Drawing on the concept of psychological contract and organizational justice, this exploratory case study seeks to examine how companies' attempts to handle layoff pressures with alternative HR arrangements are perceived and experienced by the affected employees.
The study draws on 19 interviews of employees affected by job loss. The interviewees were employees in a case organization that had implemented a HR practice called the “Competence pool” as an alternative to layoffs.
Although contract breach occurs, alternative HR arrangements can mitigate the negative effects of job loss for the affected employees and help restore the psychological contract. Such arrangements have to be implemented with care in order to avoid injustice perceptions.
As HR arrangements are by nature unique and company‐specific, this study is limited by its focus on one organization and national context. It however provides future directions for research on layoffs and their consequences.
By exploring how the affected employees perceive an alternative to layoffs, this study has several implications for organizations interested in managing layoff pressures with alternative HR arrangements.
By investigating the experiences and perceptions of employees whose jobs were terminated but whose employment relationship continued under specific conditions, this study provides new insights into layoff and HR literatures from psychological contract and justice perspectives.
