Everything HR Leaders Need to Know About Furlough Benefits

What is a Furlough?

Similar to an unpaid leave of absence, a furlough refers to the temporary layoff of some employees — either across the board or in select departments. It’s typically used as a cost-saving measure, with furloughed employees returning to their roles once their company is back on better financial footing.

Many furlough periods are scheduled ahead of time, giving both employees and their employers the chance to prepare for this shift in workplace dynamics. A government shutdown is one possible example. But furloughs can also be implemented on short notice when necessary, which can cause a lot of stress for all involved. For example, when the coronavirus pandemic first began, companies in industries like retail and entertainment furloughed their workers.

When furloughs are instituted, they can be stressful and disturbing for employees. They may feel uncertainty about the future of their jobs, and they might worry about how they’ll pay their bills or support themselves as they go through this transition period. But furlough benefits can help to ease some of these anxieties.

What’s the Difference Between a Layoff and a Furlough?

Furloughs and layoffs are both downsizing measures, but it’s important to understand the differences between these two strategies for reducing staff. A furlough might seem similar to a layoff because it’s not a paid leave, but there are some key differences between the two.

• A furlough is temporary, typically lasting a few weeks or months. Once the furlough period ends, employees are welcomed back to the same company with open arms since the cost-cutting measures were temporary.
• A layoff, on the other hand, is permanent. Employees who go through layoffs usually leave their companies for good. They have to look for work elsewhere at a completely new company.

Furlough Benefits That Employees Are Entitled To Receive

For human resources teams, it’s important to ensure that furloughed employees receive all of the furlough benefits you’re legally required to provide. These might include:

• Unemployment benefits: Some states allow furloughed workers to file for unemployment insurance while they’re on leave. This can help support furloughed workers financially during this difficult transition period.
• Paid time off (PTO): Employees who are furloughed can still keep their accrued PTO, although you’re not required to actually pay out this time while they’re on leave. You’re not required to pay any sick leave, either.
• Advanced notice of their leave: Finally, furloughed employees in some cases are entitled to receive notice from their employers if they’re going to be furloughed. This is required by both the Worker Adjustment and Retraining Notification (WARN) Act for workers that meet the federal criteria, as well as state-level WARN laws.
• Retirement benefits: Depending on the employee’s status and your specific retirement plan, they may be entitled to receive contributions for the period of time when they’re on furlough.

Additional Benefits You Can Offer Furloughed Workers

In addition to the employee benefits described above, you can also consider offering furloughed employees other forms of support. Examples might include:

• Career coaching and training: Furloughed workers may feel like they’re at a standstill in their careers, wondering if now is the time to add onto their skills or focus on career growth opportunities. Offering furloughed employees career coaching and training can help them gain the skills they need to become even more valuable employees once they return, as well as pursue their personal career goals.
• Access to healthcare coverage: Many companies provide furloughed employees with access to the same health insurance they had while they were on the job. This can help furloughed workers stay healthy and manage any medical conditions they may have without worrying about their insurance coverage. If your health plan doesn’t allow them to stay enrolled while they’re on leave,they can elect to remain covered under the Consolidated Omnibus Budget Reconciliation Act (COBRA).
• Extra fringe benefits: You can continue to offer smaller benefits within your total rewards package that bring added value to workers on value. Discounts on products and services offered by your company might be appreciated. Continuing to cover fitness classes or memberships, telehealth and mental health expenses, or meal prepping services can help support your employees while they’re on leave.

FAQs About Furlough Benefits

Who is eligible for furlough benefits?

This depends on the furlough policy of your organization. Typically, furloughed employees are those who are laid off as part of a company-wide cost-cutting measure, or due to a business closure or financial hardship.

How long do furlough benefits last?

Again, this depends on your furlough policy. Usually, furloughed workers will be placed on leave for a few weeks or months, but the length of their furlough period can vary depending on the needs of your business.

How can I help furloughed workers stay engaged and at ease during this time?

One of the most important furlough benefits that you can provide to furloughed workers is a sense of purpose and engagement. This might include offering opportunities for ongoing training and development and providing other resources that support their physical, mental, and emotional wellbeing.

Help Your Employees Prioritize Wellbeing During Times of Uncertainty

Work-life wellness is always important for every employee. But your company should strive to live out these values and support team members on their personal journeys when the business is thriving. You’ll all be better prepared to handle the difficult moments, like financial uncertainty and furlough decisions, when employees have been well-supported every day leading up to it.

If you’re offering wellness benefits to employees on furlough, they should be a continuation of the wellness program you have in place for every team member. With the right strategy, you can help employees on leave stay active, engaged, set up new financial goals, and enter this period of their lives with a fresher perspective — instead of feeling totally drained. Speak to one of our Wellbeing Specialists today to hear about the programs available for your team!