Layoffs vs. Permanent Separations

February 17, 2015

The term “layoff” is often misunderstood by employers. Other than a brief reference in the Worker Adjustment and Retraining Notification (WARN) Act that a “layoff” exceeding six months is covered by the Act, the term and the concept have no independent legal significance. It is not a process or theory that is otherwise formally recognized by law. Layoffs exist only as a matter of contract or employment policy.

The concept was proposed by unions decades ago in the collective bargaining process to preserve and protect jobs when employers reduced their workforces. The intent of the proposals was to protect the jobs for workers who were released by employers when the demand for its products or services was slow but who later hired new workers when the workload again increased. Such contractual provisions prevent the employer from hiring new workers while others retain protected layoff status.

Since then, the concept of “layoffs” has been used as part of the vernacular synonymously with permanent separation. Unfortunately, its casual use leads to misunderstandings. Well-drafted layoff provisions in collective bargaining agreements or personnel policies specifically establish the maximum duration of a protected layoff period during which an employee retains the right to be recalled to work should the employer decide to increase its workforce.

Excerpted from the Michigan Chamber’s 2015 Employment Law Handbook authored by attorneys from the Miller Canfield law firm.