Terminating Employees

Layoff Letter

Layoff letters are more than just notifications. They are legal documents that can either help or hinder your company's legal standing. Here are a few tips about how to create and leverage a layoff letter in your business.

No one goes into business with the expectation of laying off a portion of their workforce.

Layoff Letter

But in today's business climate, layoffs and downsizing are becoming an increasingly common occurrence. Although you can't plan for it, you have to prepare for the possibility that someday you will have no other choice but to downsize significant numbers of workers.

The preparation of a standard layoff letter can minimize the stress of downsizing and protect your company from legal liabilities. It can also insulate decision-making from the emotions that surround a layoff scenario. Instead of creating a letter in the midst of turmoil, you can tailor a letter that has been written during a more peaceful and rational time.

A typical layoff letter contains several pieces of information that are important for displaced workers and your legal counsel. Some of these items need to be handled delicately because they can have legal ramifications. Here's what you need to know when you take on the task of creating a standard layoff letter for your business.

  • Tone and substance. The tone and substance of layoff letter should be polite, but concise. Avoid sugarcoating the situation with phrases that communicate false hope or indicate that the reduction may have been avoidable. Given the amount of legal entanglements you could create, a "just the facts" approach is always the best tone for a layoff letter.
  • Workforce reduction policies. A good layoff letter is predicated by a well-crafted workforce reduction policy, located in the employee handbook. This policy should make it clear that employment is at-will and that layoffs could potentially occur at some point in the employment relationship. Your workforce reduction policy should also go into great detail about the process that will be followed when and if layoffs are required.
  • Protected categories of employees. Layoff letters always identify the reason why the individual has been included in the reduction. Lack of seniority and the elimination of the entire department are the most common reasons for a layoff, but it may also be possible to conduct productivity-based downsizing. Whatever the reason, make it clear that the cause for the layoff is not related to a protected employment category like race, gender or age.
  • Displaced worker rights. Downsized workers may have specific legal rights that can affect the content of layoff letters. Under the WARN Act, employers with 100 or more employees may be required to provide 60 days notice for downsizing. Special exemptions apply, so you'll need to contact your attorney before you issue a layoff letter to your staff.

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