labor Statistics|accessdate=20 October 2010}}</ref><ref name="glossary">{{cite web|url=http://www.bls.gov/bls/glossary.htm|title=Glossary|publisher=Bureau of Labor Statistics|accessdate=20 October 2010}}</ref>


'''IRIF''' - Involuntary reduction in force - The employee(s) did not voluntarily choose to leave the company. This usually implies that the method of reduction involved either layoffs, firings, or both, but would not usually imply resignations or retirements. If the employee is fired rather than laid off, the term "with cause" may be appended to indicate that the separation was due to this employee's performance and/or behavior, rather than being financially motivated.
Many synonyms such as '''''downsizing''''' exist, most of which are ]s or ] 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 in a company is defined to involve the reduction of employees in a workforce. Downsizing in companies was a popular practice during the 1980s and early 1990s as it was seen as a way to deliver better shareholder value as it helps to reduce costs (downsizing, 2015). Indeed, recent research on downsizing in the U.S.,<ref>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.</ref> UK,<ref>Sahdev et al. 1999; Chorely 2002; Mason 2002; Rogers 2002</ref> and Japan<ref>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.</ref><ref>Ahmakjian and Robinson 2001</ref> 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,<ref>Mellahi, K. and Wilkinson, A. (2004) Downsizing and Innovation Output: A Review of Literature and Research Propositions, BAM Paper 2004, British Academy of Management.</ref> most often as a cost-cutting measure.


'''VRIF''' - Voluntary reduction in force - The employee(s) did play a role in choosing to leave the company, most likely through resignation or retirement. In some instances, a company may exert pressure on an employee to make this choice, perhaps by implying that a layoff or termination would otherwise be imminent, or by offering an attractive severance or early retirement package.
==Terminology==
]s are often used to "soften the blow" in the process of ] and being fired.<ref>(Wilkinson 2005, Redman and Wilkinson, 2006)</ref> 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", "leveraging synergies", "]", "smartsizing", "redeployment", "workforce reduction", "workforce optimization", "simplification", "force shaping", "recussion", and "reduction in force" (also called "RIF", especially in the government employment sector).


'''WFR''' - Work force reduction.
"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 ]. When an employer is faced with work of a particular type ceasing or diminishing at a particular location,<ref>{{cite web|url=http://www.citation.co.uk/employment-law/redundancy |title=Employers Redundancy procedure, Redundancy Policy, Redundancy compliance |publisher=Citation.co.uk |date= |accessdate=2013-08-01}}</ref> it may be perceived{{By whom|date=March 2011}} as ]. ]s 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 ].


== Layoffs in the Public Sector ==
In (French speaking) Belgium the term ] has become a synonym for the consultation process leading to mass redundancies, due to a controversial mass layoff and resultant legislation in the late 1990s.
Following the ], the ] has seen significantly smaller job growth in employment versus the ]. As the public sector declines the demand for services from the private sector decline as well. Layoffs in the public sector have put limitations on the growth rate of the private sector, inevitably burdening the entire flow of markets.


== Unemployment Compensation ==
==Common abbreviations for ''reduction in force''==
The risk of being laid off varies depending on the workplace and country a person is working in. Unemployment compensation in any country or workplace is a function which has two main factors. The first factor of unemployment compensation depends on the distribution of unemployment benefits in a workplace outlined in an ]. The second factor is the risk of inequality being conditioned upon the political regime type in the country an employee is working in (Wonik, 2010).<sup>]]</sup> For example, in Canada, Dorion (1995) states that white-collar workers who have been made redunant receive higher re-employment wages, than those in blue-collar occupations as there job is regarded as being of a higher status than blue collar workers. The amount of compensation will usually depend on what level the employee holds in the company. Packages may also vary if the employee is laid off, or voluntarily quits in the face of a layoff (VRIF). The method of separation may have an effect on a former employee's ability to collect whatever form of ] might be available in their ]. 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 (Lihzis, 2016).<sup>]]</sup> Since they were first introduced by organized labor and the ] in the early 1950s, and first issued in a Revenue Ruling by the ] in 1956, SUB-Pay Plans<sup>]]</sup> 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 ], ], 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. 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, center on savings in labor 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.&nbsp;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)
* '''RIF''' - A generic reduction in force, of undetermined method. Often pronounced like the word ''riff'' rather than spelled out. Sometimes used as a verb, as in "the employees were pretty heavily ''riffed''".
* '''eRIF''' – Layoff notice by email.
* '''IRIF''' - Involuntary reduction in force - The employee(s) did not voluntarily choose to leave the company. This usually implies that the method of reduction involved either layoffs, firings, or both, but would not usually imply resignations or retirements. If the employee is fired rather than laid off, the term "with cause" may be appended to indicate that the separation was due to this employee's performance and/or behavior, rather than being financially motivated.
* '''VRIF''' - Voluntary reduction in force - The employee(s) did play a role in choosing to leave the company, most likely through resignation or retirement. In some instances, a company may exert pressure on an employee to make this choice, perhaps by implying that a layoff or termination would otherwise be imminent, or by offering an attractive severance or early retirement package.
* '''WFR''' - Work force reduction.
* '''RA''' - Resource action.


