What is a furlough?

The term is most common in the US. The US Office of Personnel Management defines a furlough as placing an employee in a temporary nonduty, nonpay status because of lack of work or funds, or other nondisciplinary reasons. Federal workers are furloughed during government shutdowns, and private employers use the word for temporary unpaid time off during a downturn or a temporary closure. The employee stays on the payroll records, and benefits may continue depending on the employer’s plans.

The difference from a layoff is whether the job continues. In a furlough, the employment relationship continues and the employee expects to come back. A layoff, in US usage, is a separation from employment because there is no work, which may or may not include a right of recall. Large layoffs at US employers with 100 or more employees can trigger the WARN Act’s 60-day notice requirement. In UK usage, “redundancy” is the permanent loss of a job, while a “lay-off” is being sent home without work for at least one working day: employees should normally get full pay unless the contract allows unpaid lay-off, and after four weeks in a row, or six weeks in a 13-week period, they can apply for redundancy pay.

Furlough also had a specific meaning in the UK during the pandemic, through the government’s Coronavirus Job Retention Scheme, which closed on 30 September 2021. Today, a UK employer that sends staff home without work should normally pay them in full unless the contract allows unpaid or reduced-pay lay-offs.

If you furlough staff, put it in writing: why, when it starts, the expected length and review date, what happens to pay, benefits and leave accrual, whether they can take other work, and how you will contact them about returning. This is general information, not legal advice.

Also called: furloughed, temporary layoff, lay-off (UK).