A layoff is the termination of employment of an employee or (more commonly) a group of employees for business reasons, such as the decision that certain positions are no longer necessary. Originally the term "layoff" referred specifically to a temporary interruption in work, as when factory work cyclically falls off. However, the term has long been applied also to the permanent elimination of positions as a cost-cutting measure (or for other reasons.)

Further euphemisms are often used to "soften the blow" in the process firing and being fired, including redundancy, downsize and rightsize, workforce reduction and reduction in force. Mass layoff implies laying off a large number of workers. Attrition implies that positions will be eliminated as workers quit or retire. Early retirement means workers may quit now yet still remain eligible for their retirement benefits later.

Reasoning

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A layoff is typically driven by one of two forces. In the first case, the goal is to increase a company's profits. Typically the reasoning is that the company will be able to generate the same gross revenues in the future with a smaller number of workers: if the company's revenues do indeed stay constant while labor costs go down, then self-evidently profit will be increased. However, some layoffs occur even when management believes that revenue might actually go down: this usually occurs when there are other firms in the same industry who are performing better, or when a company needs to reduce excess capacity during times of lower volumes. A layoff, or even the suggestion of a layoff, may motivate workers to be more productive. Often, however, rumors of an impending layoff sap productivity as employees who are likely to be affected engage in searching for a new job.

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