Can we include employees who have performance problems in a reduction in force (RIF)?

This decision depends on whether the problem employee meets the criteria used to identify employees to be included in the workforce reduction.  If the employer has solid written documentation of the business purpose for the RIF, as well as defendable reasons for how and why employees were chosen for layoff and that employee meets those criteria then he or she should be included.

After a company has determined that a RIF is the best way to meet the financial goals for the business, a business analysis should be conducted to determine the employees who will be affected. Nondiscriminatory employee selection criteria should be developed and used to select the employees who will be laid off. Common factors used to identify criteria are seniority, redundant roles, skills based criteria or other clearly delineated standards.

Performance criteria may be used and employers may consider previous performance reviews and other performance documentation, such as warnings or any type of disciplinary actions.  However, there should be solid written documentation that the employee has been experiencing performance issues.    

A RIF is based on a business need to cut costs or to better align resources so the business is able to meet overall goals and objectives. A RIF should not solely be used to manage performance issues. Laying off employees with performance problems, who are in necessary positions, may create problems for the company. The employer will need to fill the positions, and this could lead to claims of wrongful discharge or discrimination.

Using a RIF to manage performance can also lead to morale problems with staff who remain employed. Employees often can see when their peers have performance problems. When strong-performing employees find out that poor-performing employees received severance payments and management didn't address the performance issues, it can lead to decreased respect toward managers, as well as waning employer loyalty, disengagement and increased turnover.