Legal Considerations When Downsizing Your Workforce

With a weakening economy, many employers are now facing tough cost reduction decisions, which include possible separation of employees. Once it is decided to implement a reduction in force, the employer must make a further decision as to whether it will be voluntary, involuntary, or possibly a combination of both. Employers contemplating a possible reduction in force should consider the following:

1. There are advantages and disadvantages to layoffs. The advantages include cost savings; maintaining only the strongest employees; and increasing qualified applicants in the field for businesses looking to hire new talent. The disadvantages include economic impacts on business/division operating with reduced manpower; negative impacts on employee morale and risk of liability; and potential productivity issues with smaller workforce.