Furlough vs. Laid Off vs. Voluntary Layoff Differences

Although performance is an important part of keeping your job, a changing economy has a lot to do with your employment situation. Companies that find themselves in financial trouble may need to furlough or lay off their employees. Keep reading to learn the difference between furloughs, layoffs, and voluntary layoffs in the workplace.

furlough vs laid off vs voluntary layoff furlough vs laid off vs voluntary layoff

Furlough Definition

A furlough is a temporary, unpaid leave of absence. Furloughs are more common in the public sector, but private companies also use furloughs to temporarily pause employment. Furloughs are usually decided by employers and are involuntary to the employee.

Reasons for Furloughs

Employers may choose to furlough selected employees if they believe an unfavorable economic situation is temporary. They don’t necessarily want to lose their employees in the long term, but they are unable to pay them at the moment. During a furlough, employees may not perform work-related tasks that would require compensations from their employer.

Benefits of Being Furloughed

Furloughs are not ideal situations. However, if you’ve been furloughed from your job, there are several benefits to your employer’s decision. These benefits include:

  • There may be a continuation of health insurance and other benefits.
  • Your job will likely be waiting for you after the furlough ends.
  • Some furloughs result in a reduction of hours rather than a full suspension of the job.
  • Depending on the situation, you may be able to collect unemployment benefits while furloughed.

Laid Off Definition

Being laid off means that your job has been eliminated. Employees may be laid off as part of a larger team or department, or their individual positions may be laid off. A layoff is different than being fired because it is not the fault of the employee.

Reasons for Layoffs

The main reason for company layoffs is downsizing. During financial difficulties, companies might be able to save essential jobs by combining or eliminating less essential positions. Unlike furloughed employees, laid off employees are not expected to keep their jobs after a company’s economic situation improves.

Benefits of Being Laid Off

It’s difficult to see what upsides there could be when it comes to layoffs. However, being laid off is favorable to being fired – and does have some advantages as well. These benefits include:

  • Laid off employees typically receive severance.
  • If you are laid off rather than fired, you can receive a favorable recommendation.
  • You are eligible for employment benefits when you are laid off.
  • Some companies will provide job referral services for employees who are laid off.

Voluntary Layoff Definition

In some cases, a voluntary layoff may be the most advantageous option for employees. Companies that need to reduce their workforce sometimes offer additional benefits to employees who volunteer to lose their job.

Voluntary layoffs are different from quitting or resigning your job. The position of the person who is laid off is eliminated and no replacement is necessary.

Reasons for Voluntary Layoffs

Voluntary layoffs typically occur during financial difficulties to avoid involuntary layoffs. When employees are laid off involuntarily, it can affect the wellbeing and productivity of the entire workforce. Employees may wonder if their jobs are in danger or if they are next to be laid off.

In a voluntary layoff program, companies can use an unavoidable workforce reduction to empower their workforce. Employees who would be adversely affected by a layoff can be protected. Meanwhile, workers who may be open to pursue other opportunities have the chance to do so.

Benefits of Voluntary Layoffs

  • Volunteering to eliminate your position can save other employees from losing their jobs.
  • Employees who volunteer to give up their positions can receive severance as well as unemployment benefits.
  • Leaving a job on your own terms can better prepare you for a job search.
  • Employers who offer voluntary layoffs rather than involuntary layoffs protect themselves against wrongful termination lawsuits in the future.

WARN Act Regulations

The WARN (Worker Adjustment and Retraining Notification) Act was passed in 1988 to protect employees and their families. The act requires employers to notify workers 60 days in advance of a mass layoff or workforce reduction. It also clarifies workers’ rights and responsibilities during company layoffs and workforce reductions.

More Employment Resources

Unexpectedly losing a job is one of the most stressful experiences a person can go through. Finding a new job in an unfamiliar employment market can make that experience even more difficult. Check out a resource that details how to write a winning cover letter and resume, or you can read an article about setting career goals that lead to professional success.