== Effects of Layoffs ==
==Unemployment compensation==
Traditionally, layoffs directly affect the employee, however the employee terminated is not alone in this. Layoffs affect the workplace environment and the economy as well a the employee. Layoffs have a widespread effect and the three main components of layoff effects are in the workplace, to the employee, and effects to the economy.
The risk of being laid off varies depending on the workplace and country a person is working in. Unemployment compensation in any country or workplace is a function which has two main factors. The first factor of unemployment compensation depends on the distribution of unemployment benefits in a workplace. The second factor is the risk of inequality being conditioned upon the political regime type in the country an employee is working in (Wonik, 2010).<ref>{{Cite journal|last=Wonk|first=Kim|date=2010|title=Unemployment Risks and the Origins of Unemployment Compensation|url=|journal=Studies in Comparative International Development|volume=45|pages=57|doi=10.1007/s12116-009-9057-9|pmid=|access-date=}}</ref> For example, in Canada, Dorion (1995) states that white-collar workers who have been made redunant receive higher re-employment wages, than those in blue-collar occupations as there job is regarded as being of a higher status than blue collar workers. Where as in France, Margolis (1999, 2002) finds that workers who have been laid off have smaller unemployment periods and higher re-employment earnings in comparison with other unemployed people (Okatenko, 2010).<ref>{{cite journal|jstor=41219168|title=The Impact of the Reason for Layoff on the Subsequent Unemployment Duration|first=Anna|last=Okatenko|date=1 January 2010|publisher=|journal=Annals of Economics and Statistics|issue=99/100|pages=285–315|via=|doi=10.2307/41219168}}</ref> So for workers who have been laid off from their job, the amount of unemployment compensation they receive really depends on the occupation and country they were working in.


'''Effects of layoffs in the workplace:''' Layoffs have remained the greatest way for a company to cut costs. Although from the employer's perspective a layoff is beneficial for the business, layoffs create an uncertainty in the workplace environment and lowers other employees' job security as well as creates an apprehension and fear of termination for the remaining employees, and subsequently lowers overall motivation in the workplace environment. According to ''Healing the Wounds: Overcoming the trauma of Layoffs and Revitalizing Downsized Organizations,'' in the post-layoff environment, there is a need for empathy, tangibility, self-knowledge, and relentlessly seeking customers among the surviving employees. The remaining employees may have feelings of survivors guilt. Optimism is critical for rebuilding the workplace environment because employees look to their leaders for stability and predictability. No matter the position in an organization, employees will look for job security.
The method of separation may have an effect on a former employee's ability to collect whatever form of ] might be available in their ]. 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 (Lihzis, 2016).<ref>{{cite web|url=http://subpay.com/solutions-for-managing-layoffs/sub-pay-plan-legal-precedent-the-origins-and-background |title=SUB-Pay Plan Legal Precedent |publisher=Subpay.com |date= |accessdate=2012-03-13}}</ref> Since they were first introduced by organized labor and the ] in the early 1950s, and first issued in a Revenue Ruling by the ] in 1956, SUB-Pay Plans<ref> {{webarchive |url=https://web.archive.org/web/20110610155850/http://blog.subpay.com/2011/05/17/what-are-supplemental-unemployment-benefits/ |date=June 10, 2011 }}</ref> 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 ], ], 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.


