In today’s fast-changing economy, companies frequently make difficult staffing decisions to remain competitive and sustainable. One situation that often raises eyebrows — and questions — is when a company lays off employees while simultaneously hiring for other positions. This can feel contradictory or even unfair to those affected by job losses.
So, can a company lay off and hire at the same time? The short answer is yes — but with important legal, ethical, and practical considerations. In this blog, we explore what the law says, why companies may choose this strategy, how it impacts employees, and what your rights are if you’re affected by such a decision.
What Is a Layoff?
A layoff occurs when an employer terminates an employee due to business-related reasons — typically because of restructuring, budget cuts, downsizing, or economic downturns. Layoffs are generally considered non-disciplinary, meaning the employee didn’t do anything wrong.
Layoffs can be temporary or permanent and may involve notice periods, severance pay, and other entitlements depending on the employment contract and applicable labour laws.
Is It Legal to Hire While Laying Off?
Yes — in most cases, it is legal for a company to lay off some employees while hiring others. Employment laws in Canada (and many other countries) do not prohibit this practice outright. However, the legality depends on how and why the decisions are made.
Scenarios Where This Might Be Legal:
- Hiring for different roles or departments: If a company is downsizing its manufacturing team but expanding its digital marketing division, it might lay off factory workers while hiring new marketers.
- Changes in strategy or technology: A business might pivot to new technologies and require different skill sets, resulting in layoffs of certain workers and recruitment of others.
- Geographical restructuring: Layoffs may occur at one location while hiring happens elsewhere.
Scenarios That Could Raise Legal Concerns:
- Discriminatory layoffs (age, race, gender, disability, etc.)
- Targeted layoffs to remove specific individuals without valid reasons
- Wrongful dismissal or breach of contract
- Bad faith or retaliation
If any of the above applies, affected employees could pursue legal action.
Business Reasons for Layoffs and Hiring Simultaneously
While the practice may appear contradictory, there are several reasons a company might lay off and hire at the same time:
1. Reorganizing the Workforce
A company may restructure to focus on new goals. For example, laying off administrative roles while hiring software engineers can align the workforce with evolving business needs.
2. Cost Optimization
Sometimes, companies replace higher-paid employees with lower-salaried workers who can perform similar functions. While controversial, this tactic can reduce operating costs.
3. Skill Set Misalignment
A business might need to eliminate outdated roles and bring in talent with new skills. This is common in industries like tech, where innovation evolves rapidly.
4. Geographic or Departmental Shifts
If a company relocates certain functions to another region or outsources them, layoffs may be necessary in one area, even as hiring continues elsewhere.
5. Short-Term vs. Long-Term Planning
A company may lay off staff to cut costs immediately but continue hiring for roles that will drive future growth or fill urgent gaps.
Ethical Considerations
While the law may allow simultaneous layoffs and hiring, ethics play a critical role in how these actions are perceived.
1. Transparency Matters
Employees deserve honest communication. If the company must lay off workers while recruiting others, explaining the rationale builds trust and reduces backlash.
2. Employee Morale
Remaining employees may feel insecure or demoralized when they see new hires joining amid layoffs. This can affect productivity and retention.
3. Public Image and Reputation
The public — including customers and potential hires — may view the organization negatively if they perceive the layoffs as unjust, especially if executive bonuses or lavish hiring campaigns are happening simultaneously.
Legal Risks for Employers
Employers must tread carefully when laying off and hiring concurrently, as legal pitfalls can arise, including:
✅ Wrongful Dismissal
If an employee is terminated under the guise of a layoff, but the company continues hiring for a similar position, the terminated employee may claim wrongful dismissal.
✅ Constructive Dismissal
If significant changes are made to a worker’s job without consent, they may argue they were effectively forced out.
✅ Discrimination
Layoffs that disproportionately affect a protected group (e.g., women, older workers, racial minorities) may lead to human rights claims.
To mitigate these risks, companies often consult with HR professionals or the best employment lawyers before making such decisions.
What Are Your Rights as an Employee?
If you’re laid off and notice your company is hiring at the same time, you may understandably feel confused or wronged. Here’s what you should do:
1. Request a Clear Explanation
Employers should provide a legitimate business reason for the layoff. It’s your right to ask for clarity — especially if you suspect unfair treatment.
2. Review Your Employment Contract
Check the terms related to termination, severance, and notice periods. This will help you understand what you’re entitled to.
3. Check for Job Postings
If your job or a similar one is posted shortly after your layoff, this could be evidence of bad faith or constructive dismissal.
4. Consult Legal Counsel
If you believe your layoff was unjust or discriminatory, seek professional legal advice. A lawyer can assess whether you have grounds to challenge the termination or claim additional compensation.
How Employers Can Navigate the Situation Responsibly
To avoid legal or reputational damage, companies should:
- Conduct layoffs with clear, documented business justifications
- Communicate openly and empathetically with affected staff
- Offer outplacement support, severance, and fair notice
- Avoid replacing laid-off employees in the same roles without a legitimate reason
- Ensure that hiring aligns with business restructuring plans
Conclusion
Yes, a company can lay off and hire at the same time — but doing so requires careful planning, legal compliance, and ethical consideration. What may seem contradictory on the surface often reflects deeper business changes, shifts in skill requirements, or financial adjustments.
However, when done irresponsibly or unfairly, such actions can lead to employee dissatisfaction, legal disputes, and brand damage. Whether you’re an employer planning workforce changes or an employee facing a layoff, it’s crucial to understand your rights and responsibilities under employment law.
For employees who feel wronged, or employers looking to mitigate risk, seeking advice from the best employment lawyers is an essential step in navigating these complex situations.