What is Furlough?

Definition

Furlough refers to a temporary leave of absence from employment, typically initiated by the employer due to economic conditions or specific business situations. Unlike layoffs, furloughs are intended as a temporary measure with the expectation that employees will return to work once the conditions improve.

Key Characteristics

• Temporary: Furloughs are not permanent separations from employment but are temporary.
• Unpaid or Reduced Pay: Employees on furlough may receive reduced pay or no pay during the period of furlough. They might still retain employment benefits like health insurance.
• Employer-Initiated: Typically, the decision for a furlough is made by the employer, often due to financial challenges or external events impacting the business.
• Return to Work: Employees on furlough are usually expected to return to their roles once the furlough period ends.

Differences from Layoff

• Expectation of Return: In a furlough, there is an expectation that employees will return to their job, whereas in a layoff, the separation is generally considered permanent.
• Benefits: During a furlough, employees often retain access to their benefits, which might not be the case in a layoff.

Common Reasons for Furlough

• Economic Downturns: During recessions or significant market downturns, companies may opt for furloughs to reduce costs without permanently losing employees.
• Seasonal Fluctuations: Industries with seasonal peaks and troughs, like tourism and hospitality, may use furloughs during off-peak times.
• Operational Issues: Events such as natural disasters, or pandemics, can lead to temporary business closures and subsequent furloughs.

Impact on Remote Work

In the context of remote work, furloughs can still occur, especially in industries affected by global economic conditions. Remote employees, similar to their onsite counterparts, may face unpaid leave during furloughs but can benefit from retaining their employment relationship and benefits during the interim.