Layoffs are never something businesses like to do, but sometimes economic necessity dictates that a business reduce the costs associated with employees. Such is the case right now with global art auction house Sotheby’s. The company is currently offering employees voluntary buyouts a in the wake of a third-quarter decrease in revenue.

In order to manage the losses without resorting to layoffs, Sotheby’s is offering voluntary buyouts until the end of the month. Interested employees are supposed to file applications, and the company will make decisions about which applications to accept in order to ensure both that it can stay afloat financially and that the workforce required to keep the business going is retained.

Buyouts can be an important strategy for companies to reduce financial burdens from highly paid employees. Buyouts, by their nature, are voluntary, and there is often negotiating that occurs before a deal is struck. For businesses, it is important to go into any such negotiations with a firm sense of the business’ financial needs and goals and any limitations on specific buyout terms. Naturally employees want to get the best deal possible out of a buyout, but businesses need to be aware what they can reasonably agree to and when they need to simply turn down an employee’s counteroffer.

For businesses, it is also important to include in a buyout agreement any specific terms that have important legal implications, such as non-compete clauses and waivers of the right to sue. 

Source: smallbusiness.chorn.com, “Negotiating a Buyout,” Lisa Magloff, Accessed Nov. 19, 2015.