When and how much advance notice of termination should you provide for layoff?

This question comes up quite often when companies need to make workforce reductions. Though employers dislike the layoff process just as much as employees, reductions can be a necessary part of doing business. If you want to be perceived as a responsible, employee-first company — and who doesn’t — it’s best to give advance notice of termination. A common rule of thumb is to give employees as much notice as you would require if the employee resigned voluntarily, which is typically two weeks.

But what type of notice should you give? Let’s take a look at some of the options.

Termination Notification Types

Non-Working Notice

The standard non-working notice is often two weeks. A non-working notice means you dismiss the employee on the day of notification, and they can go home. Even with a non-working notice, it’s common practice to offer severance.

Non-working notice allows several things to happen. First, it provides the team member the opportunity to decompress. Being let go is often quite difficult, and a non-working notice provides employees the time to begin working through those emotions. Non-working notice periods can also provide employees with a jumpstart to begin looking at other internal or external roles.

If employees were good performers who got caught up in unfortunate circumstances, they may want to search for a different role in your company. In this scenario, it helps to have a designated internal recruiter to assist the impacted employees as they navigate the recruitment process and to match them to open positions. Lastly, if the employee is hostile — which doesn't happen often — you can discontinue their company access immediately, but you're still being considerate by providing the additional paid time and resources.

WARN Act Notice

There are some circumstances where state and/or federal requirements determine the notice period, such as WARN (Worker Adjustment and Retraining Notification) Act. WARN requires employers to give 60 business days as notice. However, if circumstances don't require a WARN notification, it's up to business demands and/or company practices to determine how much notice to provide. Advance notice of termination in excess of two weeks can be a financial benefit or a business continuity disaster, so you need to think through all potential scenarios.

Working Notice

In a high-production or transition environment, where you may have business demands up to the last minute, you may not be able to give employees a non-working notice period. Instead giving working notice may be necessary. However, if you provide working notice, it’s important to let impacted employees know that you'll be flexible with their time and that they can use some of that time to look for other roles.

Be aware, though, that if you give some people working notices and others non-working notices — particularly in an action where the employees are all impacted by the same event — you're opening yourself up to potential discrimination claims. Make sure you have a clear business reason supporting why certain roles are needed. You’ll also want to determine if offering retention, in addition to severance, may be needed if the target date of your expected action (layoff) extends past two or three weeks.

Advance Working Notice – Customer Loss

If you are eliminating staff due to customer loss that necessitates a transition of work, you may need to provide a longer notice period because your employees will find out some way, somehow. Some employers try to be secretive as long as possible, but remember you can't prevent the customer’s employees from accidentally letting something slip. Keeping your employees in the dark about a customer loss can be disastrous and cause mistrust.

With this type of advance notice, be sure that you plan enough resources for the business transition phase. That includes identifying ways to enhance your severance package to keep people from leaving immediately. Given current job market opportunities, if your severance is not as rich, you may consider offering retention based on meeting certain performance criteria through a determined date.

Advance Working Notice – Outsourcing

If you are reducing staff and outsourcing the work, be absolutely sure the Business Process Outsourcing company (or other vendor) is able to undertake the work completely on the agreed-upon date. In this case, advance working notice is often based on timing and financial goals.

If (1) WARN hasn’t been enacted, (2) you have a goal of minimizing severance, and (3) losing people early isn't going to be a burden, then give a longer working notice. In an environment where the market is hot, people will most likely jump quickly, and it will reduce your severance burden. However, keep in mind that, if the vendor drags out the transition or there is some potential they will miss their deadlines, you still have a business to run — and you've probably lost half of your staff two weeks after notification.

If you are unsure about timing because the vendor is unfamiliar with your processes or needs to hire additional staff, you may want to provide a shorter notification of two to three weeks. The risk of your employees finding out about an outsourcing agreement is less likely than them learning about an upcoming customer loss. While it’s best that employees hear the news from you directly, it’s also challenging to lose customers and/or pay exorbitant retention as the dates are postponed, simply to keep your operations going. It's a delicate balance. Of course, in a situation where your employees are moving to the new company and staying whole from a compensation perspective, early communication is better.

A Recap

Overall, providing advance notice of termination and thoughtful communication will demonstrate empathy and illustrate goodwill during a tough time for employees. Advance notice of termination also tends to make people and business transitions run smoother.

Onwards HR makes it easy to issue the appropriate notice.

Written by Jen Bender, an HR executive with 20+ years of experience working in the industry, particularly on projects related to outsourcing and reductions in force