LIFO

Meaning & Definition

LIFO (Last In, First Out) is a workforce management principle where the most recently hired employees are the first to be affected during layoffs, retrenchments, or workforce reductions. Organizations may use LIFO to make downsizing decisions based on employees’ length of service. The principle is often considered to promote fairness and objectivity during workforce restructuring.

Importance of LIFO

• Provides a structured approach to workforce reduction decisions.
• Uses employee tenure as an objective criterion for layoffs.
• Helps maintain transparency during retrenchment processes.
• Reduces the risk of arbitrary or discriminatory termination decisions.
• Supports compliance with applicable labor laws and industrial relations practices.

Applicable Policies

In India, the principle of “Last Come, First Go” is recognized under:

• Industrial Disputes Act, 1947 (now categorized under the Industrial Relations Code, 2020, when brought into force)

The principle generally applies to retrenchment of eligible workmen unless the employer records valid reasons for changing from it. Employers should follow applicable legal requirements and maintain proper documentation during workforce reductions.