Reduction In Force

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Updated: 4/13/2007 3:36 pm
Carrying out a reduction in force, also known as downsizing, is an unfortunate business necessity that many companies are faced with in today's competitive market. It usually involves terminating a mass number of workers from their jobs in an effort to cut costs. As necessary as it may be, companies contemplating a reduction in force should consider the consequences of laying workers off. Generally, any time companies must let workers go, especially when it's through no fault of their own, morale can be negatively affected. For example, workers who still have their jobs after a reduction in force is carried out may start to feel insecure of their own future employment status. This can create an uneasy and unstable work atmosphere. Furthermore, when a reduction in force involves the loss of knowledgeable, hard-working people, it may end up hurting the company in the long run. Companies may be wise to consider alternatives to downsizing such as reducing hours, implementing shorter workdays, or retraining employees for job positions not phased out. If and when downsizing can't be avoided, companies should be careful when choosing which workers to let go. It shouldn't be seen as an opportunity to get rid of workers who aren't liked. Such actions can result in discrimination or wrongful termination claims. Companies are better off deciding who to dismiss based on performance evaluations. Companies can further protect themselves from liability by asking departing employees to sign release forms that contain promises not to sue. Keep in mind that The federal Older Workers Benefit Protection Act requires that a waiver must be in writing, understood by the employee, and knowingly and voluntarily signed. It also must explicitly state that the worker is waiving claims under the Age Discrimination in Employment Act. To help employees in their transition to new jobs, employers should consider offering job outplacement services or severance pay. Under certain conditions, the Worker Adjustment and Retraining Notification Act, or WARN, may require employers to give their workers 60 days notice before a plant closing or mass layoff.
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