Everything You Need to Know About Furloughs

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Leah Thomas866
June 19, 2024 at 1:4AM UTC
  • Furloughs are temporary, mandatory leaves of absence from a company most often implemented as an alternative to company layoffs.
  • While layoffs typically indicate that an employee will not get their job back, a furlough normally indicates the opposite.
  • If you're subject to a furlough, your employer may require you to take one or two days of unpaid leave each week, or they may require you take weeks of unpaid leave at a time.

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What is a furlough?

A furlough is a temporary but mandatory leave of absence from a company. Furloughs are often seen as an alternative to company layoffs during economic struggles. While layoffs are likely to be permanent, furloughs are temporary. Employees do not get compensated during furloughs, but some companies still allow employees to retain their benefits. Furloughs are viewed as more favorable than layoffs but can still cause employee stress and unhappiness. And while one of the goals of a furlough is to save money while keeping employees, furloughs can ultimately lead to employees leaving the company. 

What type of companies take furloughs?

Furloughs are most common within the government and federal employees. When a budget issue arises, non-essential government contractors and employees are placed on mandatory, unpaid furlough. 

The most recent government shutdown occurred in January 2018 over a budget disagreement in Congress and lasted three days. Thousands of “non-essential” federal employees were placed on furlough until lawmakers passed a short-term spending bill to bring the government back to life and employees back to work. This type of government furlough has happened 18 other times through history. 

When this happens, government workers are categorized as either essential or non-essential employees. Those deemed non-essential employees are placed on unpaid leave. This includes NASA employees, Environmental Protection Agency workers, those from the Labor Department, workers from the Treasury Department, and more.

But the government isn’t the only industry in which furloughs are implemented. Seasonal industries often place their employees on furlough during the off-season of their fields. For example, a pool cleaning service may place their workers on furlough during the winter seasons, and a lawn care company may do the same when it begins to get cold as well.

Other companies may implement furloughs during tough economic times. For example, Honeywell implemented furloughs after the 2008 financial crisis, a move that the company has said saved it, rather than turning to layoffs. 

What is the point of a furlough?

There are many advantages to company furloughs, including maintaining employee morale. While layoffs indicate that an employee will not get her/his job back, a furlough normally indicates the opposite. Employees are generally given a furlough end-date (which sometimes may change) but still reassures employees that they will be employed again in the future.

Another obvious benefit to a company furlough is the money saved on employee compensation. However, employees placed on furlough who complete any work during this time must be paid for an entire day’s work, regardless of how much time they actually spent working. 

For seasonal furloughs, the consistency of a break in employment can be beneficial. Rather than a surprise, financial-driven furlough, employees can be prepared for the months-long break, which allows them to find other means of work and financial stability.

And because furloughs are temporary, companies do not have to worry about hiring new employees when the break ends. New employees require a hiring process and a training period, while returning, experienced employees do not. 

Downside of furloughs

Companies may lose their best employees. During a furlough, the best employees are probably the most likely to leave the company and find new employment elsewhere. Losing your most talented employees can hurt the company’s productivity when the furlough is finished.

And while companies may save money by eliminating employee salaries during this time, an employee’s salary is just a fraction of an employer’s costs for workers. During a furlough, companies still pay for employee benefits, which is costly, and some employees may qualify for unemployment, which is an additional cost to employers. Other additional costs may include start-up expenses, if the company actually has to actually shut down during this time. 

Employees may feel overwhelmed upon returning to work and having the feeling of “catching up” on the months of work they missed out on. And the overall workplace culture may be affected, as employees not placed on furlough may experience the additional stress of taking on tasks they were not previously in charge of and picking up the slack for the furloughed workers. Customer service may be in decline due to lack of employees, causing further issues. And companies run the risk of their employees finding other employment before the furlough is complete. 

What to expect if you’re subject to a furlough

Most companies will implement a no-work rule, which simply means employees are not allowed to work during this time. Because even answering a simple email would cause a company to compensate an employee for an entire day of work, companies will attempt to prevent this scenario with the no-work rule. Companies may even ask you to leave your work phone at the office during the entirety of the furlough or even temporarily shut down your work email. 

As an employee, you can generally also expect to continue receiving your benefits through the furlough. And some employees may even be eligible for unemployment pay.

Government employees placed on furlough can expect to receive compensation for the time off after the furlough has ended, even though they were not working during this time — a move that causes controversy among taxpayers who are essentially paying for government employees to be placed on leave. 

Company furloughs can be implemented in different ways. For example, your employer may require you to take one or two days of unpaid leave each week, or they may require you take weeks of unpaid leave at a time.

While it’s best to be able to financially prepare and save before a furlough, employees are not always given a warning. Many employees placed on furlough look for another job in order to support themselves while waiting for the furlough to be over.

Take these next steps

Recognizing that this could be a financially difficult time for you is the first step. Begin by saving as much money as possible and creating a budgeting plan for these next few weeks or months. 

You should also examine your personal situation and the stability of your company. If you are a government employee — where furloughs are somewhat common and you will be compensated for the break when you are brought back to work — this may not be a concern for you. Although searching for a part-time position in the meantime may be beneficial. 

But if you are an employee of a company experiencing financial difficulties, it may be in your best interest to begin searching for another full-time job. 

Make sure you do the research to see if you qualify for unemployment. And try to remain positive during this stressful time. Fairygodboss offers several tips and tricks on managing stress when it may seem impossible. 

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