What Are Voluntary Layoffs and How Do They Work?

Voluntary layoffs are when an employee decides on their own to leave their job without pay and accept a severance package. With a voluntary layoff, employees are offered a financial incentive encouraging them to either resign or retire.

AOL’s Voluntary Layoff Program And What It Means

How do companies decide between a furlough and voluntary layoffs?

Furloughs and voluntary layoffs are just two methods the management team can use to reduce a company’s workforce if necessary. Although both of these downsizing techniques are successful, the main distinction is whether the employer wants to keep a worker on a long-term basis.

There is no assurance that a worker who voluntarily leaves the company will be given the chance to rejoin it once economic conditions improve. In contrast, a furlough is a temporary pause in employment. The employer might want to keep the employee for a while, but they might not be able to pay them for a while. A furlough may also permit the employee to continue receiving benefits such as medical insurance.

What are voluntary layoffs?

When an employee chooses to quit their job on their own and accept a severance package, this is referred to as a voluntary layoff. Employees who choose to be laid off voluntarily are given financial incentives to resign or retire. In contrast to a traditional layoff, where the company decides which workers will be let go, in a voluntary layoff, workers choose who will take part and voluntarily forfeit their benefits and jobs.

If an employee wants to pursue other career or life objectives, they may decide to accept a voluntary layoff. They might also simply be excited about the possibility of changing jobs, especially if it keeps their coworkers employed.

Benefits of voluntary layoffs

A business may benefit from voluntary layoffs if it determines that it must significantly reduce its workforce due to financial constraints, organizational changes, a move, or other factors. Voluntary layoffs allow you to:

How do voluntary layoffs work?

There is no standard procedure for how voluntary layoffs operate, so you might want to consider how other businesses manage voluntary workforce reductions. Typically, the process begins with informing your staff that voluntary layoffs are an option. The announcement must be open and honest, detailing the incentive you’re offering, the positions that qualify for the incentive, and any additional requirements.

You should specify that the incentive is only available to manufacturing staff, for instance, if you specifically want to reduce the number of employees in your manufacturing department. Working closely with your legal counsel is typically a good idea to make sure you are adhering to all applicable local, state, and federal laws as well as the proper requirements.

What do companies include in a voluntary layoff policy?

A voluntary layoff policy may contain a variety of information, such as:

Frequently asked questions about voluntary layoffs

The most typical queries about voluntary layoffs are listed below:

Whats the difference between a voluntary and involuntary separation?

A voluntary separation occurs when a worker asks to leave their position. When an employee leaves their job without their consent, this is known as an involuntary separation.

What is in a severance package?

For each year an employee worked for the company, many employers offer a severance package that includes one or two weeks of pay. Employees typically have 21 days to accept an agreement before signing it, after which they have seven days to change their minds.

Can you get another job while on furlough?

Employees on furlough leave are typically permitted to accept a second job if their employer is okay with it. The employee is still employed while on furlough, so it’s crucial to keep in mind that accepting a new position could put them in violation of their employment agreement.


How do you negotiate a voluntary layoff?

Make sure you understand the benefits of taking a voluntary layoff and get them in writing. To find out if you will receive a severance package, ask the company representative. If they negotiate well, high-performing employees who volunteer for layoffs may occasionally get a better severance package.

Why do companies do voluntary separation?

The voluntary separation program’s goal is to give workers the option to leave their jobs voluntarily when business requirements necessitate a force reduction.

Is a layoff voluntary or involuntary?

A layoff is an involuntary termination of employment carried out by the employer for non-disciplinary reasons. Employees who are laid off may not necessarily be hired back when the business resumes hiring.

What are three alternatives layoffs?

Look at Alternatives to Layoffs
  • Reduce your workweek. Payroll is reduced by 20% when switching from a five-day to a four-day workweek, according to Zickerman.
  • Extend time off. …
  • Challenge employees to save money. …
  • Offer sabbaticals. …
  • Swap employees or lend them to another company. …
  • Look to your peers for help.

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