Employee Temporary Layoff Policy

Outline and define rules for temporarily laying off employees in your organisation.

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Employee Temporary Layoff Policy-undefined

There are situations and times when temporary lay-offs of staff need to be implemented which could be influenced due to various internal or external business reasons. This policy defines circumstances under which this policy will be implemented in order to set the expectations of the employees in your organization. You can also define how communication has to be done and how the process will work.

This policy template is available for download in Word format.

With this Employee Temporary Lay-off policy template, you can:

  • Define a process and guidelines for employees and managers to follow
  • Outline the method to revoke the policy at some point in time
  • Set up a process if an employee wants to leave the organization or needs to be laid off permanently

In just a few minutes, you will be able to set up a policy that covers most of the necessary information required.

This policy covers rules to be followed with respect to:

  • Temporary layoff
  • Communication process
  • Conversion from temporary to permanent lay off
  • Joining back after temporary layoff and lots more…

Employee Temporary Layoff Policy


There are situations and times when temporary lay offs of staff need to be implemented, and this could be influenced due to various internal or external business reasons.

Scope and Applicability

This policy applies to all our permanent full-time, part-time or contract employees. This policy is owned by < Name of the Person > and reachable @ < Contact Number > and < email address >


Brief and Purpose

We recognize the need for a temporary halt of production or service to our clients due to reasons that are beyond the organisation’s control. This will culminate in lay-off of employees either on a temporary basis or for long periods.

Laying off employees brings new challenges and also legal attention. < Client Name Here > will comply with the law at all times.

Policy Elements

“Temporary layoff” refers to reducing the number of employees on a short-term basis. Sometimes, we may ask employees to take planned, unpaid or partially-paid time off from work for a specific period (“furlough”). In the case of furloughs, employees may be eligible to maintain some employee benefits such as health insurance. < Client Name Here > may decide to lay off employees to:

  • Cut costs
  • Increase efficiency
  • Restructure our organization
  • Seasonal work cycle
  • Pandemic or natural disaster or causes
  • Restructuring or shifting or dismantling of a process or function
  • Any other reason as deemed fit by the management that warrants reduction in staff

Temporary Layoff/Furlough Elements

< Company name > will endeavor to provide employees with a written notice at least < one-month > in advance or as much as is specified by law before the effective [temporary layoff/ furlough] date. In the event this timeline is not possible due to any urgent decision taken by the management, impacted employees will be paid in lieu of the notice period as per terms of their respective contracts.

[ Temporary layoffs/ Furloughs ] may last from days to several months. We may set a [Temporary layoff/ furlough ] period (if it’s not set by law), during which we may recall [ laid off/ furloughed ] employees to resume work. During that period, employees may continue to receive pay and benefits dictated by law (e.g. unemployment benefits or health insurance).

This period may be extended due to unforeseen circumstances. < Company name > will be obliged to give notice of extension in this case.

If the Company recalls a [laid-off/ furloughed] employee within that period, there are two possibilities:

  • The employee returns to work in the same or similar or higher or lesser position than originally hired for.
  • The employee does not wish to return and officially resigns, post which the company will take appropriate further steps for final settlement.
  • In any case, employees should formally accept or refuse to return to work within [ five days ] after they receive a recall request. If an employee finds another permanent job during the recall period, they must notify HR within [ three days ] of a recall request. In this case, they lose the right to be recalled.
  • If the Company does not recall a [laid-off/furloughed] employee within that period, an official termination letter will be sent to the said employee within [five days]. < Company name > will pay them as per the contract or as per law, whichever is higher (e.g. severance pay) from the first day of termination.
  • The first day of an employee’s termination is the first day of their layoff, unless applicable law dictates otherwise.

Selecting Employees for Temporary Layoffs/Furloughs

When collective [temporary layoffs/ furloughs] are necessary, < Company name > may choose to select employees according to the following criteria:

  • [ Levels of performance ]
  • [ Length of service ]
  • [ Workload ]

< Company name > will not discriminate against any employee at any levels. HR is responsible for ensuring that [ temporary layoffs/ furloughs ] are managed efficiently and well documented.

Regions, branches, sub-branches, local offices, departments or by whatever names it is called, may need to close if they aren’t profitable or non-critical to the business. HR, senior management or Heads of Departments may initiate a [ temporary layoff/ furlough] process. HR is responsible for ensuring legality and efficiency.

Employee Rehire After a Temporary Layoff

During the temporary layoff period, employees may apply to another department or branch of our company. < Reporting Officers > are encouraged to refer employees to another assignment or position within the company. In the case of the laid-off employee being rehired, their temporary layoff period will end and they won’t be eligible for severance pay from their first day in a new role.

If employees receive severance pay for a certain period, they must not work for the company during that period. If they are rehired in a different department or branch, before the severance period ends, they have to return the remaining portion of their severance payment. Employees may make arrangements for repaying that balance with HR. In case of furloughs, employees returning to the company will not be eligible for unemployment benefits.


Employees have to route any questions through their respective < Reporting Officer >, who in turn will contact HR. If there are disagreements or complaints, employees are advised to follow the company’s grievance procedure.


This general procedure should be followed:

  • [ HR/Senior management/ Department Heads ] identify the need for reducing staff.
  • [ HR/Senior management Department Heads ] select the positions, teams or departments that should be abolished or branches that should close according to established criteria.
  • HR ensures that no discrimination has taken place and that there won’t be an adverse impact on any set of employees.
  • HR/Senior management consults with an attorney to ensure legality of the process.
  • [ HR/Department Heads ] notify employees selected for [ layoff/ furlough ] through an official letter explaining the reasons for [ laying off/furloughing ] and whether they should expect to be recalled.
  • HR is responsible for discussing the [ temporary layoff/ furlough ] terms with affected employees and addressing any outstanding payments and documentation.

Special Circumstance and Exception

Any Deviation from this policy has to be approved by HR. Any changes to the policy has to be approved by Legal and Compliance.

Non-compliance and Consequence

Not Applicable

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This template is meant to provide general guidelines and should be used as a reference. This is not a legal document. greytHR will not assume any legal liability that may arise from the use of this template.
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