Pros and Cons of Keeping Laid-Off Employees to Ease the Transition

Technology advances, economic downturns, business model changes and acquisitions – these are all common challenges that may prompt you to consider layoffs.

You’ve cinched the purse strings as tight as possible and even tried furloughs, but layoffs are looming. If it’s time to restructure, cut costs or combine positions, do you let your workers go now or keep them during the transition or to finish the work before they go?

There are pros and cons, depending on your organization’s needs. Before jumping into the decision, consider the best plan of action for your company.

Pros of keeping laid-off employees during transition period

  • Having a transition of institutional knowledge, process, procedures and customer background can be invaluable to those who remain with the company.
  • It gives the person who will be taking over the job more time to learn new skills and job duties – rather than just acquiring the job after others have left.
  • It allows time to document some of that knowledge that currently lives in the departing employee’s head.
  • Giving outgoing employees assistance and time to interview for a new job while they’re still working and getting paid makes for a positive separation – for both of you. They’ll be happier working and getting a paycheck, and you’ll get the work done that you need to get done.
  • Throughout the lifecycle of your employee, mutual respect is your foundation. That respect should have been there through hiring, training, onboarding, coaching and counseling. It shouldn’t be any different through the exit process.


Cons of keeping laid-off employees during transition period


  • They may mentally “check out” and not put in the quality work needed during the transition period.
  • Is the worker going to be too angry about the layoffs to effectively do the job?
  • Are they going to poison the atmosphere for those remaining? Are they going to be so bitter with the organization that they ooze disdain?
  • They could sabotage your systems or customer relations.
  • The outgoing employee may not have enough knowledge or expertise to help in the transition or train others who will be staying.


How to ease the transition

Before you even announce layoffs, you need a game plan for the outgoing employees. Will there be a severance package? If so, will the amount be greater if they can stay through the transition? What about time off to go on interviews?

Once you’ve had that difficult conversation and given your employees notice that their jobs are going away, you need to express the value for each of them.

If you’ve asked them to stay on, help them understand why they’re important to the process and the reasons for the layoff.

If you need employees to complete projects or work during the transition, there are incentives you can offer to encourage them to stay on and do a good job.

1. A retention bonus

You can give a lump sum at the end of the process or it can be divided month-by-month. Either way, it’s a financial incentive for them to stay for a specified amount of time.

For example: For those employees who want to leave right away when layoffs are announced, you might offer a severance package, of, say, six weeks. However, for those who stay a month, you could offer a severance package of 12 weeks.

2. Outplacement assistance

This may include resume writing, job-search assistance or career-transition consulting. You can turn to a third party to provide these services.

3. Flexibility

Give them time to go on interviews. Don’t hold someone to a 40-hour work week while they need to be interviewing – otherwise you’ll end up with a lot of people with “doctor appointments.” Maybe offer reduced hours, a flexible schedule and a more relaxed atmosphere.

4. Respect

You know what’s in it for you – getting the work done. But, what’s in it for them? How about a letter of recommendation? A show of appreciation and gratitude can go a long way in building professional goodwill. You never know – you may have the opportunity to hire one of them again someday (or vice versa).

Almost all business owners who have gone through layoffs can relate stories of when they wish they’d made different choices or asked for assistance. Having a team of human resources professionals that can help you weather the storm is possible with a professional employer organization.

Find out more in HR Outsourcing: A Step-by-Step Guide to Professional Employer Organizations (PEOs).


Christopher Young

Can an employee ask to be laid off for health reason’s affecting their performance if the employee is on FMLA. Will the employee get a severance package?

Insperity Blog

Hi Christopher, there are many factors that may apply to the way your employer takes action under the FMLA. For more information, you may find this document helpful:


Hi, I got a job for a pretty big company. They want me to sign a “knowledge of transfer, and continuing cooperation, without pay or compensation in case Im fired or laid off for 6 months” is this ok? I’m not sure what to do.

Insperity Blog

Hello, Thank you for your question and congrats on your new job! The best way to get a full understanding of the specific details within your agreement would be to reach out to an employment law attorney. That individual would have the opportunity to review the full document and provide you personalized guidance. Best wishes on your new role!


“However, for those who stay a month, you could offer a severance package of 12 weeks”
I don’t agree

Insperity Blog

Thanks for your comments. Offering a severance package is simply one of many options a company can offer an employee who has been laid off. Different situations call for different solutions and the final choice is up to the company to decide.