Layoffs refer to the reduction of staff size due to slow business or initiatives to save money. Layoffs can be permanent (the complete cessation of employment) or temporary (the cutting back of employment with an understanding that the employee’s position will be restored at a specific time. If you’re an employee potentially facing such problematic situation, it’s good to know the possible drivers of job insecurity.

Buyout

A large and powerful company can buy out smaller companies. They could buy the majority shares (in corporations). The larger company may replace or retain the employees of the acquired company. Employees of the acquired company could be terminated if their positions are redundant. If terminated, the employees will receive 30 to 60-day notice and notice of their rights, procedures, and severance benefits. If the employees wish to be retained, they might be transferred to other departments or hold a new position.

Cost-cutting due to economic downturn

Wages form one of the largest operational expenses. To save overhead and operating expenditures, the company will ask employees to resign in exchange for separation packages and employment search assistance. Those employees that perform redundant roles or perform unsatisfactorily are prioritized for layoffs. Employees who aren’t easy to replace will most likely be retained in the skeletal force team.

Industry decline

This refers to the slow economy of a specific industry - Agriculture, Commerce, Logistics, Information Technology, Healthcare etc. Pandemic, supply and demand and technological trends can impact industries. For example, two decades ago, landline phone boots and long-distance calls abound but as soon as the smartphones and internet advances came, the commercial telcos of the 1990s came into decline in the early 2000s.

Project ends

Projects are temporary. They may last from months to a year or so. When projects end, the participants’ employment ends. The participating employee or consultant will receive a regular salary or benefits until the end of the project. Examples of project-based employment include:

• Construction project - bridges, residential apartments, and tower
• Research project - Geological and social surveys
• Web development project for 1 year - A landing page and subpage for a pharmaceutical company

Relocation

A company may close down its branches in a country and transfer its assets to its remaining offices in the originating country. An organization could relocate because of cost-cutting and diversion of funds to the newly focused product and services segment. The company may not relocate employees due to redundancy and savings.

Staff redundancy

We have already mentioned the term a couple of times above. When staff perform identical tasks for a long-term project, their output becomes redundant, hence providing little value to the company’s goals. If an organization faces a slow business or possible bankruptcy, it may slash its workforce.