Purpose and Scope
This policy sets standard procedures to plan and execute a reduction in force (RIF) or position elimination at [Organisation Name] driven by restructuring, cost reductions, site closures, or reduced operational demand.
This policy applies to [Scope of Application, e.g., all employees] and all managers who plan or execute position eliminations.
Employment at [Organisation Name] remains at-will. Nothing here creates a contract, guarantees employment for a set duration, or mandates any specific selection method, notice period, or severance package.
Working through related paperwork at the same time? See also our US Employee Complaint & Open-Door Policy Template, Reference Request & Provision Template (UK) and US Reference Request & Provision Procedure Template.
Alternatives to Reduction in Force
Before approving a reduction in force, [Role] must evaluate and document non-separation alternatives:
- Freeze external hiring and match at-risk employees to open roles.
- Cut temporary, agency, and contractor labor.
- Offer voluntary separation or reduced work schedules, developed with legal counsel.
- Implement temporary hour or pay reductions compliant with applicable wage laws.
- Redeploy and retrain affected personnel for existing, funded roles.
Business Case and Selection Units
- [Role] must develop and approve a written business case before initiating any position eliminations. The business case must outline the operational rationale, affected functions or locations, and the target number of positions to eliminate.
- Focus the business case strictly on position requirements, not on individual performance or employee identities.
- [Role] defines the selection units, the specific departments, operational groups, or job classifications targeted for reduction. Selection units must match organizational structures and operational needs. Document their boundaries in writing.
Selection Criteria and Evaluation
Establish selection criteria in writing before evaluating individual employees. Criteria must be job-related and objective. At least [Number] assessors must evaluate employees using standard documentation.
Permissible selection criteria include:
- Skills, qualifications, and competencies required for the remaining work.
- Documented performance records, including formal reviews and active disciplinary files created before initiating the RIF.
- Criticality of current assignments, projects, or operational continuity.
- Length of service with [Organisation Name], when used as a weighted factor or tiebreaker.
Prohibited criteria include:
- Protected characteristics, such as age, race, color, religion, sex, national origin, disability, genetic information, or veteran status.
- History of protected leave, accommodation requests, safety reports, whistleblowing, or workplace complaints.
- Subjective proxies for performance, such as unmeasured potential or cultural fit.
Selection Criteria Matrix and Scoring
- Identify all employees within the designated selection unit.
- Evaluate each employee independently against the selection criteria matrix before comparing scores.
- Assign scores based on documented evidence using set weights, such as:
- Skills and qualifications for remaining work: [Weight, e.g., 40%]
- Documented performance history: [Weight, e.g., 30%]
- Criticality of current assignments: [Weight, e.g., 20%]
- Length of service: [Weight, e.g., 10%]
- Compare independent assessor scores. Document and resolve score discrepancies exceeding [Threshold, e.g., 1 point].
- Calculate total weighted scores and rank employees within the selection unit.
- Resolve tie scores using [Designated Tiebreaker Mechanism] and record the rationale in writing.
Use our templates to fast-track your documentation
Customize this template and 100s of others for free in Whale, the fastest way to get your team aligned.
Adverse-Impact Review
- Before finalizing selections, [Role] and legal counsel must run an adverse-impact review comparing provisional selections against the retained workforce.
- Assess whether the outcome disproportionately affects any protected demographic group within selection units or across the organization.
- If statistical imbalances appear, re-examine how criteria were applied, confirm written business justifications, or adjust selections before notifying employees.
- Document the review’s methodology and findings. Maintain records under legal privilege where applicable.
Statutory Notice, Final Pay, and Benefits
- Notice Requirements: [Role] and legal counsel must evaluate statutory notice requirements, including federal or state advance notice rules for covered plant closings and mass layoffs, to set applicable notice periods.
- Final Pay: Issue final paychecks according to jurisdictional deadlines. Pay out accrued paid time off and leave balances per legal requirements and company policy.
- Severance: Calculate severance pay using the approved [Organisation Name] formula. Legal counsel must review severance agreements requiring a release of claims to ensure compliance with statutory waiver rules.
- Benefits: [Role] will coordinate with plan administrators to issue health coverage continuation notices on time and clarify how retirement accounts, equity, and earned commissions are handled.
Implementation and Notification
- Schedule private, individual notification meetings led by [Role/Manager] and [Role/HR Representative]. Group notifications are prohibited.
- Deliver a concise message confirming the position elimination, effective date, and core business rationale. Do not debate performance or negotiate.
- Give the employee written documentation detailing final pay schedules, benefit continuation, severance agreements (if applicable), outplacement resources, and primary contacts.
- Send a brief operational update to remaining staff on notification day to clarify business continuity and team structure.
- Revoke system access, collect company assets, and handle reference requests per standard offboarding policy.
Documentation and Governance
Compile all reduction-in-force documentation into a single master file containing:
- Approved business case and rationale.
- Analysis of non-separation alternatives.
- Selection unit definitions.
- Completed selection matrices and scoring sheets.
- Adverse-impact review report.
- Statutory notice assessments and copies of formal notices.
- Written notification packages, severance agreements, and signed releases.
Store records securely in [System/Location] for [Retention Period] under the control of [Role].
[Role] maintains this policy. Review it [Review Frequency, e.g., annually], after every reduction in force, or when employment regulations change.
Policy Owner: [Role] Last Revised: [Date] Next Review Date: [Date]
FAQs on a layoff / reduction in force policy
What is a layoff / reduction in force policy?
A layoff / reduction in force policy sets standard procedures to plan and execute a reduction in force (RIF) or position elimination at your organisation driven by restructuring, cost reductions, site closures, or reduced operational demand.
Having it written down means the same rules apply to everyone, so managers are not making judgement calls case by case under pressure.
What does a layoff / reduction in force policy include?
This template covers alternatives to reduction in force, business case and selection units, selection criteria and evaluation and selection criteria matrix and scoring.
Every section is written to be filled in. The bracketed placeholders mark the decisions that are yours to make, such as timescales, approval owners and retention periods.
How to implement a layoff / reduction in force policy with Whale
Copy this template into Whale and work through the bracketed placeholders so it reflects how your organisation actually operates.
Assign it to the teams it applies to so it sits where people work rather than in a shared drive, and set a review date so it gets revisited on schedule instead of quietly going out of date.
Use our templates to fast-track your documentation
Customize this template and 100s of others for free in Whale, the fastest way to get your team aligned.
