As these harsh economic times continue to intensify for the worst as a result of the COVID-19 pandemic, many small and large scale primary businesses are being forced to either layoff their employees, or furlough them. As of the 4th week of lockdown in several significant states of the world, close to 4 million U.S citizens have filed for unemployment status.
For people who are laid off, this means they’ve lost their job and there will be no future payments (beyond severance for some fortunate workers). On the other side, a furlough is like a leave of absence that could result in little or no pay from the employer. Here are some of the further distinctions:
What is a Layoff?
A layoff is a temporary measure by a company to minimize its costs by ceasing regular working routines rapidly. During sudden crises, many firms prefer adopting the layoff protocol to mitigate the company’s expenses because employees’ benefits and salaries are usually the most expensive liabilities in both small and large scale business organizations. Depending on the reason for the layoff, it could be temporary or permanent.
Moreover, certain companies prefer providing you with a cover plan that will suffice up until you secure your next job. Nonetheless, for a company that employs over 100 people, the employer is required by the Federal WARN Act to give 30-day advance notice for any layoff. While being laid off, certain employers like to present their workers with the severance insurance package. It is a cover plan that restricts you from working with specific organizations, individuals, and states for a particular duration. Of course, even if you will be given severance during this time period, you are able to file for unemployment benefits.
What does it mean to Furlough Employees?
Unlike layoffs where there is no guarantee of employment, furloughs guarantee employment. Typically, a furlough happens when your company recognizes the value and can afford to at least provide some wages (though usually less than full time) and medical benefits.
In short, furloughing employees is a way an organization can show they wish to keep its employees even if they cannot afford them at this particular time. Some situations, such as the current crisis, may force organizations to provide an end date for employees under furlough. The majority of the time however, companies furlough their staff with the intent to bring them back at full-time once the crisis passes. Thus, a worker’s performance may determine the type of furlough the employee receives.
Benefits of Furloughs
Unlike layoffs, furloughs allow you to retain your employment benefits. Though you may not be spending your time in company offices, you are still eligible for company benefits. During this time, furloughed employees also have the right to collect unemployment benefits though the period has not been clearly defined as unemployment or a layoff period. For instance, most organizations placing employees under furloughs still provide health insurance without any adjustments.
Another benefit associated with furloughs is that you can seek employment within the same company in a different position. The organization may allow you to keep your previous post or recommend a different spot. Also, employees under furlough notices are permitted to seek other jobs under different employment companies. Meanwhile, when it comes to a layoff, if you’re seeking a role under some other organization, that could violate an Non-Compete.
With the ongoing crisis, every section of the economy is currently facing difficulties. Employees are some of the most affected groups. During this period, there has been and will continue to be lots of layoffs and furloughs. Thus, you need to know the difference between these aspects of employment so, if given the option, you know what will better position you in the future.