Work returns, but will you?

Before taking a voluntary layoff, there are things to consider,

As COVID-19 restrictions ease and businesses carefully reopen, many employers face the difficult task of cutting workers they no longer need.

Firms commonly rely on employee layoffs to cut costs and trim their workforce. Voluntary layoffs (also known as voluntary buyouts) allow employees to acknowledge that they are interested in being laid off. Recently, many businesses, such as Boeing, Fiat Chrysler Automotive, Ontario Lottery and Gaming and even the Government of Ontario chose to offer voluntary layoff to reduce their workforce.

There are at least three major factors you should consider before volunteering for a layoff: external employment opportunities, severance package considerations and personal factors.

Evaluate external employment opportunities

Before quitting, people often carefully assess their chance of finding employment elsewhere. The same evaluation should take place during voluntary layoffs.

During the COVID-19 pandemic, industries like accommodation, food services, retail and airline transportation have seen significant declines. However, industries like communication and information technology, health care and grocers have all reported growth. Similarly, some fields like supply-chain management, IT, e-learning and security have experienced significant surges in demand.

Generally, as an industry or job experiences decline, chances of finding comparable jobs also reduce. Given that these industries or jobs might have higher unemployment levels, you are competing with more people for existing vacancies. Employers often use education, training or accreditation as a measure of skills, and networking is now the best way to find jobs. So how your competencies, network and skills compare to others is important to evaluate when considering voluntary layoffs.

Of course, if you are willing to change industries or jobs, this factor might have less importance to you.

Severance package considerations Unlike performance-based dismissals or those who quit, employees are given financial support if laid off.

This can include legally mandated reasonable notice (working notice or payment in lieu of notice). Firms might need to give a severance package. In addition, employees who are laid off and meet the minimum eligibility requirements for employment insurance will be paid 55 per cent of previous pay up to amaximum of $573 per week for a maximum of 45 weeks as they search for a new job.

Some people use this safety net as a chance to start up a new business. Some use this time to get re-skilled, certified, or develop their competencies so that they can increase employment opportunities. Some take the time to explore career changes.

Think about how the financial side of a potential layoff might help or hurt you, considering all aspects of compensation, including the value and duration of the severance package, notice period and EI eligibility.

Personal factors Outside of the pandemic, human resource research consistently shows that two biggest predictors of quitting intentions are low job satisfaction and low organizational commitment. If you personally are unhappy with your job or company, you are likely to consider leaving.

As we faced a global pandemic, many of us are reconsidering our commitment to our employer, how meaningful we find our jobs, the role of work in ours lives, and what is important to us on a fundamental level. If you have changed your personal perspectives on any of these issues, it might trigger you to reconsider your employment options.

The pandemic provided an opportunity for many of us to live a simpler life, re-evaluating our needs versus our wants. People also need to think about the impact of job loss at a very personal level. What is your willingness to take on some insecurity as a household unit? How comfortable are you with your debt-to-equity ratio?

If you were considering leaving the job due to any of these personal factors, volunteering for a layoff might be a good option for you.

What works for one doesn’t work for the other Ultimately, there is no broad answer to all employees contemplating a voluntary layoff, if or when the option is presented. Instead, think clearly about your personal factors, external employment opportunities and financial incentives of layoffs. Talk to your loved ones, people who know you best, or human resource experts to help put the puzzle together.

This is very different from involuntary layoffs, in which the manager and/or human resource department choose which specific employee will be laid off.

Often, the company has no layoff policy in place, so shifting responsibility to the employee helps them speed the process. Voluntary layoffs can be viewed as more legally defensible for the employer, since the employee opts into it. Sometimes companies engage in voluntary layoffs because they want the employee to be part of the decision-making process. It can also help the employer maintain the reputation of being a good employer.

Regardless of underlying reason, some companies entice employees to take a voluntary layoff by offering very lucrative severance packages.

Nita Chhinzer (MBA, PhD) is an associate professor of human resources in the department of management, University of Guelph.