How to Layoff Employees Smoothly: Right Way For SME’s

how to layoff employees

Finding an employee is pressurizing a pool of candidates with a variety of talents. Even with a pre-employment screening it is challenging to examine if an employee is trustful for an organization. Any wrong step in the recruitment process can cause the organization a significant financial loss by such employees’ layoff. According to the Economic Times, a total of 3557 experienced employee layoffs across India from January to June.

For a small business, it is already tricky to set up services for the customers. What if the employee recruited is not beneficial to the organization? Even if not the targets, that employee may degrade the organization’s atmosphere. Whether it is your employee’s personality or performance, there may be distinct reasons for provoking layoffs.


Even if, by mistake, the organization attracts a bad hire, there are ways to lay him off without creating a massive impact on the status of an organization. Here we have listed down the ways to make layoffs more tolerable for a small business.

What is an Employees Layoff?

An employee’s layoff defines a state of temporary or permanent employee termination from employment because of ill personality discovered from the regular analysis, that may negatively affect an organization’s reputation. It is up to the organization what type of actions to take against such behaviors. The layoffs can be due to an employee’s faults or the company’s hardships.

Why is an Employee Layoff Essential?

Being a small-scale company, one may never want to be a part of laying employees off. It is challenging for an employer to downsize their work staff, but it becomes essential due to these reasons.

Sometimes, employees are not paying much attention to their work. This may bring adverse effects to the workplace and other employees. It is definitely not a good sign to reflect on your customers.

In the beginning, the organization may leave the employee on warning. But if the same condition persists, the employee can be terminated immediately without any notice. This is the reason almost all companies prefer the probation period. Hiring an employee under probation gives the company all the right to dismiss an employee of all the responsibilities.

However, not only employees are the reason behind the layoffs. The company’s willingness to downsize and problems in handling employees may be the reasons why companies prefer employee releases. For example, many employees have lost their jobs due to hardships in the corona pandemic. This happened due to the gaps in communication between workers. However, with the right remote monitoring solutions, the hindrances could overcome seamlessly.

Under the above conditions, an employee may apply for unemployment benefits due to the job’s termination without their fault.

Though employee dismissals are stressful for the company, the employer can employ some subtle ways to make these workforce layoffs more smooth and less tense.

How to lay off Employees to Lighten up the Stress of Employers?

Knowing that laying off employees isn’t easy, the employers can follow guidelines to lighten up their stress. It is always fruitful to analyze and track the ethics of a company and the legal regulations on employee termination. Despite finding another employee, it is better to terminate the one with low dedication Here are the steps that may lighten up the stress of the employer to a greater extent.

1. Know your Business Requirements

Laying employees off is a big decision. Performing it without any prior planning can be challenging for the company to survive. Before dismissing any employee, an employer must be able to configure how to manage the activities of that particular job. However, delay or failure in laying off people can be harmful to the business’s financial and morale reputation. It may sink down the company into a never-ending whirlpool of cashouts.

Some of the alternatives to this include

  • Avoid paying unnecessary incentives to the employees.
  • Stop promoting such employees.
  • Suspend such employees.
  • Cut-off the overtime from the salary

By suspending employees, the employer can easily manage the finances and the workflow of the company. It helps them get right on track before the breakout. Despite the suspension, such employees still are employed and join back whenever the employer wishes.

Before planning a staff layoff, there are few things to be analyzed and followed immediately to stop the company from going under budget.

  • Start the recruitment of candidates for job positions and avoid making similar mistakes.
  • Analyze your budget and act accordingly.
  • Discuss with the employees to overcome such behavior to reduce the risk of losing employees and overbound cashouts.

An employer is always more knowledgeable about business needs. Thus it is better to check minor details.

2. List Down the Staff Layoff Details

Before planning to speak with employees, it is better to have proof of the details. The employer may never want to create panic around the workplace by delivering wrong decisions. Thus, figuring out the ways to lower down the stress and panic is something more essential. Here are a few samples an employer can go with.

  • Analyze if the company needs permanent or temporary staff layoff.
  • What are the reasons to choose to fire employees?
  • What assistance can you offer to such employees if it’s not their fault?
  • Who will experience layoff?
  • Analyze how much of your ongoing work is disturbed.
  • How will this affect the current staff?
  • How to warn employees if needed?

3. Handle with Care

Employees are the organization’s primary assets, and handling them with care and support is also essential along with the job work. Despite the lack of performance and attention to work, treating employees with dignity and respect shows the culture you reflect on at your company.

In the beginning, it is always hard to interact with the employees on the matter of worker layoffs. But somehow, finding out a simple and understanding way is what an employer should consist of. Even if the business is going lower, and you need to terminate employees, show them enough support that makes them more helpful to the company’s needs.

Such an understanding can help employees and employers stay connected even after the team layoffs. Once the company runs smoothly on track, employers can reemploy the terminated employees who were beneficial for the organization.

This nature of the company can attract more worthy candidates and retain the employed ones for a longer time. But better to ensure they receive all the incentives and rewards to avoid wage violations.

4. Smooth Down the Transition Period

As we included that the employer might need to lay down the more talented and knowledgeable employees due to the hardships of the small companies, it is advised to smooth down the transition period to avoid the adverse effect on the company’s services.

For example, the company has four designers, but the employer only has to choose two who have to take up the familiar work though with more responsibilities comparatively due to the downsizing. Under such conditions, you can ask the dismissed employees to provide assistance to the other employees by increasing their transition periods.

Meanwhile, you can even identify if those terminated employees are actually worth keeping in the company. Moreover, you can offer incentives to encourage and support them. This also creates a positive impression of you organizing appreciation strategies for the current staff.

5. Provide Assistance and Insurance

As you layoff employees, offering them support under such circumstances can be more beneficial to them due to an impact on their employment. You can offer them assistance in outplacement with which they can receive help in knowledge building and career development. The employees can also avail themselves of the unemployment benefits for termination due to the company’s closure.

Such a step increases respect despite the reasons for the dismissals and shows employees that the employer genuinely cares about their employees’ wellness and productivity. You never know, but you may wish to rehire them again. Creating such a positive reflection can go a long way.

Current Trends Related To Employee Layoff

  • Due to poor performance, about 23% of the employees are fired from their job.
  • 40% of the employees are fired because they are not doing their tasks as reported.
  • Employees between the ages of 25-29 years accounted for nearly 46% of job loss due to the global pandemic.
  • An employees’ resignation costs the company around 33% of their annual salary.
  • The replacement of a trained employee may cost the company up to 200% of the former’s salary.
  • The companies that support optional remote work for their workforce experience 25% less turnover.
  • Since the beginning of the COVID pandemic, around 32% of the small business entrepreneurs have laid off their workers in order to find options to keep their business afloat.

Summing it up

Employees Layoffs are never easy for employees and employers. Employees may get depressed due to the stress of balancing life and finding another job. Employers also may find it difficult to let go of their best workers, whatever the reason is. While planning out all the strategies at first can help get through it, offering assistance to the employees can help to maintain the same mutual understanding in the future also.

If worked out best, the relationship between employee and employer can be made strong, which can be useful for the recommendations and future needs.

Request Free Trial