Layoff and Recall Policy: What HR Needs to Know

Layoffs are trying times for any organization. No matter what the reason for the reduction event, tensions run high and HR is expected to manage the brunt of the work, from notifying and meeting with those being let go to executing the paperwork and reports that happen behind the scenes.

Given how taxing this event can be, the internet is awash with tips and tricks on how to hold layoff meetings, send out notification letters, and other aspects of layoffs that are known stressors for HR.

However, what about a recall policy? After all, layoffs are ideally a temporary measure. The best case scenario is to improve the business situation enough to bring back at least some of the laid off employees. But if you are able to do that, what should your organization do next to get some of those people to come back?

Unfortunately, there is a surprising shortage of resources available on this topic. To help change that, we put together this brief guide covering what HR needs to know about layoff and recall policy to make sure your organization is prepared should you ever need to hold a layoff event.

In order to understand layoff and recall policy, we first need to discuss a simple, yet important distinction. Though many people look at a layoff as a permanent reduction event, the term layoff–on paper–means that employees may be recalled to work other roles or in other departments at the company.

A permanent reduction event is called a reduction in force (RIF), which sets the expectation that those being let go will not have a new role in the company, even if one becomes available. While many HR experts understand this difference, it’s still important to mention it to make sure everyone is clear on the distinction between the two and prepared for what a layoff event could entail.

Whenever you announce a layoff, you will need to have a recall policy in place in the event that you are able to recall any employees who were originally laid off. Especially if you expect your layoff event to be temporary. Any recall will need to be handled according to the provisions of your layoff and recall policy. If your layoff is expected to be a permanent reduction in force, this policy will still help guide your selections for layoffs, in addition to your company employment termination and severance policies.

Let’s dig into some details about what this layoff and recall policy typically looks like. As we say in every article about reduction events, always check with your legal team before initiating any sort of layoff or RIF event to make sure your policies and actions comply with all local, state, and federal laws. You can also download our free essential layoff guide to ensure that you are fully prepared for a smooth transition.

Your layoff and recall policy should explain that layoffs are generally seen as a temporary reduction and that your organization may let individuals come back to work in new roles that they are suited for. Remember, even if your reduction event becomes a permanent one, you will still need this policy, along with your company’s policies regarding employment termination and severance pay, to ensure the event goes smoothly.

Then your layoff and recall policy needs to address a few key points, such as detailing how employees will be selected for new roles and how HR will reach out to them. Basically, you need to explain–in clear language–how your recall will play out, how long employees should expect to wait to be notified, and what they should do if they want to be removed from the recall list.

Here are the key points you need to explain in the layoff and recall policy:

• What a layoff is
• How far in advance employees will be notified (check with your legal team)
• How employees are selected for recall
• How seniority and tenure are used in layoff and recall actions
• How this will impact vacation, sick leave, and other benefits
• Employee recall rights and how long they will remain on the recall list
• How employees can remove themselves from the recall list

We’ve already covered what a layoff technically is, and have other helpful resources on how far in advance employees must be notified about the event. So now let’s break down the remaining points you’ll need to explain in your layoff and recall policy.

As you start considering which employees might be good for a recall, you need to evaluate how they will fit into a new role and how their performance in that role could benefit the company. After all, if the employee will be unable to perform in a new role that might be slightly different from the one they left, it might not make financial sense to hire them back.

To help you properly evaluate this, here are four key aspects that should be used to determine who makes the recall list and who doesn’t:

1. The employee’s transferable skills and ability to achieve success in the new role

2. How the employee performed in their old role

3. The company’s business needs, such as sales quotas, project requirements, deadlines, etc.

4. How long the employee has worked at the organization (i.e., their tenure and seniority)

In short, you need to make sure that those you recall can not only perform the new role, but thrive in it. When looking at the pool of employees that you have let go and considering a recall, it’s important to keep that at the forefront of your mind, taking into account their past performance, what your company needs to fulfill orders or meet deadlines, and how long the employee has been with the organization.

Make sure this and any other recall selection criteria is clearly laid out in your layoff and recall policy for transparency. If you use these four criteria to help nail down which employees you decide to recall, you’ll be able to recall the right people without hurting your bottom line. 

One of the recall selection criteria mentioned above is employee seniority. In order to factor this into your decisions, you’ll need to keep track of each employee’s tenure. During a layoff and recall, it’s common to continue tracking this employee tenure until the recall period has concluded and switched to a permanent reduction.

For example, imagine someone is laid off after 30 months of experience working at the company, and the recall window is six months long. At the end of the recall window, that person will have accrued a total of 36 months of company experience. So that is their total tenure or seniority to use in your recall selection process.

This is important because it can impact benefits if the employee is recalled. This part of the layoff and recall policy largely depends on how your organization’s employee benefits policy works. But that same employee was to be recalled and reinstated in a new role, their tenure should continue to determine their earnings and benefits so that they don’t have to start again from scratch.

Despite this, layoff periods typically do not allow employees on the recall list to continue accruing vacation time or other time-based benefits like sick leave. Instead, if the layoff is expected to last longer than 30 days, the vacation time the employee has already accrued should be paid out to them at the start of the layoff period.

The other major element you need to include in your layoff and recall policy is an explanation of applicable employee recall rights under your local labor laws, such as what criteria and situations qualify an employee for the right of recall, and how that recall list–or layoff referral list, as it’s also commonly known–will work for your employees.

Essentially, you need to explain how long and under what conditions people will stay on the list. This could be six months, three months, one month–whatever you deem fit as an organization. After that period of time, the reduction becomes permanent, meaning those who were not recalled by that time will not be recalled at all. 

You should also explain in your layoff and recall policy how someone can opt out of the recall list for themselves. For example, if someone finds a new role elsewhere during the layoff and recall period, this policy should specify how they can contact the office to notify HR and management and ask to be removed from the recall list.

If you do recall someone, make sure you send them notice in a manner you are sure they will receive, by registered mail, with a return receipt requested. This may seem odd to mention, but it is very important. If you don’t have the right address for your employee, or if they’ve gone out of town during the layoff period, you may have difficulty reaching them.

When you notify a recalled employee, it’s also good to specify that they will have a certain amount of time to respond to the recall notice. Typically, HR departments offer around seven days–or one full week–to hear back from those who’ve been recalled. If they don’t get back to you in that allotted time, they will be removed from the recall list and will no longer have any job rights with the organization.

We’ve covered quite a bit here about layoff and recall policies and how they work. The tips explained above are common amongst HR professionals. However, it’s always important to make sure your policy works for your specific business and situation. No two companies are exactly the same, so make sure that you are doing what’s best for your employees and your organization.

Finally, remember that you should always consult with your legal team before, during, and after reduction events–even temporary ones–to ensure that you are complying with all local, state, and federal laws.

At Careerminds, we believe that you can never be too prepared for your next reduction event. Our arsenal of layoff resources, templates, guides, and industry-leading outplacement services can help you navigate the delicate layoff process. Click below to get in touch with one of our experts and see if we are the right partner for your organization.

Rebecca Ahn

Rebecca is a writer, editor, and business consultant with over 10 years of experience launching, managing, and coaching small to midsize companies on their business, marketing, and HR operations. She is a passionate people advocate who believes in building strong people, teams, and companies with empowering culture, content, and communication that facilitates meaningful results at every level and touchpoint. In her spare time, Rebecca is an avid traveler and nomad who also enjoys writing about travel safety and savvy. Learn more on her LinkedIn page.