A layoff is a suspension or permanent termination of staff or a team by the organization. It is not just only about the employee’s fault but there are several reasons resulting in elimination of employees from the business enterprises.
What are the Reasons for Layoffs?
Layoffs are happening for different reasons and it changes from one company to another. The most common causes of layoffs are highlighted below.
- Outsourcing – Company starts assigning works to 3rd party vendors or oversees units.
- Performance Issues – Staffs who don’t perform as per the company’s requirements might be laid off occasionally.
- Technological Advancements – Automation or AI tools replace human job only if it’s repetitive or data-driven roles.
- Cost-cutting – Companies start reduction of headcount to save operating costs when there is a budget cut.
- Mergers and Acquisitions – Workforce reduction becomes essential after mergers due to role duplications.
- Loss of Funding – SMEs remove part of workforce if they lose investor support or key revenue sources.
- Business Relocation – A company moving to different region or country can layoff employee to commence new business operation with native people from their location.
- Organizational Restructuring – Revamping departments or processes can lead to role eliminations.
- Economic Recession or Crisis – Global or local economic downturns may force companies to scale back their workforce.
Layoff vs Firing vs Furlough
| Category | Layoff | Firing | Furlough |
| Reason | Business-related | Performance or misconduct | Temporary unpaid leave |
| Fault | No fault of employee | Employee is at fault | No fault of employee |
| Rehire possibility | Yes | No | Yes |
| Benefits | Severance may apply | Not offered | Benefits may continue |
Layoff Alternatives
Employers immediately don’t have to opt for layoffs as they can try below given alternatives.
- Reduced Work Hours or Job Sharing
- Hiring Freeze
- Voluntary Retirement Schemes (VRS)
- Salary Cuts or Benefit Adjustments
- Internal Transfers or Role Reassignment
- Unpaid Leaves
- Upskilling Programs to shift roles instead of removing them
Current Layoff Trends (2025)
The first six months of 2025 has seen the elimination of more than one lakh jobs. It exceeds the corresponding numbers in both 2023 and 2024.
SOURCE : The Hindu
AI-Driven Job Redundancies – Companies are cutting off employees as automation and AI tools can handle tasks like marketing, customer support, and even tech work.
Quiet Cutting – A current workplace trend where organisations move employees to less desirable roles rather than laying them off. The strategy helps in reducing the workforce and cut costs without deteriorating the brand reputation.
Remote Role Reductions – Businesses are gearing up to reduce remote-first jobs. Companies are reconsidering their workflow and give high priority to in-office or hybrid models. Increased scrutinization on remote roles and there’s also a substantial reduction remote job posting.
Tech Industry Rebalancing – After hiring too many people during COVID-19, tech firms are now restructuring and downsizing to manage only a limited number of employees.
Contract-to-Core Shift – Companies have ended gig or freelance contracts to focus on smaller team of employees with permanent full-time teams.
Impact of Layoffs on Companies
Operational Impact
- Disrupted Productivity – Team morale and focus can dip after layoffs.
- Increased Workload – Remaining staff often face burnout due to redistributed responsibilities.
- Reputation Risk – Layoffs, especially mass ones, can harm employer branding.
Financial Impact
- Short-Term Savings – Layoffs can reduce immediate payroll expenses.
- Long-Term Costs – Severance packages, re-hiring later, and reduced engagement may offset savings.
Frequently Asked Questions (FAQs)
1. What is a layoff in HR terms?
A layoff is the termination or suspension of an employee due to business decisions, not employee fault.
2. How is a layoff different from a furlough?
A furlough is a temporary leave (often unpaid), while a layoff is a termination that may or may not be permanent.
3. What should I do if I get laid off?
Start by reviewing your severance information, updating resume, applying for jobs, and reaching out to your network. Try to get a good job and if required, inform the reason for layoff when the interviewer asks. It is better to stay honest as you will be resuming a career.
4. What happens to my health insurance after a layoff?
This depends on your company’s policy and country laws. In some cases, COBRA or similar coverage options may be offered temporarily.
5. What is considered a mass layoff?
A mass layoff involves a significant number of employees (50+ depending on jurisdiction) being terminated within a short time period.
6. Can you give examples of mass layoffs?
Tech companies like Google, Amazon, or Meta have announced mass layoffs affecting thousands due to restructuring or market shifts.
7. Are layoffs happening in India now?
Yes, multiple sectors like IT, edtech, and startups have experienced layoffs for various reasons including funding shortages, AI integration, and operational changes.