'''Effects of layoffs to the employee:''' Employees (or former employees in this case) can be affected in a couple of different ways. When an employee is laid off his or her general trust in long-term work may decrease, reducing expectations upon rehire. After an employee withstands a layoff, the effects can trickle into future employment and attitudes. Layoffs in the workplace often leave the former employer less inclined to trust future employers which can lead to behavioral conflicts among co-workers and management. Despite new employers not being responsible for a prior circumstances, job performance may still be affected by incoming employers. Many comedies work to make layoffs as minimally burdensome to the employee. at times employers may layoff multiple people at once to soften the impact.
Certain countries (such as Belgium, Netherlands, Portugal, Spain, Italy, France and Germany), distinguish between ], in which case the person is not entitled to unemployment benefits, but may receive a ] and ] 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''.


'''Effects of layoffs in the American Economy:''' Layoffs create lower job security overall, and an increased competitiveness for available and opening positions. Layoffs have generally two major effects on ecomomy and stockholders. The way layoffs affect the economy varies from the industry that is doing the layoffs and the size of the layoff. If an industry that employs a majority of a region (freight in the northeast for example) suffers and has to lay employees off,there will be mass unemployment in an economically rich area. This can have leave ripple effects nation-wide. Unemployment is the biggest effect on the economy that can come from layoffs.
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.


== Layoffs Abroad ==
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.&nbsp;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)
In (French speaking) Belgium the term ] has become a synonym for the consultation process leading to mass redundancies, due to a controversial mass layoff and resultant legislation in the late 1990s. When an employee has been laid off in Australia their employer has to give them redundancy pay, which is also known as severance pay. The only time that a redundancy payment doesn’t have to be paid is if an employee is casual, working for a small business or has worked for a business for less than twelve months. The redundancy compensation payment for employees depends on the length of time an employee has worked for an employer which excludes unpaid leave. If an employer can’t afford the redundancy payment they are supposed to give their employee, once making them redundant, or they find their employee another job that is suitable for the employee. An employer is able to apply for a reduction in the amount of money they have to pay the employee they have made redundant. An employer can do this by applying to the Fair Work Commission for a redundancy payment reduction (Redundancy - Fair Work Ombudsman, 2016).<sup>]]</sup> A layoff is also known as a '''retrenchment''' in (]). In the UK, permanent termination due to elimination of a position is usually called ''']'''.<sup>]]</sup> Certain countries (such as Belgium, Netherlands, Portugal, Spain, Italy, France and Germany), distinguish between ], in which case the person is not entitled to unemployment benefits, but may receive a ]<nowiki/>and ] 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''.


== References ==
== Unemployment compensation in Australia ==
# ''']''' 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.
When an employee has been laid off in Australia their employer has to give them redundancy pay, which is also known as severance pay. The only time that a redundancy payment doesn’t have to be paid is if an employee is casual, working for a small business or has worked for a business for less than twelve months. The redundancy compensation payment for employees depends on the length of time an employee has worked for an employer which excludes unpaid leave.
# ''']''' Sahdev et al. 1999; Chorely 2002; Mason 2002; Rogers 2002
# ''']''' 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.&nbsp;226–56.
# ''']''' Ahmakjian and Robinson 2001
# ''']''' Mellahi, K. and Wilkinson, A. (2004) Downsizing and Innovation Output: A Review of Literature and Research Propositions, BAM Paper 2004, British Academy of Management.
# ''']''' (Wilkinson 2005, Redman and Wilkinson, 2006)
# ''']''' </nowiki>] June 10, 2011, at the ]


