Worker Buyout Law and Legal Definition
Worker buyout refers to the process of reducing staff by offering financial incentives to employees. Generally, in such situations, financial incentives are given to employees who agree to terminate their employment with the firm. Employees may be required to surrender retirement and health benefits as a condition for receiving the financial incentives. Even though this may prove expensive for a company, it has the advantage of not damaging the morale of current employees as well as motivating them to remain loyal to the company.
Worker buyout can also be acquisition of a business by its employees. Worker buyouts generally occur when a business is facing bankruptcy or severe financial difficulty and employees are concerned about losing their jobs.