Downsizing vs. Layoff - What's the difference?


  • Layoff

    A layoff is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees (collective layoff) for business reasons, such as personnel management or downsizing an organization. Originally, layoff referred exclusively to a temporary interruption in work, or employment but this has evolved to a permanent elimination of a position in both British and US English, requiring the addition of "temporary" to specify the original meaning of the word. A layoff is not to be confused with wrongful termination. Laid off workers or displaced workers are workers who have lost or left their jobs because their employer has closed or moved, there was insufficient work for them to do, or their position or shift was abolished (Borbely, 2011). Downsizing in a company is defined to involve the reduction of employees in a workforce. Downsizing in companies became a popular practice in the 1980s and early 1990s as it was seen as a way to deliver better shareholder value as it helps to reduce the costs of employers (downsizing, 2015). Indeed, recent research on downsizing in the U.S., UK, and Japan suggests that downsizing is being regarded by management as one of the preferred routes to help declining organizations, cutting unnecessary costs, and improve organizational performance. Usually a layoff occurs as a cost cutting measure.


  • Downsizing (verb)

    present participle of downsize

  • Downsizing (noun)

    An act in which a company downsizes or is downsized

    "He lost his job in the last downsizing."

  • Downsizing (noun)


  • Downsizing (noun)

    Reducing engine's capacity at same power or increasing engine's power without increasing capacity

    "Downsizing is one of the leading trends in automotive engine design."

  • Layoff (noun)

    A dismissal of employees from their jobs because of tightened budgetary constraints or work shortage (not due to poor performance or misconduct).

  • Layoff (noun)

    A period of time when someone is unavailable for work.

  • Layoff (noun)

    A short pass that has been rolled in front of another player for them to kick.

Webster Dictionary

  • Downsizing (noun)

    the reduction of expeditures and personnel in order to become financial stable; - of businesses.

Princeton's WordNet

  • Downsizing (noun)

    the reduction of expenditures in order to become financial stable

  • Layoff (noun)

    the act of laying off an employee or a work force

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