The word "furlough" recently has got some prevalence due to COVID-19. What does it actually refer to?
Employee Furlough (EF) is often misunderstood as being the same as employee layoff. However it is actually an alternative to layoff.
The word furlough means: leave, vacation, permission, license, permit, holiday, day off.
In business, when an employer furloughs its employees, it requires them to work less hours or no hours at all or to take a certain amount of unpaid time off.
In some countries, the government then pays a substantial part of the salaries of the furloughed employees to avoid the Covid crisis will harm the employees and the economy.
EF is a cost saving strategy for employers when they don't want to lay off staff but lack the resources to continue paying them. In a layoff strategy, the employer permanently separates employees from the payroll. However in a furlough strategy they can give them a temporary unpaid leave in order to cope with extreme situations like COVID-19. The employers adopting an EF strategy do not have to rehire the furloughed employees after the situation becomes normal.
Furlough is obviously a good strategy from the employers side as firing and rehiring is a costly and time-consuming procedure.
But employees can also get benefits out of it. For example, they can can search for new employment and in the meantime might be able to claim government fundings or unemployment insurance, similar to laid off employees. Moreover, in some cases employee benefits are continued for furloughed ones.
The above is what furlough means in general, but depending on situation and legislation system, its meaning may differ and employers may arrange varying furlough policies. Some examples are given below:
- An employer may furlough a group of its employees for a week and another group the other week.
- It may furlough nonexempt employees one day a week and pay them for 32 hours each week.
- An employer may furlough all employees or it may exclude employees in essential services.
- Even an employer can set to close its business for few weeks.
The idea behind furlough is to share the hardship together as opposed to a few employees losing their jobs completely. In my opinion, EF can act like a shield to survive the ongoing war against Coronavirus. What do you think?