== Further reading ==
If an employer can’t afford the redundancy payment they are supposed to give their employee, once making them redundant, or they find their employee another job that is suitable for the employee. An employer is able to apply for a reduction in the amount of money they have to pay the employee they have made redundant. An employer can do this by applying to the Fair Work Commission for a redundancy payment reduction (Redundancy - Fair Work Ombudsman, 2016).<ref>{{Cite web|url=https://www.fairwork.gov.au/ending-employment/redundancy/redundancy-pay-and-entitlements|title=Redundancy pay & entitlements|last=Ombudsman|first=Fair Work|website=www.fairwork.gov.au|access-date=2016-05-15}}</ref>
* Karlsson, Tobias (2013). The dynamics of downsizing: the Swedish Tobacco Monopoly in the 1920s. Enterprise & Society, Vol. 14, No. 4, pp.&nbsp;829–853.
* Krolikowski, Pawel. (Feb. 2015), ''].'' "Workers who suffer job displacement experience surprisingly large and persistent earnings losses. However, standard labour market models fail to explain such a phenomenon. This column explains the persistence of workers’ earnings losses by arguing that displaced workers face higher separation probabilities in new jobs, and take substantial time to find their ideal job. The framework also matches empirical findings on the shares of average earnings losses following displacement that are due to reduced employment and lower wages."
* ], , ] magazine, September 12, 2008.
* Cameron KS. 1(994) Strategies for successful organizational downsizing. Human Resource Management, 33: 477-500.
* Cascio, F.W. (2002) ‘Strategies for responsible restructuring’, Academy of Management Executive, Vol.16, pp.&nbsp;80–91.
* Redman T and Wilkinson A (2006) Downsizing, in T. Redman and A. Wilkinson(eds), Contemporary Human Resource Management, London: FT/Prentice Hall, pp.&nbsp;356–381
* Sahdev, K. (2003) ‘Survivors’ reactions to downsizing: the importance Human Resource Management Journal, Vol.13, No.4, pp.&nbsp;56–74.
* Tyler M and Wilkinson A (2007) The Tyranny of Corporate Slenderness: Understanding Organizations Anorexically, Work, Employment and Society, 21: 537-549.


==See also== == See also ==
*] * ]
* ] * ]
* ] * ]
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* ] * ]
* ] * ]
* ] == External Links == {| class="wikitable" | |Look up ''''']''''' in Wiktionary, the free dictionary. |}
* ]

==References==
<references />

== Further reading ==
* Karlsson, Tobias (2013). The dynamics of downsizing: the Swedish Tobacco Monopoly in the 1920s. Enterprise & Society, Vol. 14, No. 4, pp. 829-853.
* Krolikowski, Pawel. (Feb. 2015), ''].'' "Workers who suffer job displacement experience surprisingly large and persistent earnings losses. However, standard labour market models fail to explain such a phenomenon. This column explains the persistence of workers’ earnings losses by arguing that displaced workers face higher separation probabilities in new jobs, and take substantial time to find their ideal job. The framework also matches empirical findings on the shares of average earnings losses following displacement that are due to reduced employment and lower wages."
* ], , ] magazine, September 12, 2008.
*Cameron KS. 1(994) Strategies for successful organizational downsizing. Human Resource Management, 33: 477-500.
*Cascio, F.W. (2002) ‘Strategies for responsible restructuring’, Academy of Management Executive, Vol.16, pp.&nbsp;80–91.
*Redman T and Wilkinson A (2006) Downsizing, in T. Redman and A. Wilkinson(eds), Contemporary Human Resource Management, London: FT/Prentice Hall, pp.&nbsp;356–381
*Sahdev, K. (2003) ‘Survivors’ reactions to downsizing: the importance Human Resource Management Journal, Vol.13, No.4, pp.&nbsp;56–74.
*Tyler M and Wilkinson A (2007) The Tyranny of Corporate Slenderness: Understanding Organizations Anorexically, Work, Employment and Society, 21: 537-549.
*{{cite book |last=Wilkinson |first=A |year=2004 |title= Downsizing, rightsizing and dumbsizing: quality, human resources and sustainability - Total Quality Management |volume= 15 no 8 |url=http://www98.griffith.edu.au/dspace/bitstream/10072/16844/1/34201_1.pdf}}

==External links==
{{wiktionary}}
* , ] * , ]
* A case before the U.S. Department of Labor, wherein the terms RIF, IRIF, and VRIF are commonly used. * A case before the U.S. Department of Labor, wherein the terms RIF, IRIF, and VRIF are commonly used.
* A glossary in a U.S. Department of Energy document that includes brief definitions of RIF, IRIF, and VRIF. * A glossary in a U.S. Department of Energy document that includes brief definitions of RIF, IRIF, and VRIF.
*, United States ] * , United States ]
* UK specific information on the legal rights of those being made redundant. * UK specific information on the legal rights of those being made redundant.
* - by ] * - by ]
* *
* Layoffs news and tracker. * Layoffs news and tracker.
* - RTÉ Ireland TV Series * - RTÉ Ireland TV Series
* * <center>]</center> {{Employment}}

