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When a company is experiencing a temporary or seasonal decrease in production or income, it may need to issue layoff notices to employees. The precise contents of layoff notices will vary by company; however, most include the date the layoff is to begin, the reason for the layoff, and the expected date when the employee may return to work, if known. In many jurisdictions, layoff notices, often referred to as "pink slips," are important for the worker as it makes the application for unemployment benefits much easier and quicker.
Many companies, particularly in the construction industry, experience seasonal downturns in revenue as a result of the climate. Naturally, when a company does not have contracts to fulfill, it does not need as many workers as when business is booming. When a company does not have the business to keep all its workers busy, it may need to hand out seasonal layoff notices. Many construction companies routinely layoff employees during the winter months and rehire them back when the weather becomes more conducive to working.
Other industries may also encounter downturns in profits or face economic hurdles that require it to cut the size of its workforce. As a result, layoff notices will be handed out to employees. What criteria a company uses to determine which employees will be laid off will vary by company. In some cases, seniority will determine the order in which employees are laid off when a layoff is necessary. In other cases, the company may determine the order based on job title and responsibilities.
When an employee receives a layoff notice, it may indicate how long the layoff is expected to last, but, in most cases, it will be an indefinite layoff. Some employees, in construction industries for example, are regularly laid off during the winter and have a fairly good idea of when they will be called back to work. Other layoffs, while ostensibly a temporary layoff, are actually permanent.
While an employee never wants to receive a layoff notice, receiving an actual notice that the employee has been laid off, as opposed to being fired, can be helpful if the employee applies for unemployment benefits. In many jurisdictions, employee who has lost his or her job through no fault of his or her own may be eligible for unemployment benefits. If the employee has a written notice indicating that the employee was laid off, it can speed up the application as it is then clear that the employee lost his or her job through no fault of his or her own.