Layoffs and reductions in staffing are an inevitable part of every business and industry. Employers need to make the decision to downsize and it’s up to the human resources department to prepare all the paperwork. This includes notifying the employee about their termination of employment through a formal reduction in force letter.
Writing a reduction in force letter can be difficult, especially if you’re not aware of the content structure. If done incorrectly, you may face a series of security risks, retaliation, and lawsuits. Luckily, we’ve prepared a guide with everything you need to include in a reduction in force letter (and more) so you’re in compliance with all the rules and regulations for termination of employment.
But before we jump into the reduction in force letter let’s first go through the layoff process:
The Reduction in Force Process
The need for a reduction in force (RIF) may arise as a result of business restructuring, reorganization or budget limitations. In order to go through with the reduction in force, it’s necessary for employers and human resources to follow the basic compliance steps:
- Choose which employees will undergo the layoff process. You should be able to justify your selection.
- Avoid disparate impact and disparate treatment. This means steering clear of all discriminatory practices, either intentional or unintentional, that affect a protected minority group.
- Review federal and state WARN regulations. Make sure you follow the notification period as specified by the employee protection act.
- Review OWBPA regulations. Employees aged 40 and over have additional rights when laid off so make sure you’re aware of these rights.
- Decide on severance packages. If you decide to offer severance packages to help terminated employees get back into the workforce then you need to determine what they will consist of.
- Forward the reduction in force plan to human resources. Your reduction in force request needs to be sent to the human resources department for approval.
- Notify the employee affected. Once your request is approved you have to send a reduction in force letter to notify the employee of your decision.
All in all, the reduction in force plan needs to answer these following questions:
- Why is a reduction in force necessary?
- What alternative methods have been suggested by human resources?
- How does the decision to lay off employees affect other staff members?
- Has the terminated employee/s been notified?
What Should You Include in a Reduction in Force Letter?
You should include specific pieces of information in your reduction in force letter:
Insert date and addressee. This information is a given. It’s important you note who the recipient of the reduction in force letter is and when they received it.
Provide reason for layoff. Explain to the terminated employee why they have been laid off and from which date this reduction in force comes into effect.
Offer outplacement support. Offer employees outplacement support that will help them accept their termination of employment, such as access to resources, tools and career counselors.
Inform terminated employees about their rights. Encourage the employees to exercise their rights, such as the right to appeal the decision and the time frame in which they may do so.
Thank the employee for their services. End the reduction in force letter on a positive note by acknowledging the employee’s role in the company and wishing them success in future positions.
How Should You Prepare for and Coordinate a Notification Meeting?
One of the most unpleasant tasks during the layoff process is when the time comes to notify the terminated employee. So it’s good to prepare for a notifications meeting and be ready for the good, the bad and the ugly. Here’s how you should prepare for a notification meeting:
- Familiarize yourself with the layoff process and severance agreements.
- Arrange the date, time and location to meet with the employee.
- Speak to your human resources department to discuss the layoff process.
- Expect the employee to have questions so have the answers ready.
- Prepare yourself for multiple scenarios and emotional outbursts.
Here’s how you should conduct a notification meeting:
- Get straight to the point and keep the message short and simple.
- Be assertive to show the decision is final and cannot be changed.
- Listen to whatever the individual has to say.
- Be supportive and encouraging.
- Remain calm at all times.
How to Mitigate Termination of Employment Risks
One of the best ways for employers to mitigate the risks involved with termination of employment is writing a strong reference letter. This is to explain to future employers that the employment has ceased due to a decision to reduce staff and not because of personal performance.
Here are some tips about writing a reference letter explaining a layoff:
- Focus on work and personal successes. Emphasize achievements the individual has achieved during their employment in your organization.
- Keep a positive tone. There’s no need to mention any flaws so highlight the positive qualities of the individual.
- Give examples of employee performance. Point out various instances where the employee had been involved in and contributed to the organization’s success.
- Explain the layoff process. Clarify the reasons why the individual ceased working at your organization but keep it concise and in favor of the individual.
Terminated employees will appreciate the initiative and it will also give them a head start in their job search process.
However, just to be on the safe side, create termination of employment waivers and releases with consultation from a legal professional. This way, you can be certain the terminated employee won’t take any action that can be damaging for your organization.
Layoffs are never easy. It’s an unpleasant situation for everyone in the organization, from top management to frontline employees.
Nevertheless, it needs to be done and the only thing organizations can do to ease the situation is provide a proper explanation to the employees affected.
Creating a Reduction in Force Letter
Here's what you need to include in your reduction in force letter:
A reduction in force letter that is well structured can mitigate various risks and maintain the company image. So it’s important you take the time to write a well-structured reduction in force letter that justifies the reasons for termination and use it as a template for all future layoff processes.
Need advice about your layoff procedure? Speak to human resources experts who can guide you through the whole layoff process. Schedule a free consultation with Careerminds today.