The coronavirus pandemic provides a good example to discuss the subject of furlough. While many employees have been asked to work from home others like factory workers cannot simply “work from home.” Hence, they have been forced into a temporary closure to prevent further spread of the coronavirus. In such a situation, employees may have to send some of their employees home without pay, this is called furlough.
What is Furlough?
Furlough is a temporary leave of absence that is granted to a governmental or institutional employee. Simply put, a furlough is releasing an employee on a temporary non-pay leave. It mostly occurs in special cases such as economic and financial conditions which directly or indirectly affect a specific employer or the whole economy. It is used as a strategy to temporarily set aside some employees until the employer or institution regains economic and financial stability. Furloughs are temporary although they could last a short time or long time depending on the intensity of the current economic issue.
According to Adam Calli, founder, and principal consultant at Arc Human Capital, furlough is used by an employer to “drastically cut costs in times of economic difficulty, [whether for] the economy overall, or specific to a particular industry, company, or location.”
The term “furlough” can also be used in employment to refer to long service leave or annual leave. Unlike forced furloughs, this type of furlough can be voluntary. It also refers to a break or vacation from military service, missionary work, parole, probation, work release, or conjugal visit.
The coronavirus impact on furlough
The coronavirus pandemic impact on the economy has caused a lot of businesses and firms to either temporarily close down or reduce work productivity by working from home. In as much as some businesses can afford to work from home others simply cannot. Many of the workers in affected industries that cannot afford to operate from home will be furloughed while a few others would be mandated to keep going to work amid the coronavirus crisis. Many businesses both small and big have been greatly affected by the novel coronavirus on different levels. The financial and business impacts may differ but it is certain that it would take many businesses a while to get back on their feet once the crisis is over. For example, Compass Coffee, a coffee shop located in Washington DC, has said that in only two weeks their business has plunged 90%. As a result of that, they have temporarily closed all their branches in other locations and have laid off about 90% of their workforce. Even with the absence of an imposed lockdown, many businesses would still suffer. Though many industries have resulted in layoffs, a few industries are holding on to furloughs.
Furloughs have already begun to play out and so far, the most affected industry is the airline industry. While Virgin Atlantic has already asked its employees to take an eight-week unpaid furlough, many hotels like Marriot has also started furloughing its employees. On Wednesday, Macy’s CEO also announced that the company would furlough most of its staff. The US unemployment rate has hit a 6.6million record within the past few weeks.
What does furlough entail?
While on furlough, employees are not mandated to do or accept any work from their employer. This is called the ‘no work rule’ which requires that a furloughed employee should not as much as answer a phone call or send an email on behalf of their employer. In special cases, a furloughed employee may be required by the employer to do some official work, in such a case, the employer is mandated to pay the employee the equivalent for that day and any other day. While employees are on furlough, every access to work accounts or devices would be temporarily revoked to avoid unauthorized working by the employees.
What is the difference between a furlough and a layoff?
The major difference between a furlough and a layoff is the fact that one is temporary and the other is permanent. Employers use furlough to retain the staff they cannot cater for at the moment yet still require their skills. The downside to this is that furloughed employees may be tempted to find new jobs rather than wait for an uncertain date of returning back to their jobs.
In furlough, employees still have full access to their employment incentives such as health and life insurance.
Furloughed employees are positive that in due time they would have their jobs back. Usually, a specific date or specific conditions are set in place for when an employee would be due to return to work. This is different from layoffs as laid-off employees have no guarantee of getting back their jobs, unless in rare cases.
Furloughed employees especially public employees still retain their employee rights. As due process must be followed to place them on furlough.
Furlough Employee Rights
Contrary to what many may believe, furloughed employees can seek other employment opportunities while they wait for their current employers to call them back. The downside to this for employers is that they are likely to lose top talent to other employers. Furloughed employees may have the right to seek temporary employment elsewhere, however, they must first crosscheck with their current employers to know the terms that apply.
It may be quite different for furloughed public employees as certain rules concerning outside employment still apply in a furlough. However, furloughed employees are allowed to take unemployment benefits. Although, receiving unemployment benefits differ from state to state.