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Furloughs can be a great way to reduce your business costs without the need for more permanent reductions, such as a layoff or reduction in force (RIF). Like any other type of reduction event, there are a few crucial steps to follow and documents you will need in order to ensure a successful furlough event.
In this article, we will discuss how to assemble the necessary internal documentation for a furlough, should you decide that a furlough is the right option for your organization. This includes crafting a thorough and thoughtful furlough notification letter for your employees, which is where having a furlough letter template can come in handy.
What Is a Furlough Letter?
A furlough letter is one of the most important documents needed for a successful furlough. It’s a written notification letter that you can send out to your employees to notify them of the furlough, explain how it will work, and offer resources to help answer their questions.
The sample furlough letter template shared below is a customizable example demonstrating how you can compose the proper furlough notification for your own situation. Like all sample letters, this is a jumping off point for you to build upon with your own specifics. All organizations and furloughs are different, requiring different clauses in the letter and overall policy. We highly recommend that you work closely with your legal counsel to make sure you are complying with all applicable local, state, and federal furlough laws.
What Is a Furlough and When Is It Useful?
Now before we get into the furlough letter template itself, when and why you might choose to hold a furlough in the first place. A furlough is essentially an unpaid, mandatory leave of work. The best way to think about furloughs is to look at seasonal businesses, such as landscapers, ice cream shops, and others of that nature.
For example, an ice cream shop may not make logical business sense to remain fully operational during the winter months when not many people will be buying ice cream. So many of these types of seasonal businesses will simply furlough their employees and close up shop during their off-season. During the furlough, the staff members are not paid, but they still technically retain their jobs. When the business reopens again, those workers are welcomed back as if they never left.
For other businesses, it can also make sense to use a furlough as a cost-saving measure. For example, a company could furlough employees for one week to help balance its budget, or hold a recurring furlough every Monday for a few months to achieve the same goal.
Furloughs are extremely customizable, which makes them an attractive alternative to layoffs. However, there are still some downsides to furloughs as well. So it’s important to consider all of your options, including temporary layoffs, more permanent reductions in force (RIFs), or less drastic reductions of resources.
Click below to download our free guide on some effective downsizing strategies that can help you cut costs without laying off employees.
How to Write a Furlough Letter
The best way to learn how to write your own furlough letter is to use a sample furlough letter template to keep yourself on track and ensure you include all of the key elements. Again, no sample furlough letter is going to be a one-size-fits-all template, but there are common threads that run through all of them.
Let’s go through our sample furlough letter template and its key components that you’ll need to make sure you include in your own furlough letter as you customize the template provided below.
Sample Furlough Letter Template
We’ll start with a furlough letter sample that you can copy and customize for your own furlough notification needs. You’ll notice that there isn’t a lot of fluff or small talk in this template. Just like with a layoff letter, you want to get right to the point in your furlough letter because you’ll have a lot of information to convey quickly and succinctly. So let’s illustrate how you might best put all of this into a furlough letter template.
Copyable example
[Date] Dear [Recipient Name], The purpose of this letter is to formally notify you that your position as [insert title] in the [insert department or team name] is being temporarily eliminated due to [insert reason]. Your last official day of work will be [insert last day]. Please be assured that this action in no way reflects dissatisfaction with your job performance. The length of this temporary furlough is undetermined at this time. We will do our best to provide current information as our organization moves to have employees come back to work. Furloughs are a company-initiated, short-term, temporary, unpaid leave of absence. The furlough period and provisions may be changed or terminated at the sole discretion of [Organization Name], and does not create any new employment contract, express or implied. During the furlough period, your health and welfare benefits will continue (if applicable), and will accrue at employee cost during this time. Benefit cost repayments will be required upon potential return to work, if applicable. If you do not return to work, you will not be billed for the benefit premiums accrued. If you have a final paycheck, [Organization Name] will deduct any premiums in arrears that it is able to, and anything outstanding beyond that amount will not be billed back. During the furlough period, you may file for unemployment compensation. Please refer to your state’s guidelines for unemployment compensation regarding specific details and provisions surrounding application, eligibility, and collection of benefits. To assist you in applying for any eligible benefits, please reference the state in which you are employed at www.dol.gov or by calling 1.866.4.USA.DOL. If you have additional questions, you may contact [Name of Designated Contact] at [insert telephone number/email address], who is available to meet with you to answer any further questions you may have concerning this furlough. We wish to thank you for your contributions to the [insert department or team name] at [Organization Name]. Please be assured that we will do all in our power to work with you, and are available to answer any questions you may have. Don’t hesitate to contact us if we can offer assistance in any way. Sincerely, [Name of Employer Representative] [Title of Employer Representative]
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Furlough Letter Key Components
Now let’s break down this furlough letter template to understand its key components. When you begin to draft your own sample furlough letter to employees, it’s good to follow a specific content structure to help you include all of the key information and avoid any problems later on.
Here are the five key components you’ll need to include in your furlough letter:
1. Reason for the furlough: Get right to the core of the message by explaining why this furlough is happening, making it clear that it is not a reflection of their job performance, and that they are still valued and needed.
2. Length of the furlough: This is where you explain that this furlough is temporary, and give specifics on how long you expect it to last (if you know at this point). You’ll notice that we’ve left this section “undetermined” in our sample furlough letter template above, so feel free to customize this with your specific furlough timeline and details.
3. Employee benefits: It’s important to give details about what health, welfare, and unemployment benefits (if any) employees can expect to receive while on furlough. This will depend on how long your furlough will last, as well as your company policies and what is dictated by the laws that govern where you do business. So always double check this section with your legal team to ensure they are accurate and in full compliance.
4. Contact information: Always make sure you include contact information and instructions for how employees can follow up if they have further questions. This may include holding a group meeting that anyone with questions can attend so that everyone is on the same page.
5. Positive acknowledgement: End the furlough letter on a positive note by acknowledging the employee’s contributions to the company and offering support.
If you fail to include any of these components in your own furlough letter, you could face damage to your company brand and employee retention, not to mention potential security risks, retaliation, and lawsuits. So make sure to consult with your HR and legal experts to compose a thorough furlough letter template for your organization’s ongoing use. This can save you a lot of headaches later on. You can read our complete furlough guide to make sure you’ve covered all of your bases and have answers to anything that may arise.
Furlough Letter: Final Takeaways
It’s absolutely crucial that your workforce reductions are handled with care. A properly prepared furlough letter is essential for your organization in order to ensure a smooth furlough event from start to finish.
So it’s essential that you take the time to compose a thorough and thoughtful furlough letter template that allows you to explain the reasons for the furlough, the timeline, and all other pertinent information for your impacted employees in your future furlough events. As you use our sample furlough letter template provided above to craft your own furlough letter, make sure you fully customize it for your workforce and furlough event specifics.
Lastly, remember to always work closely with your legal counsel to ensure that you are including all necessary language and complying with all local, state, and federal laws when holding any reduction or cost saving event.
At Careerminds, we believe that you can never be too prepared for your next reduction event. Our arsenal of resources, templates, guides, and industry-leading outplacement services can help you navigate the delicate reduction process. Click below to speak with one of our experts and see if we are the right partner for your organization.
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