Wondering when you should start rehiring laid off employees? If your business has regained momentum and can financially support re-hiring the team you had to part ways with, continue reading for all the information you need to make your next step.
What Is a Laid-Off Employee?
A company laying off employees is much different than firing them, though the results are nearly identical. During layoffs, businesses terminate employment because of an action the business took. “Firing” occurs when the employee’s actions lead to their termination.
If you’re laid off, you likely didn’t do anything wrong; The termination occurred because of your company’s decision. Fired employees are less likely to be rehired than laid-off employees because their actions, at one point or another, broke company policy and forced the company to terminate their employment.
Can You Rehire a Laid-off Employee?
Yes! Unless the employee has found work elsewhere or your relationship ended on less than favorable terms, you can absolutely rehire a laid off employee. There are no laws that prevent this.
In fact, rehiring laid off employees has its benefits for your business. You’ll exert less time and money on training, and they’ll fit right back into your company’s culture. Reintroducing previously laid off employees could also help boost workplace morale.
Nonetheless, you don’t want to jump into the rehiring process too soon. Take this time to reassess your business goals, how your industry has changed, and how your human resources department can support your long term growth.
Why You Need to Rehire a Laid-off Employee?
Companies don’t need to rehire laid off employees, but doing so saves the time and expenses of onboarding entirely new employees. Since they already know the business, their transition back to work can be seamless.
It can also boost their morale and strengthen their devotion to the business. If the layoff was approached correctly, they’ll understand that the layoff was merely a business decision, not a reflection of their work performance. This level of communication, trust, and devotion is what most companies strive to achieve.
Rehiring Laid Off Employees: What You Need to Know
As you start to get back to business, use this opportunity to determine which laid off workers aren’t just available but also eligible for rehire. Here’s what you need to know about rehiring laid off employees.
1. Look to Your Cash Flow to Determine Rehiring Pace
Before you get the ball rolling, you need to have a good understanding of your business’ finances. If you analyze your cash flow and find that you’re still experiencing challenges, rehiring every laid off employee may not be an option.
But remember, you don’t have to do everything at once. Instead, only rehire employees that are essential and bring in the most value. You can always ramp up your staff when your cash flow improves.
If you decide to move forward with rehiring, consider your other expenses, such as rent, utilities, equipment costs, and more. Keep in mind that the cost of hiring extends beyond wages and also incorporates insurance, equipment, and more.
How long after a layoff can a company rehire? Remember, there’s no set time frame for when you need to take action. As your business progresses and you have more working capital, you can continue to rehire employees who are a good fit.
2. Evaluating Employee Eligibility
You’ll also need to examine each employee’s rehire eligibility. If the employee was terminated because of their own actions, they likely aren’t eligible.
Here’s a list of the types of employees who are eligible.
- Non-Voluntary Dismissal
- Voluntary Termination
- Returning to Work (from maternity, bereavement, or medical leave)
Most layoffs qualify as non-voluntary dismissals, allowing businesses to extend a job opportunity to them once financials improve.
3. Start by Rehiring Employees That Drive Revenue
Throughout the pandemic, many entrepreneurs took a step back from day-to-day operations and evaluated which employees, departments, or job functions are indispensable. You should continue with this mindset even as you get back to business.
You may find that certain job positions you thought were critical can easily be replaced by automation tools or even freelancers.
As you look to rehire, your main focus should be on driving revenue. Start by rehiring laid off employees who have previously played a key role in generating revenue.
Additionally, consider who can bring value in multiple ways. Anyone who can work in multiple job functions could help you accomplish more with less.
4. Communicate Your Plan to Employees
Talented, motivated, and well-trained employees are hard to come by. If you don’t make the effort to inform them of your plans and let them know how valuable they are to your company, they may feel inclined to seek work elsewhere. That means you’ll have to spend time and money to train new workers.
While you should never guarantee an employee’s right to return to work, you do want to communicate to employees you intend to bring back that they’ll have a spot on your team once business allows.
Be explicit, open, and clear about what employees should expect about getting rehired after being laid off. Let them know if you plan to have a job for them in the coming weeks or months. Inform them of your plans and the timeline for any changes.
Often, employees will understand that your plan is fluid due to the pandemic’s unpredictable nature. Keep them in the loop, nonetheless. Most importantly, be empathetic to all furloughed employees and show understanding if they feel the need to seek employment elsewhere.
