How do you lay off an employee? Five key steps

Layoffs are a stressful event for all concerned. The good news is that, although challenging, a well planned and executed layoff can be done with compassion for the affected staff, HR teams and managers alike. In this article, we’re looking at how to conduct a layoff with professionalism and empathy, so that everyone involved comes out the other side unscathed.

Losing a job can be incredibly stressful for the impacted employee. Delivering this news is also unpleasant for the manager involved. Basically, layoffs cause a lot of anxiety all round and aren’t fun for anyone. The stakes are high – you need to retain key talent, maintain your employer brand, and keep up morale. But with a clear action plan, good communication and outplacement support, layoffs don’t have to be as fraught as they seem.

In fact, understanding how to conduct a fair, empathetic layoff can actually empower businesses, giving them the confidence to make difficult decisions that ensure their success in the long run.

To support you in delivering a successful layoff, we’ve compiled a step-by-step guide for you to follow to ensure everything unrolls smoothly. These are the five key steps:

1. Building a layoff team

2. Developing a layoff communication plan

3. Establishing employee selection criteria

4. Training managers

5. Holding a layoff notification meeting

Let’s look at each step in greater depth.

Depending on the size of your organisation, conducting a layoff event probably isn’t a job for just one person. You’ll need to build a team to support the process, with colleagues from management, HR, legal and PR. Diversity is important here – ensure you have a good mix of experience, gender, age, culture, and so on.

The team will also need to involve stakeholders including senior leadership and middle managers, to advise on retaining the right talent and minimising the impact on productivity. These stakeholders will help to make crucial decisions for the business.

Honest and transparent communications are vital throughout the layoff process. Prepare a clear statement that your management team can use when delivering the news.

Your staff will want to know why they are being laid off. Bear in mind that you should always relate this reason to a sound business decision and clarify that the layoff is not personal. Communicate clearly, without euphemisms, and consider how you would like to hear the news yourself if you were in the employees’ position.

This is the part of the process that employees will remember – the moment they heard the news that their job will no longer exist. Therefore, the way you communicate this news is important. It’s recommended that you prepare a script in advance, so that those delivering the news can stay on track and deliver the same message in the same way. When crafting your message, try to put yourself in the position of the affected employee.

Layoff notifications should always be delivered in person (or via video call for remote workers). Never deliver the news via email – although the communication plan should also include written confirmation of the layoff, following the in-person meeting.

The criteria for determining which employees are laid off is an important part of the process. Making the wrong decision here could negatively affect productivity and may even result in the need to rehire – another cost your business doesn’t need.

Before you compile the list, consider the severance package you’ll be offering. If layoffs can be conducted with no ill feeling, your business is less likely to experience legal action and more likely to retain its reputation. Including outplacement services as part of your severance package means that your employees will feel supported and valued, meaning they leave in a better frame of mind, with a more positive memory of your business.

With a good severance package, employees may even volunteer for redundancy. When this voluntary phase is completed, establishing your employee selection criteria can begin in earnest. Every business is different, so the criteria will vary from organisation to organisation. You may choose a last-in, first-out method, base selection on seniority, look at performance appraisals, use attendance or disciplinary records, or assess qualifications and skills.

Whichever selection criteria you choose, remain focused on the future of the business rather than short-term cost savings.

Impacted employees will have questions, so your layoff plan will need to include providing managers with the answers. We’ve said it before, but it bears repeating: transparent communication is key to morale and productivity. Without open communication, rumours run rife and dissatisfaction builds.

Training and coaching your managers can mitigate this risk. They need to know how to handle the questions without saying the wrong thing, passing the buck, or escalating the situation. Providing them with an outline of what they should say, including details of severance pay and outplacement support, will help here.  Ensure your communication plan includes provision for manager training.

You will have had legal input from the first stage of the process, but remember to cascade that information. Your manager training will need to include legal compliance, to ensure the layoff process complies with all relevant legislation.

Layoff notifications should always be held in private. Bad news is sensitive and difficult to hear, so ensuring privacy shows that you respect the employee’s feelings. Use the script you prepared, whilst remaining flexible enough to listen to their concerns and respond to their questions. Don’t veer off topic.

Remember, too, that even the staff that aren’t laid off are likely to be impacted by the event. Reiterate to them that their roles are secure (unless you foresee further cuts in the near future). You can improve their morale by showing them that you’re taking care of the retrenched employees by providing comprehensive outplacement support.

We’ve already shown that communication can make or break a layoff. Poor communication when breaking the news is one of the biggest mistakes your company can make. During the pandemic, several companies made the news for all the wrong reasons for holding mass layoffs over Zoom. Their brand has been irreparably damaged, which will affect their future hiring, retention, and client acquisition.

One-to-one meetings, with honest communications, are the way forward. During this meeting, you can tell your impacted employees about the provision of outplacement services and break the bad news in a compassionate way.

Person-centred layoffs mean never conveying the message to staff via mass video calls, email, or the sudden removal of security access.

The in-person meeting may be conducted by the employee’s line manager or a representative from the HR team. Privacy during this meeting not only respects the employee but avoids mass panic across the company.

Timing is another crucial aspect to consider. The day you choose will vary depending on shift patterns and working hours, but it’s recommended that you avoid breaking the news just before a holiday or on a Friday afternoon. The golden rule is to be transparent, professional, and to-the-point.

We know that layoff meetings can be sensitive and highly charged. The person delivering the news must do so with compassion, but not excessive sympathy. Keep the initial meeting short, but allow the employee a chance to respond and outline the next steps in the process.

It sounds simple, but we understand this is not an ideal situation. By following these steps and developing a robust script, you can make it easier for everyone concerned.

To summarise what we’ve learnt, a smooth layoff depends on clear communication and planning. With the foundations in place, you can retain key talent, reposition your business financially, and maintain morale.

We began with the question “how do you lay off an employee?”. The answer is by communicating with stakeholders, planning the event with input from every perspective, and executing the plan with consistency.

A well executed layoff reduces stress for everyone and outplacement support can go a long way to enabling that. Contact us at Careerminds today to see how we can facilitate your retrenchment process.

Jen David

Jen is a careers writer and CV specialist, with over 13 years' experience in the job search sector. Find out more by connecting with her on LinkedIn or visiting her website.