A furlough is a temporary period of leave from work where the employee is not paid. Employers typically use it as a cost-cutting measure during the period of financial difficulty or economic downturn. The employee is still employed but does not work and does not receive a salary for a certain period of time.
Both furloughs and layoffs are ways of reducing labour costs, but the two concepts have distinct differences.
A furlough is a temporary suspension of employees from their job duties, usually due to financial constraints. During a furlough, employees are usually paid nothing and are not required to work at all. Employees may be able to use benefits like health insurance during the furlough. It is usually a short-term measure, and once the financial situation improves, employees can return to their jobs.
A layoff is when an employer permanently terminates an employee’s position and is not eligible for any form of benefits. Companies lay off workers when they need to downsize their operations or want to restructure their workforce.
a. For employers
b. For employees