Furloughs vs Layoffs: How it Affects You

Before the pandemic, a lot of employed workers had not heard of the term ‘furlough’ and some who had thought it meant ‘lay off’.

Furlough is up there with most used words since the pandemic began and unemployment began to hit. To put this into context, Google searches for “what does furlough mean” are up 5000% in the last couple of months.

People who work in service industries such as airlines, restaurants, gyms, hotels, event centres, etc. might be more familiar with the term furlough than people who work in corporate organisations. However, with the uncertainties surrounding the state of the economy and the timeframe businesses will resume normal operations, one thing is common with furloughed and laid-off employees — no one is getting paid.

This very significant thing that they have in common, makes it even confusing to distinguish. So let’s clear this up.

What is Furlough?

“Furlough,” derives from the Dutch word, “verlof,” which means “leave of absence,”

A furlough is an unpaid leave of absence due to the special needs of your employer, which is mostly economic. Companies use this tactic to cut cost and retain talent, hoping to bring the employee back when the ‘struggle’ is over.

When an employee is furloughed, they have their role, salary and job duties put on pause while other benefits like health insurance will still be accessible.

Do you get paid during the furlough? No, that’s the whole point. But you remain an employee and wait to get called back to work. Also, you’re sharing financial risk with your employer when external forces like COVID19 drive down revenue.

Although, you’re likely to get called back to work, also have it at the back of your mind that it could become a permanent termination if conditions do not improve. So, if you’ve been furloughed, it’s best to look for another full-time job while you wait for that call. Look out for yourself first 😄

What is a layoff?

This, on the other hand, has been more common than furlough. In a company’s financial crisis, 1 out of 10 employees can be furloughed while 7 could be let go.

A layoff is when an employer terminates your employment temporarily or permanently. It could be temporary if your company notifies you that you could be rehired in the future — almost not a guarantee. Permanently, it means rehiring isn’t an option and there are usually different reasons for this, from business closure to reducing overhead cost or employee performance.

If you’re laid off, you could get some employee benefit if it was stated in your contract prior. We suggest you review your employment contract thoroughly and ask for what you deserve.

In these very uncertain times, you might be faced with either of this as an option. And as much as we’d hate for it to come to this, consult with legal counsel or a trusted HR advisor to weigh all of your options and make the best decision.

And if you think having a steady income come furlough or layoff is what you need, then head to Casava.co to make sure of that!

Casava is helping every Nigerian protect their income from unemployment. We ensure that in the event of job loss or in the case that you can’t work because of a serious injury, you earn your salary for up to 6 months with a monthly premium as low as the cost of an Uber trip!

Simplifying insurance for Africans.

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