Have you ever heard about furloughs before? If you are subject to it, why do you get this? If you’re a manager responsible for bringing this news, how can you smooth this?
Well, people. Here, we will learn about the reasons employees get furloughs, the legal requirements for employers, and strategies to deliver them to people.
What Are Furloughs and How Are They Implemented?
Furloughs have become more in line with current economic conditions. This can be explained by the fact that organizations must be flexible in the face of economic uncertainty.
The World Economic Forum writes, “Many companies reacted to the crisis by placing their employees on leave – that is to say on unpaid leave – rather than dismissing them completely.”
Compared to layoffs, the difference is that furloughed staff remain on their employer’s pay list, ready to work again once the economy recovers.
However, a furlough is a temporary leave of absence, usually without pay. An employer usually uses it as a savings measure in case of financial difficulties or a decreased demand for its products or services.
During a leave of absence, employees are usually expected to stop working for a specified period, such as a few days, weeks or months.
When they are on leave, they may be eligible to receive unemployment benefits or other forms of government support. It’s up to their country’s and state’s laws and regulations.
The Reasons Employees Are on Furloughs
While the economic downturn may be the general reason, there may be other reasons that employees find themselves in this situation, such as:
1. Economic downturn
In times of recession or economic uncertainty, businesses may experience reduced demand for products or services. It results in reduced income and the need for reduced costs through furloughs.
2. Budget cuts
In the event of a budget reduction, a company may need to reduce its spending to remain financially stable. Furloughs can be a cost-saving measure that allows the company to lower labor costs without permanently laying off employees.
3. Seasonal fluctuations
Furloughs or temporary layoffs of employees also happen when a business suffers a drop in demand for its products or services during a given period of the year. Some companies may reduce work hours, offer voluntary leave, or implement a hiring freeze to avoid layoffs.
4. Business Restructuring
Restructuring generally involves changing the organization’s operation, which may result in the need for cost-reduction measures. When an organization goes through a restructuring, it can identify no longer necessary roles. In such cases, the organization may temporarily lay off employees in these positions until they are needed again.
5. Natural or emergency situations
Natural disasters or emergencies like COVID-19 can lead to furloughs. Lockdowns and social distancing can cause businesses to close or downsize, resulting in financial hardship. Companies can put people on temporary layoffs to reduce costs in response to these challenges.
How to Communicate Furloughs to Our Employees
Employee furloughs can be a challenging experience for impacted employees as they may face financial hardship due to lack of pay. That is why transparency, clarity, and compassion are critical when telling temporary absences to employees. Here are what we need to consider:
1. Provide advance notification.
A notice gives employees time to get ready for temporary layoff. It allows them to make the necessary arrangements, such as adjusting their budgets, making alternative work arrangements or looking for alternative job opportunities. The purpose is to help mitigate the financial and emotional impact of the temporary layoff on employees.
2. Explain the purpose of the furlough.
Communicate the reasons for the temporary lay-off and its impact on the business and its employees. You can discuss the financial challenges that led to that decision. Also, tell our people that furlough is part of the company’s way to mitigate the impact.
3. Clearly outline the terms of the furlough to them.
Here are a few key terms to include in the description of a temporary lay-off:
Expected Duration
Communicate the anticipated duration of the furloughs, including any potential termination date or time.
Pay and benefits
Let people know how their salaries and benefits are going to be impacted. Will they be partially paid or qualify for unemployment benefits Managers should also report any other implications for other benefits, such as health insurance.
Work expectations
During the furlough period, employees may be prohibited from working for other businesses or in another occupation. Communication of such expectations or limits to our people is essential to avoid confusion and misunderstandings.
Callback procedures
Communicate callback procedures to people as soon as possible or simultaneously as furlough is communicated. In this case, managers should inform employees how they will be notified when they return to work. By sharing this information, employers can help workers transition to the labor market.
While temporary absences may be difficult for impacted employees, clear, transparent communication about furloughs from us as employers can help reduce certain financial and emotional impacts.
