Layoff

A layoff (or reduction in force) is an action to reduce the number of employees in a work unit or at the University overall. A layoff may become necessary due to reduced funding, reorganization, changed workload, or the cancellation, amendment or completion of a grant or contract.

It is the policy of this University that employees are to be laid off only after examining all other available alternatives, including separation of temporary employees, delay in the filling of vacant positions, position re-design and work unit re-organization, and job sharing. Each department facing the layoff of an employee is obligated to make every effort to place that employee, either within or outside the department, prior to the effective date of layoff. Responsibility for the decision as to which employee(s) must be separated is at the department level, subject to the approval of Employment, Classification & Compensation Department, Office of Human Resources.

Proposed separations must be approved in advance by the Employment Classification & Compensation Department. To avoid delays in the approval process, the department head should contact the Employment Classification & Compensation Specialist assigned to work with their department at least six weeks prior to the anticipated separation of an affected employee by layoff.

The last day the employee works is the effective date of a layoff. An employee separated by layoff is paid for accumulated vacation leave in the same manner as other separations. In addition, the employee may be eligible for other benefits as described in this policy.

This policy applies to permanent SPA employees who have completed their probationary periods (full-time and part-time regularly scheduled to work 20 or more hours each work week) and to SPA employees in trainee appointments who have completed at least 6 months of their trainee progression.

Temporary employees, employees with time-limited appointments, permanent employees scheduled less than 20 hours per week, probationary employees, and trainee appointments who have completed less than 6 months of their trainee progression may be separated without following this policy and are not eligible for re-employment priority or severance pay.

A layoff decision requires a thorough evaluation of the need for specific positions and the relative qualifications of employees so the University can provide the highest level of service possible with a smaller work force.

The area of review used to make the layoff selection in depends on the organization. Normally, the unit level at which this review should occur is the department. However, some departments are large enough to have smaller units, such as divisions. It is appropriate to confine the layoff process to a division.

When identifying employees for layoff, management must consider the following factors:

• the position classification(s) affected,
• the appointment type of each employee,
• the relative performance of employees in affected classification(s),
• length of total state service (which may include time spent in the military as set out in the policy on Veterans' Preference), and
• impact on the University's Affirmative Action goals

The source of funds is not a relevant factor in determining the appropriate employee to be laid off. For example, if the position is grant funded, and the grant is ending, it does not necessarily mean that the incumbent of the grant-funded position should be the employee laid off. The relative efficiency and length of state service criteria must be applied, without regard to funding source.

Position Classification: For the purpose of determining which employee(s) will be affected by a layoff, comparisons will be made between employees with the same or closely related classification titles. A position classification title is closely related to the targeted position if it has the same salary grade and there is a reasonable skills transfer.

For example: An Administrative Assistant II serving as a business manager and a University Administrative Manager I would be considered closely related classifications. An additional example would be an Office Assistant IV and a Processing Assistant IV.

Type of Appointment: Once the relevant job classifications for the layoff have been determined, the department head shall make a decision as to which employee(s) are designated for layoff. The factor which must be considered first is type of appointment. Permanent employees must be retained over employees with temporary, probationary, and time-limited appointments, and trainee employees with less than six months in a trainee progression in positions with the same or closely related classifications.

Relative Performance: The primary component of determining the relative performance of employees shall be the most recent annual overall Performance Management rating. If significantly different from the most recent overall annual rating, the most recent interim review overall rating may be considered in determining relative performance.

Other components of determining relative performance are:

• the existence of an active disciplinary action for either job performance or personal conduct;
• the presence of performance-related prizes, awards or commendations awarded on a departmental, school or university basis;
• documented performance difficulties communicated to the employee, but not rising to the level of disciplinary action;
• any other documented indicator of performance.

Management is responsible for making the layoff decision using all of the above factors. Because the result of a layoff is a smaller work force, it is policy that relative performance be accorded the most weight in making this decision.

Length of Service: Length of Total State Service may become a differentiating factor in the decision to separate an employee, particularly where other criteria are substantially equivalent. Eligible veterans must be accorded one year of state service for each year or fraction thereof of military service, up to a maximum of five years of credit, in computing total service.

Gender and Race: The gender and race of employees proposed to be separated through layoff should be considered by the department against the University's Affirmative Action plan to take care that such actions do not adversely affect the University's goals.

The department head (or designee) must submit a written request for approval of a proposed layoff to the Employment Classification & Compensation Specialist assigned to work with their department. The request must be approved by the ECC Specialist before any layoff action can be taken. The written request must contain the following information:

• the reason(s) for the layoff
• anticipated date of separation,
• name(s) of the employee(s) to be laid off and justification for the decision,
• a listing of all vacant positions in the department which are the same or closely related,
• status of recruitment activity for vacant positions which are the same or closely related,
• what efforts the department has made to avoid the layoff of the selected employee,
• a brief explanation why action other than layoff is not possible, and
• a management contact.

See "Related Subjects" below for a sample request.

