Here’s a question that’s come up recently that we posed to our employment law superhero, Steve Roppollo, Managing Partner with Fisher Phillips. Steve joined us on an on-demand webinar on this crucial topic – I’d highly reccomend watching now.
Question: What’s the difference between a layoff and a termination? Do you need to communicate them differently?
Let’s call a layoff and a “reduction in force” the same thing for right now, even though they’re not exactly the same, and use that to distinguish a termination.
A termination is something that happens to one person, and there is generally a reason behind the termination that relates to either that person’s conduct or performance.
A reduction in force is usually motivated by economic interests: “business is down, we had to cut back”—that kind of thing. It’s seldom related to performance, although reductions in force can include an evaluation based on performance. An employer may decide, for example, to let go of the three lowest performing salespeople. Or, sometimes, HR people will ask a department supervisor, “Who are the five people you really want to keep?” What’s usually happening there is the department is undergoing a general, overall performance evaluation, and the company is making decisions about who stays and who goes. So, even a reduction in force can include an evaluation of performance where a person’s performance is relevant.
But typically, that reduction in force is a position elimination. It’s motivated by the fact that there’s no longer going to be a position for the person to work in. In that case, we need to be consistent with our rationale. If we’re eliminating the position, don’t then hire a person to fill that role right afterward. That’s really true for a layoff, a reduction in force, or a job elimination.
If, on the other hand, you’re saying, “Look, your performance hasn’t been what we want,” then yeah, replace the guy right away. And for what it’s worth, the difference between an RIF and a layoff is that we typically use the term “layoff” when there’s an expectation of reinstatement when things get better. That is, you’re just on a layoff list, it’s usually done in the union setting. I typically tell my clients not use the word layoff unless you plan to maintain a list from which you’re going to go get people to come back to work once things get better. If you’re just planning to do a reduction in force, then call it that: a reduction in force, or an RIF.
Termination Best Practices
While we hope you never have to rely on this cheat sheet, the reality is that terminations need to happen from time to time. Get this cheat sheet to learn how to protect yourself from wrongful terminations.