What is layoff?
A layoff is an action taken by a company to reduce its workforce. This can be done through either the termination of employees or the freezing of hiring and recruiting. Layoffs are usually implemented when the company is undergoing financial hardship and the organization needs to reduce its costs.
Effects of Layoff
Layoffs can have a lasting effect on workers, such as decreased morale among remaining staff members, reduced engagement in their roles, and fewer future opportunities within the organization. It can also create financial stress due to lost income and health insurance benefits that may no longer be available through the employer. Furthermore, layoffs can lead to flow-on effects in society such as increased unemployment rates and other associated economic issues.
Difference between Layoff and Retrenchment
Layoff and retrenchment can be seen as similar concepts, but they are actually quite different. A layoff usually happens when a company downsizes its workforce – either temporarily or permanently. This is usually due to a change in the company’s finances, market conditions, or organizational structure. Usually, it’s only certain employees who are laid off and these layoffs are often done without any notice or consultation with workers.
On the other hand, retrenchment involves permanent dismissals of employees due to long-term changes in the external environment that render their particular skills and roles redundant.
Another difference between layoff and retrenchment is that layoff generally implies short-term change, while retrenchment implies long-term structural adjustment of an organization’s workforce.