A furlough is a temporary leave of absence from work, during which employees retain their job but are not paid for a specified period of time. Furloughs may be short or long term and are usually due to special needs of a company or employer, which may be due to economic conditions of a specific employer or in society as a whole. Furloughs can be used as a strategy to keep employees while protecting the companys bottom line.
Here are some key differences between furloughs, layoffs, and reductions in force:
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Furlough: A furlough is a mandatory temporary leave of absence from which the employee is expected to return to work or to be restored from a reduced work schedule. It is usually unpaid and may be due to a lack of work or budget cuts.
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Layoff: A layoff is the termination of an employees contract due to matters such as redundancy, restructuring, or financial difficulties. It is usually permanent and may be due to a lack of work or budget cuts.
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Reduction in force: A reduction in force is a permanent termination of employment due to a decrease in the number of employees needed to perform a particular job or function. It is usually due to a lack of work or budget cuts.
Furloughs are an important tool for cutting costs when the business is down. Employers prefer furloughs to layoffs because in furloughs, they retain access to their skilled workforce. In case of termination, they need to hire and train new employees later, which can be expensive as well as time-consuming.
