Call Us: (563) 583-2115
Call Us: (563) 583-2115

Alternatives to Employee Layoffs

Businesses around the world are hurting right now and many business owners are struggling with the dilemma of whether to layoff employees now or try to ride things out with the hope that they’ll get better. It’s an unenviable decision. For most employers, these people are like a second family and it’s not easy to let go of them. Which is why you sometimes need to think outside the box to get things done.

None of the solutions below are ideal, but if you’re looking for an alternative to layoffs, one of them might be your best option.

Freeze hiring, raises, and bonuses

If you have not already, make sure that you halt all payroll increases. That means freezing all hiring and raises and cutting out bonuses. You’re trying to maintain or decrease the amount you spend each week on payroll, not increase it.

Cut part-time staff and contractors

One way to make cuts to payroll without losing core team members is to eliminate part-time staff and contractors. Cutting hours or letting go of either can help lower your payroll. Just remember that these staff members and contractors may not be available again if you want to hire them back in the future.

Create a virtual office

For some businesses, the physical location is closed, and employees are working from home. If this is your situation, consider whether it’s working and working well. Can your business successfully operate in the long-term with a virtual office and online meetings? If the answer is yes, then you might be able to cut rent out of your expenses and funnel that rent into other expenses like payroll.

Pay cuts

Pay cuts are a way to lower your payroll while still keeping part or all of your staff. However, pay cuts may foster dissatisfaction among your employees, especially if those cuts remain in place well after the business recovers.

Your ability to issue pay cuts to full-time employees will depend on the employment laws within your state as well as the contract you have in place with that employee. Be sure to contact your human resources specialist before you issue something like pay cuts across the board.


Similar to pay cuts, furloughs are also something you’ll need to contact your human resources specialist about before you institute them.

Furloughs are kind of like a temporary layoff. You’re giving an employee unpaid leave for an undetermined amount of time, but you’re planning on reinstating their pay when things get better. According to SHRM, the benefit of furloughs over layoffs is, “employers do not have to pay for recruiting, selecting, socializing and training new employees because the furloughed workers can pick up where they left off.”

What if I have to layoff employees?

If there’s no way around it and you have to layoff your employees, then there are ways to make it easier on the employee.

  • Be polite and empathetic. Make sure you state upfront that this has to do with the health of the business and that the employee did nothing wrong. Offer to be a reference for the employee during his or her future job search.
  • Have a list of resources available for them including where to apply for unemployment and other services.

These are difficult times and if you have a good relationship with your employees, they will understand that you’re trying to do your best by them.

Note: The above are options that you should explore, but please remember that they are general insights and not advice for your specific company. If you’re looking for advice that would directly relate to your business, please feel free to contact us here at Tax Credit Group or contact your financial adviser.

© Copyright 2022 Tax Credit Group, Inc.

3500 Dodge Street Suite 302 | Dubuque, IA 52003 | (563) 583-2115