Laying off employees is one option for reducing staff levels in a company. Unfortunately, this is a difficult process for both employers and employees and could result in legal problems if the layoffs are not handled correctly and professionally. The U.S. Equal Employment Opportunity Commission protects workers’ civil rights. If a company cannot clearly show that its reason for firing someone is based on company finances or employee performance, the employee could file a civil lawsuit. To avoid such litigation, companies that lay off employees should instruct supervisors to clearly and honestly describe the reason for an employee’s termination. A supervisor should fire an employee in the presence of at least one other supervisor.
Furlough days are mandatory, unpaid days off that enable companies to reduce staff levels without firing any employees. Because the employees are not paid for these days, furlough days have the effect of pay cuts. For instance, if a company asks an employee who typically works 30 days a month to take three furlough days, the company essentially cuts the pay of the employee by 10 percent for that pay period.
Asking employees to change their work status to part-time is another option for reducing staff levels in a small business. Full-time work schedules are typically 35 to 40 hours a week in many industries and large companies. Part-time work schedules may be 20 or fewer hours a week, and are particularly common in small businesses. Businesses that ask employees to work part-time reduce staff levels and save money each month on payroll. Additionally, companies do not usually pay employee benefits for part-time workers, producing another significant savings for the business. The reduced pay and benefits may provoke some employees to quit.
Companies that rely on temporary workers for special projects or other non-routine aspects of their business can reduce staff levels by relying more heavily on their own staffs and not renewing temporary work contracts. For example, a newspaper could rely mostly on in-house staff to write articles and eliminate the use of independent correspondents. Companies generally cannot, however, dismiss temporary workers if the workers have a contract that guarantees a certain amount of work. Violating the terms of a temporary worker’s contract could result in a civil lawsuit alleging breach of contract by the company.