There’s another reason companies should do their best to be mensches when layoffs are necessary: Laid-off workers, understandably PO’d, sometimes hit back by suing the former employer for discrimination (age, race, ethnicity, nationality, religion), or for sexual harassment. The charges might be completely bogus,* but fighting them can still be expensive.
* A funny story illustrates the point: A client of mine had to do layoffs. One of the laid-off employees filed a charge with the EEOC. He belonged to Religion X. He claimed he was subjected to discrimination because of it. But guess who else belonged to Religion X? The guy’s departmental VP. The COO. The CEO. Not to mention a majority of the board members. That was the end of that charge, but it still took some management- and attorney time to respond to it.
To deal with such a charge, the employer might have the burden of demonstrating — usually with evidence such as regular written job evaluations, etc. — that there were legitimate reasons the employee was laid off. (See generally a posting at LegalWorkplace.com.)
That’s why HR people and employment lawyers often seem obsessive about personnel paperwork: They know what the paperwork might be needed for, someday.