How to Layoff an Employee in Difficult Financial Times

There's a lot written these days about what to do if you lose your job. However, a lot of small business owners are facing very difficult financial times right now and are placed in the unfortunate position of having to layoff an employee. Sometimes, the person is someone who has worked with them for years. Often, they consider the person not just an employee, but a good friend. Here are some steps to layoff an employee.

Instructions

1. Put into writing everything you want to say. This will help calm your nerves and project a sense of optimism in an otherwise stressful situation. You don't want to layoff an employee and wouldn't be doing this if things were going well in your business. Do not feel guilty about things that are beyond your control. Try to project a sense of calm, even though you don't feel it. You want the person to feel that there is hope in an otherwise seemingly hopeless situation.

2. Contact your network of business associates to see if they might have openings. When you have to layoff an employee, see what you can do to provide a resource for finding another job.

3. Communicate to the employee that the layoff is due financial difficulties and has nothing to do with their abilities. Tell them that you value them as an employee and that as soon as things turn around in the business, you would be willing to hire them back if they are willing to come back and haven't found employment elsewhere.

4. Discuss a reduced salary. If things aren't quite so desperate and you don't have to layoff an employee just yet, you might consider asking the employee if he/she would consider working for a reduced salary for a period of time to see if things improve financially.

5. Do not over-explain or prolong the discussion. State the nature of the layoff and ask the employee if they have any questions, but do not drag out the encounter. If the employee wishes to discuss the situation further, feel free to do so to the extent you both are comfortable.

6. Inform them of any pay, including unpaid vacation, comp time, etc. that the employee will be receiving.

7. Thank them for their dedicated service to your organization and wish them the best of luck in their future endeavors. Tell them not to hesitate to contact you for a reference. Provide the employee with a letter of recommendation.