Protecting Yourself In Staff Reductions

In good times, companies tend to hire employees with abandon. With business on the rise, individual employee performance problems become less important than having a sufficient number of employees to handle the increasing workload. Problem employees are retained in the face of potential litigation over employment terminations.

When business slows down and profitability turns, companies consider reorganization, which generally includes a reduction in staff (i.e., "layoff") to reduce fixed costs. The priorities change as companies seek to terminate those whom the company has "carried" for years, despite performance problems. Now the prospect of wrongful discharge litigation becomes an important economic consideration as the company weighs the two seemingly unattractive alternatives of either: (a) keeping the poorer performers despite the negative impact on the business, if their termination poses a threat