{{Employment}}


] ]
]
] ]
] ]

Revision as of 10:49, 7 December 2016

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Introduction

A layoff is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees (collective layoff) for business reasons, such as personnel management or downsizing an organization. Originally, layoff referred exclusively to a temporary interruption in work, or employment, but this has evolved to a permanent elimination of a position in both British and US English, requiring the addition of "temporary" to specify the original meaning of the word. A layoff is not to be confused with wrongful termination. Laid off workers or displaced workers are 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 (Borbely, 2011). Downsizing in a company is defined to involve the reduction of employees in a workforce. Downsizing in companies became a popular practice in the 1980s and early 1990s as it was seen as a way to deliver better shareholder value as it helps to reduce the costs of employers (downsizing, 2015). Indeed, recent research on downsizing in the U.S., UK, and Japan suggests that downsizing is being regarded by management as one of the preferred routes to help declining organizations, cutting unnecessary costs, and improve organizational performance. Usually a layoff occurs as a cost-cutting measure.

Terminology

Euphemisms are often used to "soften the blow" in the process of firing and being fired.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", "leveraging synergies", "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, 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

RIF - A generic reduction in force, of undetermined method. Often pronounced like the word riff rather than spelled out. Sometimes used as a verb, as in "the employees were pretty heavily riffed".

eRIF – Layoff notice by email.

IRIF - Involuntary reduction in force - The employee(s) did not voluntarily choose to leave the company. This usually implies that the method of reduction involved either layoffs, firings, or both, but would not usually imply resignations or retirements. If the employee is fired rather than laid off, the term "with cause" may be appended to indicate that the separation was due to this employee's performance and/or behavior, rather than being financially motivated.

VRIF - Voluntary reduction in force - The employee(s) did play a role in choosing to leave the company, most likely through resignation or retirement. In some instances, a company may exert pressure on an employee to make this choice, perhaps by implying that a layoff or termination would otherwise be imminent, or by offering an attractive severance or early retirement package.

WFR - Work force reduction.

Layoffs in the Public Sector

Following the recession of 2007-2008, the public sector has seen significantly smaller job growth in employment versus the private sector. As the public sector declines the demand for services from the private sector decline as well. Layoffs in the public sector have put limitations on the growth rate of the private sector, inevitably burdening the entire flow of markets.

Unemployment Compensation

The risk of being laid off varies depending on the workplace and country a person is working in. Unemployment compensation in any country or workplace is a function which has two main factors. The first factor of unemployment compensation depends on the distribution of unemployment benefits in a workplace outlined in an employee handbook. The second factor is the risk of inequality being conditioned upon the political regime type in the country an employee is working in (Wonik, 2010). For example, in Canada, Dorion (1995) states that white-collar workers who have been made redunant receive higher re-employment wages, than those in blue-collar occupations as there job is regarded as being of a higher status than blue collar workers. The amount of compensation will usually depend on what level the employee holds in the company. Packages may also vary if the employee is laid off, or voluntarily quits in the face of a layoff (VRIF). 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 (Lihzis, 2016). 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 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. 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, center on savings in labor 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)

Effects of Layoffs

Traditionally, layoffs directly affect the employee, however the employee terminated is not alone in this. Layoffs affect the workplace environment and the economy as well a the employee. Layoffs have a widespread effect and the three main components of layoff effects are in the workplace, to the employee, and effects to the economy.

Effects of layoffs in the workplace: Layoffs have remained the greatest way for a company to cut costs. Although from the employer's perspective a layoff is beneficial for the business, layoffs create an uncertainty in the workplace environment and lowers other employees' job security as well as creates an apprehension and fear of termination for the remaining employees, and subsequently lowers overall motivation in the workplace environment. According to Healing the Wounds: Overcoming the trauma of Layoffs and Revitalizing Downsized Organizations, in the post-layoff environment, there is a need for empathy, tangibility, self-knowledge, and relentlessly seeking customers among the surviving employees. The remaining employees may have feelings of survivors guilt. Optimism is critical for rebuilding the workplace environment because employees look to their leaders for stability and predictability. No matter the position in an organization, employees will look for job security.

