How to Hold a Furlough in 2020
November 06, 2020 by Shannon Perry
When we welcomed in the year 2020, no one realized that it would bring with it a pandemic that has changed the world and how we live. There are few industries that haven’t been impacted by COVID-19 and in many cases, it’s been bad. Entire companies have gone under due to it and while many organizations and governments worldwide are working to adjust to this new normal, hard decisions are being made.
Laying off a significant portion of a company’s workforce to save money may seem like the only option, but a furlough might be an alternative that in the long run will save the company money as it avoids offboarding costs and can save the company brand too.
Furlough vs. Virtual Layoff
In both cases, employees aren’t coming into the office to work, but with a furlough, this is just temporary. A furlough is a temporary, unpaid leave of absence that allows for an organization to save money, restructure, or complete other goals. Once the furlough is done, employees will be able to resume their work as usual. Though layoffs are not always intended to be permanent, they typically are.
Benefits of a Furlough
Now that we’ve discussed the difference between furloughs and layoffs, it’s time to explore the benefits of having a furlough instead of a layoff event. Here are some of the top benefits of a furlough and how it can have a positive impact on your company in such uncertain times.
Keep your talent. Furloughs allow you to keep the talent that you’ve worked so hard to recruit. A virtual layoff event will undo potentially years of headhunting, recruiting, and building relationships with invaluable members of your team.
Avoid having a RIF event. Not working, whether it is because of a furlough or layoff event, is unpleasant. But with a furlough, employees can have some measure of security knowing that when it is over, they’ll still have a job. And in the meantime, they will have health benefits – an absolute necessity during a pandemic.
Evaluate and audit operations. Furloughs actually offer upper management a chance to examine the company operations more easily, which ultimately will also save more money as it cuts down on inefficiency within the company.
Eliminate employee offboarding. Employees are not leaving your company when they are placed on furlough so typical offboarding benefits, such as outplacement, aren’t needed. You can save money by not needing to let go of your workforce.
Regulations, Timeframes, and Furloughs
When conducting a furlough, it’s important to consider the laws and regulations surrounding it in your country, state, or province. Just like with layoffs, certain groups may experience discrimination and there are laws in place to provide protection against that. For example, in the United Kingdom, special regulations have been put in place due to COVID-19 that allow for a ‘flexible furlough’ and exceptions that ensure the process remains fair for everyone.
While rules are in place to protect more vulnerable employees, some may – or may not – be in a place that restricts the length of time a company can place employees on furlough. A furlough can be as short as a few weeks, or even up to a year. It depends on the company, the industry, the economy at the time, and any laws or regulations that are implemented. In short, it’s complicated.
It’s worth mentioning that even though employees are not present and not being paid, or are working fewer hours for reduced pay, benefits like health insurance are still active. And, under some laws, furloughed employees may also qualify for unemployment.
It’s best to consult with your company’s legal team before implementing a furlough both to protect parts of your workforce and ensure that your furlough doesn’t violate any evolving laws or regulations. We are not lawyers and this article should not be misconstrued as legal advice! With the COVID-19 pandemic causing unpredictable shifts in the global economy, it’s essential that your company remain up to date on how lawmakers are handling it.
Create a Furlough Notice
Once legal has been consulted and the complicated aspects of a furlough explored and resolved, it’s important to compose a clear and concise furlough notice for those employees affected. Here is an example from the Society of Human Resource Management (SHRM) on how to start such a letter:
“Effective [date], [Company name] is implementing a temporary furlough of certain nonessential positions. This notice is to inform you that your position is included in this furlough and as such, you are being placed on a temporary, unpaid leave of absence effective, beginning [date]. This furlough is expected to last through [date]. It is important to note that your employment continues to be at-will and nothing in this notice or other furlough communications is intended as an express or implied contract.”
A furlough letter can be entirely customized, but following a specific guideline will help cover everything that furloughed employees need to know about the changes their job is undergoing. Here are a few things that your furlough letter should always include:
- Employee information, such as their name and contact details, as well as their job title and department.
- A positive tone throughout the letter, including salutations, and ending the letter in a more positive manner.
- An explanation of what a furlough is and most importantly that they aren’t losing their job.
After The Furlough
Once the agreed-upon term for the furlough comes to an end, organizations are faced with a few different choices. Employers can establish a new agreement and extend the furlough, bring employees back to work, or if necessary, transition to a layoff event.
While ideally welcoming employees back would be what follows after the agreed timeframe is completed, sometimes extending a furlough, or for some organizations implementing a flexible furlough, is another way to offer the security employees need while also doing what’s best for the company. When considering altering the furlough agreement or extending it, employers should regularly review agreements with each employee to see what options are available to them.
When furloughs aren’t enough and other, more permanent measures are needed, employers can turn to virtual layoffs and even voluntary, early retirement.
Voluntary retirement is a simple way to reduce your workforce, save money, and even save your company brand the bad press that layoffs can sometimes cause. But, if layoffs are ultimately unavoidable, transitioning from a furlough to a virtual layoff event can be made as painless as possible – for both your HR department and the outgoing employees.
If it is necessary to transition from a furlough to a virtual layoff event, our outplacement services can help provide resources and services that will make it much less stressful for everyone. Check out our blog on the topic here.
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