Unpacking the Reasons Behind Your Layoff

We live in very uncertain times regarding the global economy, and layoffs have become a routine part of corporate jobs. As unfortunate as that is, knowing why you were laid off is practical. In this article, we have tried to explain what it means to be laid off, the potential reasons for your layoff, and some other phenomena related to layoffs within an organization.

What does it mean to be laid off

A layoff usually means when employees are terminated temporarily or permanently by the company for reasons unrelated to their performance. A mass layoff can happen due to a decline in funding, the company’s effort to cut back on unprofitable avenues, an economic downturn, etc. When employees are laid off they don’t lose their investment in the company’s retirement plan or are qualified for a severance package. And even though they lose wages and company benefits they qualify for unemployment insurance or compensation.

Layoffs are different from firing for causes such as unaccepted workplace behavior or performance issues of a specific employee. Since mass layoffs can often damage the economies of surrounding communities it is not ideal for an economic section that is dependent on a singular employer or a single industry.

So, layoffs are understandably unpopular with the workforce whether the employer calls it “downsizing”, “right-sizing” or “smart sizing”. Layoffs can also be termed as “workforce reduction” or “reduction in force”. Layoffs are also different from a “furlough” where workers are idled for a time due to the repairment of plants or other such reasons.

Reasons for being laid off

Now that we have an idea about layoffs, let us look at the reasons for them so you can better understand why you were laid off.

Laid off for Cost Reduction

The most popular reason for layoffs by far is a company’s effort to cut back on costs. This can happen due to an economic downturn but usually, it means that the company is in debt and trying to avoid a buyout. Reducing the workforce hence is a certain way of ensuring more cash to pay off the debt. It can also mean that the company is not making a substantial profit to stay functional and in the competition.

If a company does decide to lay off employees it must be done swiftly. Otherwise, it can lose even more money on lawsuits or severance packages which is beneficial for the employees but not so much for the organization.

Staffing Redundancies

Redundancies in staffing can happen due to over-staffing in a specific avenue, outsourcing, or modification of a role. Layoffs can happen went the company spots this redundancy and wants to eliminate some operatives to increase efficiency and cut back on cost. This kind of layoff also ensures a new management style, changes the direction of the company, and redefines job responsibilities for workers who were not laid off.

Reducing the workforce in one sector can mean expansion in other. For example, if the company decides to expand its IT sector it may lay off employees from marketing.


The need for a layoff can also arise from the company’s decision to relocate, i.e, shut down offices in one location to open one in another. Since shutting down the office of said location will not only affect the employees but the overall surrounding economy, the company should take extra care to minimize the damage. In other words, it should provide the employees with resources to help them adjust.

Merger or Acquisition

A merger is when two companies combine to create a new organization. This may be done for tax purposes, to increase product offerings, reduce competition in the industry, and/or bring in more profit. Although This means the companies may need more employees to realize their goals. However, the companies might decide to lay off employees because mergers often create duplicate positions. The leaders of the new organization can also decide to lay off some employees to save money.

An Acquisition is when one company buys out another. This is why an acquisition is also called a buyout. A company might buy another to gain access to resources, reduce competition or increase market power. In this process, the employees might experience lay-off because the new leadership of the new business might want to save money by reducing duplicate positions.


Some companies only operate in specific seasons of the year. For example, a ski resort operates at its full capacity only during winter. So, they might decide to lay off employees during Spring because the resort is not accommodating as many guests anymore. They can also decide to retain some of them if the resort still stays open at some capacity. Industries might also lay off employees temporarily with the promise of reinstating them.

Loss of Funds

A big loss in company funds can happen due to a drastic decrease in sales due to unforeseen calamities, or if an investor changes their mind about investing. In these cases, if the company is not realizing profits they might decide to lay off employees.

Big Tech Layoffs of 2023

Here is a list of Big tech layoffs of 2023

  • Microsoft is laying off over 100 employees working for its industrial metaverse team. It will also lay off employees at Hololens, Surface Laptop, and Xbox products.
  • Yahoo will lay off 20% of its employees as it cuts advertising tech industries. 20 percent of Yahoo employees means 1600 personnel will be out of their jobs.
  • GitHub which is Microsoft owned is supposed to lay off 10 percent of its workforce to cut costs. This also means that they plan on going fully remote.
  • As of February 1st, Paypal has also announced that it would lay off 2000 employees in an attempt to cope with the slowing e-commerce trends.
  • As of January 26th, SAP is supposed to lay off 2800 employees due to their net income dropping by 68%.
  • On January 20th, Google announced that it will cut 12,000 jobs globally which is almost 6% of its workforce.
  • Alphabet, Google’s corporate parent, also announced there would be layoffs at its Mountain View, California-based robotics subsidiary Intrinsic AI, eliminating around 20% of its workforce or roughly 40 employees.

What to say when you get laid off

Here are some suggestions on what to do if you are laid off

  • Do your research on your area or country’s lay-off policies beforehand.
  • When your boss tells you that you are laid off, ask them if it is immediate.
  • If it is not, ask them when your last day is.
  • Always ask for a letter of recommendation.
  • Speak to HR to complete the necessary separation paperwork.
  • Make sure you get your lay-off paperwork in order to claim any unemployment benefits or severance packages if you are in a location that offers them.
  • Always keep calm and professional and maintain professional contact with everyone in your old office.

What is Funding Winter

A funding winter s a period of a market correction of capital inflow where short to mid-term startups find it difficult to achieve sky-high valuations and struggle to raise funds.

Factors leading to Funding Winter

Here are the main factors that contribute to making a funding winter.

  • Geopolitical Tension, for example, the Russia-Ukraine war led to tension between the.
  • Global inflation; For example, the central banks including the Federal Reserve are forced to raise interest due to market conditions.

The Impact of funding winter

Funding winter especially affects the startups–

  • It can cause the paychecks to get smaller. There can be multiple rounds of funding with smaller valuations.
  • Initial public offering slows down. Resulting in a lack of exit strategies.
  • An increase in Mergers and Acquisitions.
  • And finally, it causes cost-cutting and right sizing which is essentially a mass lay-off.
How do you explain you were laid off?

Firstly, a layoff has nothing to do with your performance. It is the choice of the company. So, be honest about the fact that you were laid off and keep a positive tone. Usually, when an employer asks you the reason for your layoff they actually want you to address it first. So, address the elephant in the room. And always emphasize your value as an employee in a stable work environment.

Why did I get laid off?

Most of the reasons for layoffs are listed above in the article. But the most common reasons, and probably what happened in your company’s case, are cost reduction, relocation, buyouts, mergers, or bankruptcy.

Should I say I got laid off?

It is natural to feel insecure about keeping jobs or interviewing for them when you are laid off. You should always address the issue first when you sit down with a new potential employer.

What is funding winter?

A funding winter s a period of a market correction of capital inflow where short to mid-term startups find it difficult to achieve sky-high valuations and struggle to raise funds.

How to cope with layoff?

The company should help the laid-off employees adjust to the playoff by providing resources. But to deal with the emotional instability you should seek out colleagues who are going through or have gone through the same thing.

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