RIF vs. Layoff: Know the Difference

We often see the terms RIF and layoff being thrown around to describe the same thing: someone losing their job. But no matter how frequently you see these terms being used as the same, they are not. This is a common issue that we like to refer to as the RIF vs. layoff mix-up. How well do you differentiate between an RIF and a layoff?

Chances are you’ve lost your job or stopped working at some point in your working life. Or, at the very least, know someone who has gone through something like this. How did they break the news to you? Did they use the words layoff or reduction in force? (Sometimes people mix this up with fired, too, which is an even bigger issue.)

These two terms have got many people wondering: Does it matter if you call it an RIF or layoff? Isn’t it the same thing at the end of the day? Well, not quite exactly. These two terms weren’t coined just for the fun of it. RIFs and layoffs – believe it or not – are, in fact, different. And we must treat them as such.

A layoff is a temporary involuntary separation of employment as a result of budgetary or operational reforms. In simpler terms, the organization can’t afford to keep the position open or the position is temporarily unavailable. However, the good news about layoffs is that they are not permanent. Instead, they are typically temporary.

The main reason for a layoff is that there is not enough work for the employee to do or some other business decision has led to a role being redundant or unneeded at the current time. Employers who issue layoffs do so temporarily, with the honest intention of recalling employees as soon as business picks up.

During a layoff, an employee may no longer perform work-related duties or receive wages. Although a layoff is primarily considered to be a temporary termination of employment, it can become permanent. Say, for example, that the role isn’t needed again. After a certain amount of time, the layoff becomes a RIF.

So what is a RIF?

A reduction in force, on the other hand, is implemented when there is no longer a need for an employee’s position and the termination of employment is permanent from the start.

Therefore, the potential to rehire following an RIF is close to nil. A RIF is usually preceded by a change in business strategy, radical budget reforms, or any other drastic issues that cannot be solved with a temporary termination of employment.

Consequently, what makes a layoff different from a reduction in force is that it is primarily considered to be temporary. This means that the potential to rehire exists. In contrast, rehiring or recalling is generally not an option in the case of a reduction in force.

Additionally, it’s important to mention that good planning and organization is pivotal when implementing a RIF or layoff. Everyone within an organization fares better when the termination of employment is handled skillfully. This means that employers should develop a workforce reduction strategy to minimize the negative effects associated with termination of employment. Regardless of whether it’s temporary or permanent, HR teams should follow reduction in force guidelines for easy implementation.

You probably already know why workforce reductions occur. Perhaps the organization is going through reorganization, recovering from a financial hurdle, or limiting their products and services.

A reduction in force is usually a permanent solution to a perpetual problem. It entails a permanent separation between the employee and the organization. Things like huge budget cuts, rigorous reorganizations, mergers, and acquisitions can be the reason for issuing an RIF.

For example, if a company decides to discontinue the production, selling, and delivery of a particular product or service, then certain positions are bound to become redundant. The same goes for a company that has lost or ended a large contract. In both instances, a reduction in force is more than appropriate since there is no longer a need for these employees – nor will there be in the near future. In most cases, RIFs are an obligatory process for businesses to continue operating and have a positive cash flow.

The main reason for a layoff is a decrease in sales or a reorganization within the company that is temporary. For instance, there may be an influx of work during the holiday season that may require more employees. But as soon as this busy period passes, there is no need to have the same number of employees. As a way to save money, companies will implement employee layoffs. In any case, the employee will likely be rehired if the need arises. Hence, we can say that an employee layoff is more of a strategic move, rather than a mandatory business process.

Like we briefly mentioned above, many times a layoff becomes permanent, though. This is most likely the reason why RIFs and layoffs are often times lumped together. However, it’s very important to know the finer details, especially when you’re talking to staff members impacted by the move. During their exit interview, you need to explain if this is a permanent move or if the employee will be put on a recall list for a specific period of time.

Before implementing a RIF or layoff, HR should be aware of legal issues and act on them accordingly.

• The WARN Act. Organizations with over 100 employees must provide a 60-day calendar notice to employees during plant closings and mass layoffs.
• ADEA. Workforce reductions cannot unfairly target employees over the age of 40.
• COBRA. Employers should provide employees with the proper documentation to set up COBRA or else be the target of a lawsuit.
• FMLA. Things can get a little tricky when conducting workforce reductions while affected employees are on unpaid leave.
• USERRA. This law protects employees who take leave from work to serve in the military so terminating an employee protected by this law can cause legal trouble.
• Workers’ Compensation. Organizations that plan to terminate the employment of an employee on workers’ compensation need to provide a valid reason.
• EEOC. The Equal Employment Opportunity Commission protects employees in protected classes from being discriminated against in the workforce, including during RIFs and layoffs.

Make sure you pay attention to government guidelines to manage a compliant reduction in force. This will ensure you avoid legal trouble during workforce reductions.

We can conclude that the main difference between an RIF and layoff lies in the duration. Namely, the former is permanent, while the latter is temporary.

To avoid confusion, HR teams should assert this difference when implementing workforce reductions and refrain from using the terms interchangeably.If you’re going through a RIF or layoff, consider the reasons for the termination of employment. Do you see yourself rejoining the organization in the near future or is this a permanent separation? If you’re not sure, ask management teams or HR. This way, you know for sure what to expect and can plan ahead for finding new employment.