When the economy is struggling, one of the ways you've saved your business from closing its doors may have been to lay off some or all of your employees. It made sense at the time, but it wasn't easy.
Laying off employees takes a toll on the business, but also on you as a business owner. You likely had to take on more responsibilities (if not all of them) and spend a lot more time to get them done. On top of that, you had to disappoint the people who helped you build a business you were proud of.
Now that you can see the light at the end of the tunnel, you're considering rehiring the help. But it's not an easy decision to make — your business is your livelihood, and laying off employees was one of the hardest things you've had to do. Rehiring the same people could be a risk for you and them if the economy were to shift again.
But, if you're still bringing in business, then there's a reason to consider rehiring former employees. The best reason to make a rehire is because your workload is getting to be too much for you or the employees you still have. Simply put, you need the help.
Rehiring employees you've laid off will save you time and energy. You already know how they work and what to expect of them. Most importantly, they know how you run your business, how to represent your brand well, and how you interact with your customers.
In fact, their relationships with your customer base could be a great advantage to rehiring them — it's good for morale if a customer can continue working long term with the same people within a business.
If you were to hire new employees, you may be able to hire them at a lower rate than former employees, but it would take you longer to onboard them and train them on your business’s processes, In the end, that time is equivalent to money that you could spend doing something else — like part of a project for a customer.
When you're rehiring employees, you may think it's as simple as calling your former worker and solidifying a new start date, but there's more to consider if you want to make a smart decision as a business owner.
First, take some time. While you may have had to lay off your entire workforce, don't hire all of them back at once. It may be tough, because you like them and want to give all of them a fair chance. But in order to be conservative about your workload and cash flow, it's smart to start off by rehiring one person at a time.
When you’re ready to hire another person, let the first employee you want to rehire know of your intentions. Understandably, it's possible that your employees had to look elsewhere for work when you laid them off. As soon as you think you may be able to rehire in the near future, get in touch with those you intend to spark conversations with so they can keep the opportunity in mind. Of course, let them know to expect things to be a bit different this time around. Setting the expectation of flexibility during this transition is important. Things won't be exactly the same as they were before you laid off the employee, which is important to note.
Secondly, make sure you're taking the appropriate steps legally.
You'll want to make sure you get the appropriate forms from the IRS (such as W-4 and I-9). It's also a smart idea to make sure the person is still licensed in your state to do this sort of work and if so, that they're insured.
If you didn't invest before, now may be a good time to look into workers compensation insurance. Whether your employees are part-time, full-time, or just temporary or seasonal, workers comp can protect you and your business. If the rehired employee gets injured or becomes sick while working for you, workers comp can cover the cost of certain claims. And depending on what state you live in, it may be legally required.
Last but not least, take this opportunity to set some boundaries and ground rules that you may not have had in place before the layoffs. Maybe you now require a new sanitation protocol for tools, or perhaps now there are certain areas of your region where you'd prefer to not accept consultation appointments.
Rehiring employees is a good chance to follow through with practices you wish you had implemented before, and follow through with them. These changes don't necessarily need to be documented in onboarding paperwork (though a code of conduct never hurts), but you could include them on your checklist of items to review.
The past few months without your employees have likely been a struggle. Maybe you've had to use a large portion of your savings, or apply for an SBA loan. Being ready to rehire a former employee is cause for celebration, but it is also a transition.
As a small business owner, you're no stranger to transitions and are made to adapt consistently for the health of your business. Brace yourself for any adjustments ahead by keeping in mind the "why" behind your business.
Maybe your reason is because you love what you do; maybe you are good at your craft and want to support your family; maybe you're carrying on a family business. Regardless of your "why," keeping it in mind will help propel you forward. And remember, now that you've rehired, you won't be going at it alone.
I’ve told stories since I learned to talk and written since I could hold a pen. As a small business owner myself - I'm a freelance writer and yoga teacher - I love contributing to the entrepreneurship community in different ways (including writing for Simply Business!). When I’m not drafting articles for SB, I can be found on my yoga mat, perusing an indie bookstore, and writing (with my cat nearby of course).
Allison writes on a number of topics such as small business leadership, business structures, and employee training.
This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer
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