The Difference Between Layoffs, Furloughs, and Reductions in Force (RIF)
April 13, 2018 by Josh Hrala
In today’s world, the term ‘layoff’ has seemingly started to take on a new meaning. On paper, a layoff is when someone is let go from a company because of budgetary reasons, workforce planning initiatives or other right-sizing reasons with the idea that they may get ‘recalled’ later on. The goal of a layoff is to reduce spending or boost productivity with new staff members in new departments.
However, a layoff is a specific thing compared to other methods of performing the same task, such as a reduction in force (RIF) or furlough. Layoffs are meant to be a temporary thing that specifically is designed to let employees know that they will be able to be rehired later down the road when the financial side of the business or the business strategy settles down.
Despite this fact, many people lump RIFs with layoffs, which is wrong. RIFs are when a company permanently reduces its workforce, meaning that an employee will not be able to be rehired at a later date.
On the other hand, you have a furlough, which is more like a layoff than a RIF because it is a temporary move to adjust budgets. Furloughs, though, are typically over a set date. For example, a company could offer a furlough for 60 days and guarantee the worker can come back after that date. These types of moves largely depend on your organization, local laws, and more. We highly, highly recommend that you speak with your counsel before introducing any of these things.
So, to better understand these often thrown around terms, let’s look at some definitions from experts to make sure we are all on the same page.
What Is a Layoff?
Sounds simple, right? We all have heard of layoffs, though – like we mentioned above – the word has sort of lost it’s true definition because the term is thrown around just so much.
“A layoff is a temporary separation from payroll. An employee is laid off because there is not enough work for him to perform; his employer, however, believes that this condition will change and intends to recall him when work again becomes available,” reports the Society for Human Resources Management (SHRM).
“Employees generally are able to collect unemployment benefits while laid off without pay, and frequently an employer will allow them to maintain benefits coverage as an incentive to remain available for recall.”
As you can see, this is a temporary cutback to allow the problem to be addressed.
What Is a Furlough?
Unlike layoffs, furloughs are less talked about but are also a temporary reduction to help the company get through financial woes or other issues.
“A salary furlough is a set period of time during which an employee does not report for work and does not earn a wage. The employee retains her job during the salary furlough, however, which means that the employee retains benefits. After the salary furlough ends, the employee returns to work.”
Hatter goes on to say that one of the major differences between a layoff and a furlough is how they are perceived by the public and staff members. A furlough is known as a temporary thing while a layoff is seen more as a RIF than something that will only last for a few weeks or months.
“Just the word “layoff” can drastically change the environment in a workplace,” Hatter writes.
“Salary furloughs do not carry the same negative connotation, which can preserve the efficiency and positive environment of a workplace.”
What Is a Reduction in Force (RIF)?
The main difference between RIFs and the other forms of reductions is that a RIF is permanent. What does that mean? Well, it basically means that the employees let go during a RIF will not be able to come back to the company. It’s a permanent move, which is usually brought on by a strategy change, drastic budget issues, or other, bigger, issues that cannot be solved by a temporary change.
“A reduction in force (RIF, pronounced “rif”) involves a permanent cut in head count that also can be accomplished by means of attrition,” reports SHRM.
“When an employee is terminated pursuant to a reduction in force, it is sometimes referred to as being ‘riffed.’ However, some employers use layoff as a euphemism for what is actually a permanent separation.”
And there we have it. Layoffs, furloughs, and RIFs are all different things that have sort of melded together because of the way we talk about these issues.
Want to learn more about RIFs, layoffs, furloughs, and other HR policy issues? Check out what we have to offer in our resource library here: