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Whether they’ve come in mass staff cuts, or through slow but continual “forever layoffs,” many businesses have carrried out headcount reductions this year. While those dismissals are painful for everyone involved, recent survey data indicates most departing and remaining staffers felt managers handled them poorly, often allowing targeted workers learn their fate through the company rumor mill………Continue reading….
Source: INC
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Risks of being laid off vary depending on the workplace and country a person is working in. Unemployment compensation in any country or workplace typically 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.
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 multiple 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. 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 extreme pathological fear of becoming inefficient. Hence ‘trimming’ and ‘tightening belts’ are the order of the day. 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 as 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. One framework to examine the effects on the macro level is PSB, which examines the stakeholders perspective in global downsizing. This framework examines the global perspective of positive and negative stakeholders behavior during downsizing.
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. In order to diminish negative effects of layoffs, Wayne Cascio suggests alternative approaches to layoff and downsizing as “Responsible restructuring” approach.
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. Employees (or former employees in this case) can be affected in several ways. When an employee is laid off temporarily, 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. Any case of layoffs may leave the former employee less inclined to trust future employers, which can lead to behavioral conflicts among co-workers and management. Layoffs can erode confidence, making employees feel insecure about their job performance and career prospects.
Despite new employers not being responsible for a prior circumstances, job performance may still be affected by prior layoffs. Many companies work to make layoffs as minimally burdensome to the employee. At times employers may layoff multiple people at once to soften the impact.
- Denial stage is the first stage in the emotional reaction to change or layoffs, in which an employee denies that an organization change or layoff will occur.
- Anger stage is the second stage of the emotional reaction to downsizing, in which an employee becomes angry at the organization.
- Fear stage is the third emotional stage following an announcement of layoff, in which employees worry about how they will survive financially.
- Acceptance stage is the fourth and final stage of the emotional reaction to downsizing, in which employees accept that layoffs will occur and are ready to take steps to secure their future.
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.
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.
The person is not entitled to unemployment benefits, but may receive a onetime payment and 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.
After an employee withstands a layoff, the effects can trickle into future employment and attitudes. Any case of layoffs may leave the former employee less inclined to trust future employers, which can lead to behavioral conflicts among co-workers and management. Layoffs can erode confidence, making employees feel insecure about their job performance and career prospects.
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