After receiving approval from the ECC Specialist, the department must provide the following information, in writing, to the employee(s) being laid off at least 30 calendar days before a layoff occurs:

• the reason for the layoff (e.g., reduced funding, reorganization, changed workload, or the cancellation, amendment or completion of a grant or contract);
• the effective date of the layoff (the employee must receive the notification at least 30 calendar days prior to the effective date);
• instructions to contact the Office of Human Resources to obtain necessary information on:
  • retirement system membership and benefit continuation options, including unemployment insurance eligibility;
  • the University's policy on priority re-employment;
  • completion of necessary application forms;
  • the availability of aid in seeking other employment within the University and within state government; and
  • possible eligibility for severance pay;
• and the right of permanent employees to appeal the layoff through the University Dispute Resolution and Staff Grievance Procedure.

See "Related Subjects" below for a sample letter.

In the event that a department wishes to make a permanent reduction in hours for a currently full-time permanent SPA employee, the department has two options: reduce the employee's hours or layoff the employee. However, the employee makes the choice.

The department must present the employee (orally or in writing) with the choice of either a reduction in hours or a complete layoff. A permanent reduction in hours must include a corresponding reduction in pay and a possible reduction in benefits. (For example, if the reduction is at or above 75% FTE, there will be no change to membership in the Retirement System, State Health Plan, etc. However, vacation and sick leave accrual will be affected by any reduction in hours.)

The department should provide the employee with a reasonable amount of time to consider the decision to accept a reduction in hours or to be laid off. Departments may wish to consult with the Benefits Specialist in the Office of Human Resources assigned to work with the employee's department about the effect that dropping below 75% FTE will have on the employee's benefits.

If the employee agrees to a reduction in hours, the department must draft a letter outlining the changes that are proposed. This shall include: new FTE, new salary rate, new leave earnings, and the effect this reduction will have on the employee's benefits. If the reduction takes the employee below 75% FTE, then the letter should refer him/her to the Benefits Specialist so that the changes in their benefits can be explained to them. The letter must also include that this reduction in hours is grievable under the Staff Dispute Resolution and Grievance Procedure. The letter will need an approval line for the employee and shall be copied to the appropriate departmental administrative office and to the ECC Specialist.

The department will then process a permanent change in FTE through HRIS. The change in hours can be made effective immediately; there does not have to be a 30-day advance written notice to make this change if the employee has agreed to the change.

If the employee does not wish to accept a reduction in hours, with the accompanying changes to salary and benefits, then the employee must be laid off. The department proceeds as usual for requesting layoff.

An employee who will be separated due to a layoff is eligible for the following benefits:

1. SEVERANCE PAY. A permanent full-time or part-time (20 hours per week and over) employee who is not offered permanent employment as a state employee by the effective date of the layoff may be eligible for severance pay. Approval of this payment is made jointly by the Offices of State Personnel and State Budget. If approved, payment is bi-weekly and based on total state service supplemented by an age factor. This payment is administered by the HR Records & Information Department as a part of the layoff process. (See "Severance Pay" in this Section.)

2. CONTINUED HEALTH INSURANCE. Employees with at least one year of State service continue to receive the University's contribution for their health insurance once their employment is terminated due to layoff. The employee continues to pay any additional premiums paid by them (e.g., dependent coverages) at the time of the layoff. This benefit continues for one year or until the former employee accepts another permanent State government position, whichever is sooner.

3. PRIORITY RE-EMPLOYMENT CONSIDERATION. Permanent employees who are separated by a layoff are eligible to receive priority re-employment assistance for a period of twelve months from the date they receive written notification of the layoff decision. (See "Priority Re-Employment Consideration" in this Section.) Employees either scheduled to be, or already laid off, at UNC-Chapel Hill may receive assistance through the Office of State Personnel for placement in other state agencies and universities. Employees laid off by UNC-Chapel Hill are entitled to priority re-employment rights at all other state agencies and universities.

4. DISCONTINUED SERVICE RETIREMENT. Some employees may be eligible for Discontinued Service Retirement as an alternative to severance pay. (See "Discontinued Service Retirement" in this Section.)

5. VACATION PAYOUT/RETURN RULE. Permanent employees who are separated by a layoff and who had to forfeit vacation leave in excess of 240 hours (pro-rated for part-time) will have that excess leave reinstated to them if they return to permanent State employment within one year of their layoff separation date.

Layoff priority re-employment consideration begins upon notification to an employee, by letter, of his/her impending layoff. The employee receives priority consideration for 12 months from the date of notification of the layoff.

When the department knows of the need for a layoff well in advance of the anticipated effective date, it is recommended that the department notify the employee informally and give the employee an opportunity to select when the official notification of layoff is given. This will give the employee the option as to when priority re-employment rights begin (and end), and thus some degree of control over placement efforts on campus.

An employee separated from permanent part-time positions has priority only to part-time positions with the same number of hours.

An employee of UNC-Chapel Hill, or any other state university or agency, who has been officially notified of layoff shall be interviewed for any available vacant position that is at a salary grade equal to or below that held at the time of notification, if the employee has applied for the position or has been referred to the hiring department on a priority re-employment register by the Office of State Personnel. Layoff candidates must meet the minimum education and experience qualifications for the position.

