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The severance package offered by a company is usually defined in the offer letter by the company.  Usually the terms are 2 way, applicable if the employee decides to leave on his own to seek better opportunities or if the company decides that they no longer need his or services.  During an economic boom,  the attrition rate is high and many employees leave.  In a recession the reverse is applicable.

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Since even a laid off employee can be useful to the organisation at a future date, many organisation try to make the layoff as painless as possible by hiring the services of an outplacement firm.

This firm identifies suitable opportunities for laid off employees in other companies and arrange for the resume to be sent and interview arranged. Since the employee has few other options, they usually accept this offer happily.

Unlike manufacturing companies which usually have a strong trade union to fight for the rights of the worker, there is no union to support the cause of white collar workers in most companies. So the management wishing to sack an employee can just force them to resign.

Though the employee can refuse to resign, most employees submit their “resignation” letter since they are assured that they will receive atleast a part of the benefits due to them. Few employees have sufficient resources at their disposal to fight a large company in court. Also, it is much more difficult to get a job, if you are laid off than it is when you have resigned.

Though an organisation benefits in the short term from lower operating costs, in the long run layoffs adversely affect the image of the company. It also creates an atmosphere of uncertainty as the employees are worried that they will be affected next. This reduces their productivity and  employee morale.

Over a period of time, a layoff affects the ability of the company to attract suitable candidates, who may be needed for future growth as economic conditions improve. This is the reason why some companies have a tradition of not laying off any employee.

In some countries, companies directly tell their employees that they are being laid off due to adverse economic conditions and lack of profitability . The employee is informed about the layoff and expected to clear his or her desk and leave the office immediately.

In other countries, due to political factors and social conditioning, layoffs are far more difficult to implement, though they may be necessary for the survival of the organisation. Smaller organisation may lay off their workers without much fanafare, but layoffs in larger organisations are noticed by the media. So the employees are forced to submit a resignation letter.