5. Set Expectations and Goals Based on New Industry Trends
Keep in mind that your pre-Covid-19 target expectations for success may no longer be realistically attainable. Be mindful of using key performance indicators (KPIs), normally a helpful tool for measuring your employees’ success, when evaluating a rehired employee’s job performance. This measurement may no longer be as accurate or as indicative of how you’re rebuilding.
Instead of setting unrealistic targets, reconsider your expectations based on available resources and industry trends. When you hit a milestone, increase your goals and work toward the next milestone.
6. Create a Supportive Reintegration Process
Returning to a job that lets you go is a difficult mental hurdle for some employees. They may question whether it’ll happen again or judge leadership for the employees that were kept, so it’s essential to address these issues upfront and create a process that supports them throughout their re-onboarding.
This can include frequent check-ins, group meetings to encourage collaboration, and a transparent explanation of the situation that led to the layoffs, among many other things. It’s important to tailor your reintegration process to your specific employees. Will they need extra attention in the first few days/weeks to get back on track? If so, you should make an effort to meet the employee on their terms.
7. Use a Business Line of Credit to Accelerate Your Hiring Process
Rehiring laid off employees is a natural step as your business grows. Depending on how long it takes to get back to business, your cash flow may not cover your rehiring needs.
A business line of credit gives you access to additional cash to use for payroll and other expenses as your business scales back up. Unlike a loan, a line of credit allows you to draw cash as you need it and only pay interest on what you’ve borrowed.
As your business goes through the transitional period of rehiring laid off employees, the ability to cover sudden, unexpected expenses could make the difference between staying afloat and reaching the next milestone.
Banks typically offer the best interest rates but tend to only favor businesses with strong financials. Fintech lenders, on the other hand, can be more accepting of credit challenges or other issues. They can even provide financing in a few hours.
Fund Your Business’ Next Milestone
Getting back to business and pursuing new opportunities isn’t a one-step process. As you fit the puzzle pieces back together, know that the final product may look different from how your business did in the months before the pandemic.
Instead of trying to mold your business back to its original form, consider the changes that have occurred. Rather than achieving a fixed goal, prioritize progress. Be sure that you’re always inching closer toward building a business that’s profitable and efficient in your industry’s new landscape.
As you make these changes, a business line of credit can give you the flexibility you need for rehiring laid off employees and achieving your next milestone.
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Frequently Asked Questions
Do You Have to Rehire Laid Off Employees?
It’s not required to rehire laid-off employees, although doing so has many benefits for businesses. Not only is the onboarding process less time-consuming, but that employee can hop back into their role much quicker than a new hire learning the ropes.
However, it’s ultimately a business decision. They can choose to hire new employees if they need/want to.
Can You Get Rehired After Being Laid Off?
Yes! The company that laid you off could rehire you, but remember that it’s not a sure thing. Depending on the reason behind the layoff, it might be years until that business is ready to financially support more employees.
If you’re wondering about the possibility of being rehired, reach out to your old employer and ask. Still, it’s best to look for an alternative in the meantime.
Can an Employer Hire Someone to Replace a Laid Off Employee?
Yes. Businesses can choose to rehire laid off employees or hire new people entirely. There are many reasons behind this, but it’s ultimately up to the business owner to make this decision.
How Long After a Layoff Can a Company Rehire?
The timeline will depend on that specific business and its plan. If financials improve faster than they expected, they could start rehiring a few months later, but remember that it’s not a sure thing.
Layoffs don’t happen for just any reason; There’s likely a financial decision being made behind closed doors that led to the circumstances. It’s possible that a business will never rehire their laid off employees simply because they’re not as big of an operation anymore. In these cases, the laid off employees will need to search for new employment.
Why Should a Company Consider Rehiring Laid Off Employees Instead of Hiring New Ones?
An employee who’s familiar with your brand and processes doesn’t need as much onboarding attention as an entirely new employee. They’ll pick up where they left off, whereas a new employee will need time to learn systems, processes, and the intricacies of the workplace.
Businesses often choose to rehire employees because of this, especially after a lay off. Rehiring an old employee is also less expensive, which can be a prominent benefit coming back from layoff territory.
Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advice from National Business Capital and the author. Do not rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely on this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there may be errors, omissions, or mistakes.