Effects of layoffs to the employee: Employees (or former employees in this case) can be affected in a couple of different ways. When an employee is laid off his or her general trust in long-term work may decrease, reducing expectations upon rehire. After an employee withstands a layoff, the effects can trickle into future employment and attitudes. Layoffs in the workplace often leave the former employer less inclined to trust future employers which can lead to behavioral conflicts among co-workers and management. Despite new employers not being responsible for a prior circumstances, job performance may still be affected by incoming employers. Many comedies work to make layoffs as minimally burdensome to the employee. at times employers may layoff multiple people at once to soften the impact.

Effects of layoffs in the American Economy: Layoffs create lower job security overall, and an increased competitiveness for available and opening positions. Layoffs have generally two major effects on ecomomy and stockholders. The way layoffs affect the economy varies from the industry that is doing the layoffs and the size of the layoff. If an industry that employs a majority of a region (freight in the northeast for example) suffers and has to lay employees off,there will be mass unemployment in an economically rich area. This can have leave ripple effects nation-wide. Unemployment is the biggest effect on the economy that can come from layoffs.

Layoffs Abroad

In (French speaking) Belgium the term Procédure Renault has become a synonym for the consultation process leading to mass redundancies, due to a controversial mass layoff and resultant legislation in the late 1990s. When an employee has been laid off in Australia their employer has to give them redundancy pay, which is also known as severance pay. The only time that a redundancy payment doesn’t have to be paid is if an employee is casual, working for a small business or has worked for a business for less than twelve months. The redundancy compensation payment for employees depends on the length of time an employee has worked for an employer which excludes unpaid leave. If an employer can’t afford the redundancy payment they are supposed to give their employee, once making them redundant, or they find their employee another job that is suitable for the employee. An employer is able to apply for a reduction in the amount of money they have to pay the employee they have made redundant. An employer can do this by applying to the Fair Work Commission for a redundancy payment reduction (Redundancy - Fair Work Ombudsman, 2016). A layoff is also known as a retrenchment in (South African English). In the UK, permanent termination due to elimination of a position is usually called redundancy. 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 paymentand 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.

References

  1. 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.
  2. Sahdev et al. 1999; Chorely 2002; Mason 2002; Rogers 2002
  3. 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.
  4. Ahmakjian and Robinson 2001
  5. Mellahi, K. and Wilkinson, A. (2004) Downsizing and Innovation Output: A Review of Literature and Research Propositions, BAM Paper 2004, British Academy of Management.
  6. (Wilkinson 2005, Redman and Wilkinson, 2006)
  7. Archived June 10, 2011, at the Wayback Machine

Further reading

  • Karlsson, Tobias (2013). The dynamics of downsizing: the Swedish Tobacco Monopoly in the 1920s. Enterprise & Society, Vol. 14, No. 4, pp. 829–853.
  • Krolikowski, Pawel. Job ladders and earnings of displaced workers (Feb. 2015), Center for Economic and Policy Research. "Workers who suffer job displacement experience surprisingly large and persistent earnings losses. However, standard labour market models fail to explain such a phenomenon. This column explains the persistence of workers’ earnings losses by arguing that displaced workers face higher separation probabilities in new jobs, and take substantial time to find their ideal job. The framework also matches empirical findings on the shares of average earnings losses following displacement that are due to reduced employment and lower wages."
  • Weinstein, Bruce, "Downsizing 101", BusinessWeek magazine, September 12, 2008.
  • Cameron KS. 1(994) Strategies for successful organizational downsizing. Human Resource Management, 33: 477-500.
  • Cascio, F.W. (2002) ‘Strategies for responsible restructuring’, Academy of Management Executive, Vol.16, pp. 80–91.
  • Redman T and Wilkinson A (2006) Downsizing, in T. Redman and A. Wilkinson(eds), Contemporary Human Resource Management, London: FT/Prentice Hall, pp. 356–381
  • Sahdev, K. (2003) ‘Survivors’ reactions to downsizing: the importance Human Resource Management Journal, Vol.13, No.4, pp. 56–74.
  • Tyler M and Wilkinson A (2007) The Tyranny of Corporate Slenderness: Understanding Organizations Anorexically, Work, Employment and Society, 21: 537-549.

See also

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