How to Lay Off Employees With Dignity

Understanding the Legal Considerations

Understanding how to lay off employees starts with knowing most states have at-will employment laws. This means a company can terminate employees at any time, and employees can also quit at any time.

This law has several exceptions for employers. You can’t let employees go for reasons that violate anti-discrimination laws, such as race, sex, age, national origin, disability, religion, or gender identity.

Also, you can’t fire an employee for retaliation for reporting illegal or unsafe working conditions and as payback for refusing to conduct unlawful activities.

Employee Contracts Offer Protections

A signed employment contract can protect employees in most states against wrongful termination. When terms are specified in the contract, the employer can only terminate the employee based on those terms.

For example, suppose an employer promises to offer three years of employment but terminates the employee without any valid reason after several months. In that case, the company is typically obligated to pay the employee for the remaining contracted period.

Large Layoffs

Significant layoffs may require adherence to specific state and federal laws or regulations. For instance, under the federal WARN Act, larger companies with more than 100 employees are supposed to notify employees at least two months before a mass layoff or plant closing.

Moreover, specific states require additional notice. For example, some organizations must provide 90 days’ notice in New York before a significant workforce reduction. New York also requires companies to notify fired employees about their right to apply for unemployment benefits. 

As a rule of thumb, work with an employment lawyer about any significant layoffs to fully understand your responsibilities as an employer.

Explaining the Business Reasons for Layoffs

Being laid off is life-changing. An affected employee may feel shocked, embarrassed, and panicked about the future. One of the first questions they’ll likely ask is: “Why me?”

As a manager, one small way to demonstrate empathy for the person receiving this dreaded news is to show that much thought and consideration went into the decision.

If you’re firing someone for poor performance and are not citing at-will employment, be ready to share how you provided warning, training, and remediation opportunities via a performance improvement plan to address the issues before the termination. 

For mass layoffs, be transparent. Do you have to lay off employees because of financial reasons? Share the company runway and how it affected your decisions. This information won’t change the situation. However, for employees who are let go for reasons beyond their control, it can provide clarity and reduce—but not eliminate—feelings of shame or inadequacy.

Be compassionate and respectful. Don’t drag the conversation out with unnecessary small talk. No one wants to talk about sports or the weather at a time like this. 

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Developing a Communication Plan for Layoffs

As soon as it’s clear that individual or mass layoffs are imminent, it’s time to develop a detailed communication strategy. This will outline how you’ll communicate with affected employees, including when, where, and how these conversations occur.

Here are a few tips on developing a communication strategy for laying off employees gracefully. 

Consider the Timing

Being fired is a terrible experience, and being fired on your birthday or before a major holiday is even worse. When setting the strategy, consider dates and milestones.

Also, while Fridays have traditionally been the day for employee terminations, some experts argue that Monday or midweek is better and more considerate. It allows employees to promptly address any lingering concerns with the company and embark on their job search without delay rather than dwelling on the situation throughout the weekend.

Where Layoff Conversations Should Take Place

Ideally, the conversations should take place in person in a private location where the individual can leave the building discreetly. With the reality of hybrid and remote work, a Zoom conversation with your camera turned on is also acceptable. According to best practices, the hiring manager leads the conversation with a people resource representative present.

Remember to show compassion and empathy in the situation. You want to allow the person being laid off to ask questions. While shooting off an email to notify employees of a layoff removes the sting on your side, it’s unkind to those on the receiving end. 

What to Bring to the Meeting

Companies employ various processes for terminating employees. This may involve sharing all necessary paperwork upfront during a face-to-face meeting or sending a follow-up termination email directly to the employee’s account after dismissal. Nevertheless, here is a list of information to prepare for the meeting.

• Reason for termination:  If you are not citing at-will employment, come to the meeting with an explanation that shares the reasons behind the decision.
• Effective date of termination: Specify the exact date when the termination will take effect during the meeting.
• Final paycheck: Inform the employee about their final paycheck, including any accrued but unused vacation time or benefits they’re entitled to.
• Severance package (if applicable): If the employee is eligible for severance pay or benefits, outline the details of the severance package, including the amount and any conditions attached to it.
• Return of company property: Share the process for returning company property, such as computers, keys, and access cards. 
• Continuation of benefits: Explain how the termination will affect the employee’s benefits, such as health insurance, COBRA rights if applicable, or retirement plans, and provide information on any continuation options.

Tips to Help Guide the Conversation

Remember, this is an earthquake for the person receiving the news, especially if the firing is unexpected. They may respond calmly or experience intense emotions. Give them room and grace to feel what they feel. Don’t offer cliches like “things happen for a reason.”

If the conversation is going off track, stick to the decision process behind the termination.

You can also show compassion by asking if there’s someone you can call to pick them up or provide immediate support. If they want to leave without returning to their desk, you could also offer to gather and ship their belongings.

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Communicating Severance Packages and Employee Assistance

Companies are generally not required to offer severance packages. However, some states mandate that select organizations provide resources to help employees find their next job.

Be ready to communicate what, if any, packages or resources are available to employees after a layoff. For employees affected by circumstances beyond their control, consider at least offering a letter of recommendation to help with their job search. 

Boosting Office Morale After Layoffs

If an employee is being let go for bad behavior or the inability to do their job, it might not cause a big stir around the office. In this case, a recommended approach is to inform the team that the individual is no longer with the company and provide a brief explanation focusing on the organization’s future. Avoid delving into personal or specific performance details out of respect for the individual’s privacy. 

But if you’re undergoing a significant change or experiencing a budget deficit that requires mass layoffs, it’s only fair to expect a reaction from the remaining employees.

They’re likely to be angry, confused, and scared—impacting productivity.

Communication is key to helping build morale back up. Share the business justifications for the layoffs and the resources you gave to those affected, including severance packages and employee assistance. This can help minimize confusion and demonstrate how the company culture is committed to helping people recover. 

Furthermore, show that the layoffs were not reactive and that you have a long- and short-term plan for moving the company forward. 

Be clear on how any restructuring will affect those who remain at the company. If you expect them to do more work for the same pay, communicate how they will be recognized (and ideally compensated) for their extra efforts.

Wize Words

Following a layoff, it’s valuable to reflect on how to avoid similar situations in the future. Analyze factors like rapid expansion, industry changes, and internal indicators of financial health to identify root causes. Reflecting on these insights can inform preventative measures and foster trust and morale among remaining employees. For individual terminations due to performance issues, reassess training and onboarding procedures to support underperforming employees better.

Frequently Asked Questions

Helen Anne Travis