What is Furlough? A Guide to Understanding Temporary Leave from Work

Being placed on furlough is a temporary, unpaid leave of absence from your job where you typically remain an employee of the company. Unlike a layoff, a furlough is not a termination; it's a strategic pause often used by employers to manage costs during challenging economic times, with the expectation that you will return to your role.

What Exactly is Furlough Leave?

A furlough, often called furlough leave, is a mandatory, temporary suspension from work initiated by an employer. During this period, you do not work and do not receive your regular salary, but you generally retain your employee status and benefits, such as health insurance. Employers may implement different furlough structures. A full furlough means you stop working completely, while a flexible furlough allows you to work a reduced number of hours, with the employer covering only the hours worked.

There are two primary types of furloughs to understand:

• Administrative Furlough: This is a planned management tool used when a company needs to reduce labor costs, often due to budget constraints, seasonal slowdowns, or reorganization. It is a proactive measure to avoid permanent layoffs.
• Shutdown Furlough: Also known as an emergency furlough, this occurs due to an immediate, unforeseen event that halts operations, such as a sudden funding lapse, a natural disaster, or a significant drop in demand. This type is less common and often more abrupt.

Why Do Companies Use Furloughs?

Organizations implement furloughs as a alternative to layoffs to navigate financial instability. According to mainstream HR practices, common reasons include:

• Balancing the company budget during a revenue shortfall.
• Managing workforce needs for seasonal industries.
• Adapting to economic downturns or lower demand for services.
• Ensuring operational continuity during a crisis.

Furlough vs. Layoff: What's the Critical Difference?

The fundamental difference lies in job security. A layoff is a permanent termination of employment, severing the relationship between the employee and the employer. A furlough, based on our assessment experience, is a temporary leave with the intention of recalling employees once conditions improve. If your employer uses terms like "temporary layoff," it is often functionally the same as a furlough.

What Are Your Rights and Options While on Furlough?

When you are furloughed, your employment contract is suspended, not terminated. Key considerations include:

• Duration: Furloughs are typically temporary, often lasting a minimum of three weeks, but can extend for several months depending on the company's situation.
• Government Schemes: In some countries, governments may offer furlough schemes (like the UK's Coronavirus Job Retention Scheme) where they subsidize a portion of an employee's wages. Your employer would apply for this on your behalf.
• Working Elsewhere: Generally, you are allowed to seek other employment while on furlough. However, you must review your employment contract for any exclusivity clauses and communicate with your HR department to avoid conflicts of interest.
• Benefits: You typically retain your employee benefits, such as health insurance, but you must confirm this with your HR representative.

How to Use Your Furlough Time Productively

A furlough can be an opportunity for professional development. Here are actionable steps you can take:

• Develop New Skills: Use the time to complete online courses or certifications that enhance your resume. Focus on skills identified as in-demand within your industry.
• Update Your Professional Materials: Refresh your CV, LinkedIn profile, and professional portfolio to reflect your most recent accomplishments and skills.
• Network Strategically: Engage with your professional network online. Attend virtual industry events and reconnect with former colleagues to explore new opportunities.
• Plan Your Career Path: Assess your long-term goals. Whether you plan to return to your current role or seek a new position, a furlough provides time for strategic thinking.

In summary, being on furlough is a challenging but temporary situation. The key takeaways are: furlough is not a termination, it is crucial to understand your specific company's policies, and you can use this time proactively for career development.