Furlough vs Layoff: What’s the Difference

furlough vs layoff

Difference Between Layoff and Furlough

The start of the year brought rough news for some American workers. While many are able to work from home during this lockdown, others don’t have that luxury.

All of the change has lead to companies putting employees on furlough or laying them off completely.


Questions Answered

  • What is the difference between layoff and furlough?
  • What is a furlough?
  • What is laid off?
  • How long can a company furlough an employee?

Unfortunately, the impact of the pandemic has taken its toll on many industries, forcing them to temporarily and permanently close the doors. So, what happens to employees in these industries?

Many still work, some get laid off, and others are sent home without pay (which is called a furlough).

What Is The Difference Between Layoff And Furlough?

Generally speaking, a furlough is meant to be a temporary arrangement while being laid off is a more permanent termination (including salary and benefits). 

A layoff and a furlough are both temporary forms of employment interruption, but there are some key differences between the two.

What is a Layoff?

A layoff refers to the temporary suspension or termination of an employee’s work due to lack of work or funds.

Layoffs are often implemented when a company is facing financial difficulties or restructuring, and they can be either temporary or permanent. Employees who are laid off are typically eligible for unemployment benefits.

What is a furlough?

A furlough, on the other hand, refers to a mandatory, unpaid leave of absence for a set period of time. Businesses will often furlough employees when they don’t want to lay off staff (in hopes of turning things around shortly) but lack the resources to continue paying them. 

Employees who are furloughed are typically not eligible for unemployment benefits, but they may be able to continue receiving certain benefits, such as health insurance, while they are on furlough.

Furlough for Hourly Employees: Hourly employees will typically see one of two types of furloughs. A general reduction in their work hours or a full out schedule cut.

Furlough for Salaried Employees: Salaried employees will typically see a temporary pay reduction or full work cut. They are still employed but not working or receiving compensation.

Overall, the main difference between a layoff and a furlough is that a layoff involves the suspension or termination of employment, while a furlough is a mandatory unpaid leave of absence.


Frequently Asked Questions (FAQ)

Is being furloughed or laid off better?

It is difficult to say whether being furloughed or laid off is “better,” as it ultimately depends on the specific circumstances and the needs of the individual employee. Both furloughs and layoffs can have negative impacts on an employee’s financial stability and job security.

That being said, there are some differences between the two that may impact which option is more favorable for an employee. For example:

  • Unemployment benefits: Employees who are laid off are typically eligible for unemployment benefits, which can provide some financial support during the period of unemployment. Employees who are furloughed, on the other hand, may not be eligible for unemployment benefits, as they are not technically terminated from their job.
  • Benefits: Employees who are laid off may lose access to certain benefits, such as health insurance or retirement plans, depending on the terms of their employment. Employees who are furloughed may be able to continue receiving certain benefits, such as health insurance, while they are on leave.
  • Job security: A layoff may be a permanent separation from employment, while a furlough is typically a temporary leave of absence. As a result, employees who are furloughed may have a better chance of returning to their job once the furlough period is over. However, this is not guaranteed, and it is possible for a furlough to turn into a permanent layoff if the company’s financial situation does not improve.

Overall, both furloughs and layoffs can have significant impacts on an employee’s financial stability and job security. It is important for employees to carefully consider the terms of any furlough or layoff and to seek financial and legal advice as needed.

How Long Can A Company Furlough An Employee?

There’s no set time limit for how long a company can furlough an employee as it can depend on the specific circumstances of the company and the needs of the business.

Some furloughs may last only a few days or weeks, while others may be more prolonged, lasting several months or longer. Most furloughs are a temporary fix, so anything less than one year is likely. 

Overall, the main difference between a layoff and a furlough is that a layoff involves the suspension or termination of employment, while a furlough is a mandatory unpaid leave of absence.

Related Articles: Employee Resignation Announcement | Best Outplacement Services


Title: What’s the difference between layoff and furlough (furlough vs laid off)

Category: Employer Resources

Tags: furlough vs layoff, Furlough, difference between layoff and furlough, furlough definition, furlough vs laid off, furlough definition, difference between layoff and furlough

Author: Reid is a contributor for theJub. He’s an employment and marketing enthusiast who studied business before taking on various recruiting, management, and marketing roles. More from the author. | Author Profile


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