Layoffs: Making the Dreaded Task Easier

There's a right way to lay off an employee, both for your peace of mind and to protect yourself legally.
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So far, the tidings haven't been that jolly this holiday season.

Every day seems to bring yet more news of corporate layoffs. This week alone,

Dow Chemical

(DOW) - Get Report

announced that the company would be slashing 5,000 jobs and eliminating 6,000 contractor positions.

Office Depot

(ODP) - Get Report

said it will be letting about 2,000 employees go, and

3M

(MMM) - Get Report

will have laid off a similar amount by the end of the year.

From financial behemoths like

Citigroup

(C) - Get Report

to tech giants like

Yahoo!

(YHOO)

, the job-shedding cuts across industries, and small businesses aren't immune. When sales slow down and orders dry up, layoffs are often the only way for a company to remain financially viable.

Telling someone they've lost their job is never easy, although firing an incompetent or untrustworthy employee can at least bring a certain level of relief after he or she is gone. But layoffs often mean saying goodbye to perfectly good workers, people the boss may even consider friends.

While large corporations have layoff routines in place, smaller businesses often don't have the benefit of advice from human-resources reps and in-house lawyers. Unprepared bosses can find the process spinning out of their control, while employees can walk away not just upset, but furious enough to threaten legal action.

The key is to know what to say when, advises

Erika Tyner Allen

, a lawyer and training consultant who specializes in legal compliance and public communications. Employees should be given the news in a short, to-the-point meeting. Though you may be tempted to soften the blow by offering reassuring words, beware of sending mixed messages.

"That first meeting is for you to deliver the basic information," says Allen. "You should be careful not to convey that the decision is up for grabs." The best way to make sure you'll stay on message is to write down beforehand exactly what you want to say: the reason for the layoffs, a rundown of severance and vacation-pay arrangements, and any other pertinent details.

Being prepared doesn't mean you should come across as a robot, but be careful to maintain the right boundaries. "It's fine to say you're sorry -- it's always OK to be compassionate," says Allen. "It's not a time to say 'I know how you feel' or share a story from your own past. Give the employee the information and let them be by themselves to digest it. You can set up a time later to be their sounding board or let them vent."

Although many business owners worry that layoffs leave them open to anti-discrimination lawsuits, Allen says those concerns are overblown, given that relatively few such claims make it to court and win. "Employers have tremendous flexibility," she says. "Managers are much more fearful than they should be."

If you do worry a certain employee might make a case for anti-discrimination due to his or her age, race or other factors, it's especially important to determine the job-related reasons that particular employee was let go. "Before the termination, write a memo that articulates how the decision was reached and why," Allen advises. "The process of writing it down creates accountability." Save all such memos as a safeguard against possible lawsuits.

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Aim for what Allen calls the "don't piss your employees off" standard. An angry employee is more likely to seek revenge in court, no matter how flimsy the case may be. "Employees can sue for something silly," she says. "Even if it won't win in court, it can still be costly and time-consuming for you to defend yourself."

Letting employees go will probably always top the list of employers' most dreaded tasks. But the right preparation and mindset can make it less traumatic for both sides.

Elizabeth Blackwell is a freelance writer based in Chicago. She is the author of Frommer's Chicago guidebook, and writes for the Wall Street Journal, Chicago, and other national magazines.