How to Write a Compassionate Layoff Letter Due to Lack of Work

When your business loses clients, contracts, or market share, it can cause major issues within your organization, especially when it comes to your human capital.

If one of these losses causes a significant disruption, you might have to lay off some of your staff. That means you’ll need to write a layoff letter due to lack of work and send it to the affected employees.

In this article, we’ll discuss what a lack of work means, how to write a compassionate and compliant layoff letter due to lack of work, and how to communicate the news effectively to your staff.

A “lack of work” situation happens when you have more employees than are necessary for the available tasks. This is often triggered by:

• The loss of a client or contract.
• A downturn in revenue.
• Reduced product demand.
• Business restructuring.
• Automation or new technologies.

Think of it like a school group project where two people end up doing all of the work, while five others have no tasks of their own. That’s a basic example of job redundancy.

Organizations facing fluctuating demand often rely on contract workers or temporary layoffs to stay agile. But when reductions need to be permanent, layoffs are the next step.

It’s always a stressful time when layoffs occur, especially for HR professionals. You’re expected to handle logistics, lead difficult conversations, and watch coworkers (often friends) lose their jobs.

That’s why having a solid lack of work layoff notice template ready to go is essential. It removes one more stressor during a hectic time, so that you can focus on ensuring the process is handled smoothly and legally.

A layoff is typically caused by business factors such as a lack of work, not employee performance. Termination, on the other hand, usually refers to a separation caused by an employee’s conduct, policy violations, or performance issues.

Instead of having to craft a letter from scratch for every workforce reduction notice, you can click below to use our customizable sample layoff script. This free template guides you through five simple steps to craft empathetic notifications for your next layoff event.

The best way to inform employees is with a clear and compassionate job redundancy letter followed by a face-to-face (or virtual) conversation. You should outline the reasons for the layoff, clarify next steps, and provide support resources such as severance, benefits, or outplacement services.

Layoffs should be communicated in three parts:

• A formal employment termination letter or layoff notice.
• A 1-on-1 conversation between the employee and a manager or HR rep.
• A follow-up meeting to discuss benefits, resources, and next steps.

Let’s start with a sample layoff letter due to lack of work to give you an idea of what your own layoff letter should include. Below is our lack of work layoff notice template that you can copy and customize for your own organization.

Feel free to copy and customize this free employment termination letter template to craft your own layoff letter due to lack of work. Of course, this example is provided for illustrative purposes only, and does not constitute legal advice. Remember to review all of your layoff communications with your legal team before sending anything to your employees to ensure compliance with all applicable laws.

Now let’s break down this sample lack of work layoff notice to understand its key components. Crafting a layoff letter due to lack of work requires a careful balance of clarity, professionalism, and empathy. 

Avoid placing blame, and instead focus on the business reasons behind the decision. Wherever possible, reassure the employee by mentioning available resources such as severance or career transition support in the letter. 

Then before distributing the letter, especially in the case of a mass layoff or when employees over 40 are affected, always consult with legal counsel to ensure compliance.

Here are six elements your lack of work layoff notice should include:

• Clear opening: Start with the employee’s name and the reason for the letter.
• Reason for the layoff: Briefly explain the business reason for the lack of work, such as a company restructuring or economic downturn.
• Effective date: Specify the employee’s final working day to provide clarity on the timeline.
• Severance and support: Mention any available severance, benefits continuation (e.g., COBRA), or support resources (e.g., outplacement).
• Details on next steps: Outline any next steps where they can learn more and ask questions, such as setting up a meeting with their HR rep.
• Positive Acknowledgement: End with words of appreciation for their hard work, making it clear that this is not a reflection of their job performance.

Severance is not legally required in most cases, unless specified in an employment contract or company policy. However, many employers do choose to offer severance pay to support departing employees and reduce legal risk.

Although layoffs caused by a lack of work differ from those due to mergers or acquisitions, the legal and logistical processes are similar. But with careful planning, clear communication, and compassionate support, you can help ensure a smoother transition for everyone involved.

Here are the key takeaways:

• Layoffs due to lack of work are often the result of business challenges such as lost clients, reduced demand, or restructuring—not employee performance.
• Your letter should include a brief explanation of the situation, the employee’s last working day, available resources (such as severance or outplacement support), and next steps.
• Avoid vague language, excessive emotion, or blame, and focus instead on business necessity and employee dignity.
• Always consult with legal counsel before distributing layoff letters, especially in mass layoffs or when employees over 40 may be affected.
• Use a consistent, customizable template to simplify the process, reduce legal risk, and ensure that all affected employees receive the same level of care and clarity.

Need more support? If you’re looking for more guidance for your upcoming layoff event, click below to speak with our experts and learn how Careerminds can help you navigate this difficult process and provide the best support for your impacted employees.