The Difference Between Furloughing and Laying Off
Furlough and laying-offs Employees, What should you consider?With uncertainty over how long both the current Covid-19 crisis and the Government’s job prevention scheme will last, business owners will continue to face challenging employment based decisions in the coming weeks and months. Employees will certainly not want to lose their jobs and having invested time and money (as well as emotionally in most cases) in them, employers will want to avoid losing good staff if at all possible. So businesses will no doubt be doing everything they can to prevent downsizing or prolonged closures. However, due to the financial impact of something as significant and sudden as this pandemic, avoiding a reduciton of resource levels of some kind will be outside of most business’s control. Many companies do not have the option of facilitating employees to work from home and some have been ordered to close by the UK government, which could lead to businesses like yours having to make tough decisions. Its likely that your firm is eligible for some wage compensation under the Coronavirus Job Retention Scheme due to the commercial effect that COVID-19 has had on your business. To get more information on this scheme, visit the Gov.uk website – https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme. The Government’s job prevention scheme introduced a new word into many people’s vocabularies in the form of, furlough. Before the Chancellor announced the Government’s initiative many companies were probably considering the possible need to lay staff off. Its possible that the Treasuries ability to assist businesses via the offering of furlough payments might fall short of the duration of the pandemic’s impact. In which case, as unappealing a prospect as it might sound, the possibility of laying off staff could need to be reviewed again.
Whats is the Difference Between Furloughs and Lay-Offs?A Furlough is a period where employees are not working nor being paid. Employees are put on temporary unpaid leave until the business re-opens. Depending on circumstances (and potential contract stipulations), employees may even be allowed to work for other businesses while on furlough. As mentioned a furlough is a temporary arrangement, however, a lay-off is permanent. Lay-offs are generally mass sackings of employees, caused by a need to cut expenses to save a business and they are typically not due to staff performance. What are the Pros and Cons? As drastic as it sounds, laying off staff might at first seem like the more appropriate option if your over-riding need is to save money. However, depending on circumstances it might not be the best decision for everyone. Why not consider these pros and cons when looking at what is best for your business:
- Laying off larger numbers of employees would lead to recruiting and training a similar number of people if demand returns to normal levels once the ordeal is over. This can be extremely costly and very time-consuming.
- Furloughing some staff enables employers to keep a ‘rotating’ timetable, where everyone has reduced hours instead of only a few having full hours.
- Lay-offs can immediately free up money from not making salary payments.
- Furloughing staff can enable businesses to resume operations much quicker once the situation changes.
- Furloughed staff may resent the business if they do not get any compensation over this period. This could lead to disgruntled workers, who when they return may not be eager to be productive
- Create and Develop a plan:
- Be honest communicate:
- Make Sure You Keep in Touch with Furloughed Staff:
Are there any Legal considerations?Firstly, we would recommend businesses should consult a qualified professional before taking any action with their employees, as it is important businesses ensure that they comply with all applicable UK employment laws. For example, you should keep the following regulations in mind:
- Employment Rights Act 1996
- The Equality Act 2010: