Layofffs vs. Furloughs Layoffs vs.

LAYOFFFS vs. FURLOUGHS

Layoffs vs. Furloughs

The nation is suffering the worst recession in 70 years. More than 5.1 million jobs have been eliminated since December of 2007. In order to keep talented employees, win additional loyalty, and better position themselves for recovery many employers are implementing furlough programs. According to the Wall Street Journal (Tuna, 2009) a survey of 245 U.S. companies revealed 17% had ordered mandatory furloughs and 19% had offered workers voluntary furloughs. The same survey found 65% had cut or planned to cut jobs completely.

Furloughs and Layoffs

A furlough is a temporary defined period of unpaid time off at the end of which the employee returns to work on a paid basis. This arrangement between employer and employee may be negotiated to terms of implementation. Some employers may allow their workers to reduce their workweek to a three or four day schedule with the employee being given the capacity to chose the days off, while other may require the employee to take a specific period of block time off per month but allow employees to chose the period. As a general rule employees on furlough continue to accrue vacation days, sick days, and personal leave and other benefits such as health insurance. Sometimes an employer may allow a furloughed worker to use personal or sick days so they can continue to receive pay (Brazas, 2012).

A layoff is the removal of an employee from the workforce without pay and without guarantees of returning to work. One variation of the layoff is the shutdown, common in automotive factories, where the factory is closed for a period of time until demand for production resumes. Employees that have been laid off do not continue to receive benefits such as vacation time and insurance (Brazas, 2012).

Discussion

Many companies feel that by furloughing employees during this tough economic period they are able to buy more time to make smart decisions. Often furloughs are less costly than layoffs for employers because they avoid severance costs and when business picks up recruiting and training costs for new workers (Tuna, 2009).