When competing only with external applicants who are not current State employees, layoff candidates shall be selected for open positions, even if not the best qualified, as long as they are able to perform the essential functions of the position within a reasonable length of time, including normal orientation and training given to any new employee. If more than one qualified priority candidate is available, the offer is made first to the candidate with the most Total State Service. However, a hiring department may select a current University or State employee over a layoff candidate if the current employee is demonstrably better qualified.

After the approval of a layoff request, the Office of Human Resources will contact the layoff candidate to schedule an information session in the Employment, Classification & Compensation Division. At the information session, ECC Staff will explain the layoff policies and benefits available to the employee. The employee must claim (or decline) priority assistance and will receive applications for State government and University employment.

Through the monitoring of lists of priority candidates maintained by the Office of State Personnel and the ECC Division, an employee will be considered for any available vacant position for which he/she qualifies at a salary grade equal to or below that held before separation.

Priority status continues when a priority employee accepts a position at a lower salary grade.

Priority status ends when an employee declines an interview or an employment offer for a position equal to or higher than the salary grade held at the time of the layoff notification.

State law requires the University to offer a salary to the layoff candidate who will be laid off or who has already been laid off equal to the rate of pay earned by the layoff candidate at the time of the layoff, given that sufficient funds are available. A layoff candidate may accept a lower salary in order to be re-employed.

A UNC-Chapel Hill employee with 24 consecutive months of SPA service who has priority status and who has reason to believe priority consideration was denied in a selection decision may appeal through the University's Staff Dispute Resolution and Grievance Procedure. Alternatively, such an employee may appeal directly to the State Personnel Commission through the established contested hearing process of the Office of Administrative Hearings.

The University does not determine a former employee's eligibility for severance pay. UNC-Chapel Hill submits a request for severance pay to the Office of State Budget and the Office of State Personnel.

Subject to approval by the Office of State Budget and the Office of State Personnel, severance pay may be paid to a permanent full-time or part-time (regularly scheduled to work 20 hours or more each work week) employee who is separated by reduction in force, who does not obtain other permanent employment in State government by the effective date of the separation (layoff), and for whom there is no foreseeable opportunity for re-employment with the State at the time of separation. In order for the Office of State Budget to approve payment, the department must document "economies in the State budget" which result from the reduction in force.

Severance pay does not apply to employees who are defined as ineligible for layoff status (see "Eligibility" section above) or who are separated on early, service, or disability retirement.

Severance pay is based on the employee's Total State Service and base salary at time of separation, as defined in the table below:

Years of Service	Payment
Less than 1 year	2 weeks base salary
1 but less than 5 years	1 month base salary
5 but less than 10 years	2 months base salary
10 but less than 20 years	3 months base salary
20 or more years	4 months base salary

In addition to the Total State Service payment, severance pay will also include an age adjustment payment, based on the employee's age at the time of separation, of 2.5 percent of annual base salary for each full year over 39 years of age. The age adjustment recognizes that older employees, although protected by Federal law from discrimination on the basis of age, have a more difficult time finding new employment. The total age adjustment payment cannot exceed 21 years (ages 40 to 61) and cannot exceed the amount of the Total State Service payment.

Following the approved layoff, the ECC Specialist submits a written request for severance pay to the Office of State Budget (OSB), through the Office of State Personnel. OSB rules on the request for severance pay, and notifies HRP of its decision. HRP notifies the employee of the OSB ruling, and takes any actions necessary to implement the decision.

The total amount of severance pay, including any age adjustment amount, is paid on a pay period basis. Severance payments are not subject to employee retirement contributions and are not included in computing average final compensation for retirement purposes.

Acceptance of a job offer at any level in the state system terminates severance pay. However, acceptance of employment through Tar Heel Temps as a temporary employee does not terminate severance pay.

Employees whose salaries are funded from appropriations or receipts receive severance pay from the sources in effect at separation.

When an employee is separated from the University due to a reduction in force (layoff), and it is determined that such reduction will accomplish economies in the State Budget, the employee may be eligible for discontinued service retirement. This is subject to the availability of departmental funds and approval by the Chancellor and the State Budget Director, on recommendation by the State Personnel Director.

"Economies in the State Budget" means "economies resulting from elimination of a job and its responsibilities or from a lack of funds to support the job." Please note that severance wages shall not be paid to an employee who chooses discontinued service retirement.

In order to be eligible for discontinued service retirement, an employee must have:

• 20 or more years of creditable retirement service and be age 55 or older to receive an unreduced benefit, or

• 20 or more years of creditable retirement service and be age 50 or older to receive a reduced benefit (reduced by 1/4 of 1 percent for each month under age 55).

For additional information, employees should contact the Benefits Specialist assigned to their department.

When an employee is laid off due to lack of work or a permanent loss of funds, it is expected that the department will abolish the employee's position through the appropriate HRIS process. The position does not have to be abolished if the layoff is due to reorganization or re-design. In that case, it is anticipated that a new job description will be submitted.

If you have questions about this policy, contact the Employee & Management Relations Specialist in the Office of Human Resources assigned to work with your department.