The Impact of Layoffs on Employee Performance: A Legal and Human Resource Management Perspective

Abstract

This study aims to analyze the relationship between layoffs and employee performance, particularly focusing on employees who remain after layoffs occur. Layoffs create significant implications not only for terminated employees but also for surviving employees within the organization. This study employs a qualitative descriptive approach using in-depth interviews and observations, combined with a statutory approach to examine relevant labor regulations. Data were analyzed using the Miles and Huberman model. The findings indicate that labor regulations in Indonesia provide clear legal protection regarding layoffs; however, layoffs generate both negative and positive impacts on remaining employees. Initially, employees experience psychological pressure, including anxiety, stress, and job insecurity. Over time, these conditions lead to increased workloads, followed by improvements in work quality, responsibility, discipline, and performance awareness. The study also highlights the important role of organizational support, including effective communication, KPI implementation, and structured work distribution, in maintaining employee performance stability. This study contributes to the understanding that layoffs do not necessarily reduce employee performance and may even enhance it under effective organizational management.