The Coronavirus pandemic has hugely affected all sectors of the economy in one way or another. This has created a significant economic shock on businesses. When running a business, such unprecedented events are bound to happen at one point or the other. The effects of such an event cut across different industries such as transport and tourism, which consequently would increase the operating costs of running any company. In some cases, a company would then have to reduce its expenses, and one of the ways to do this is by reducing the workforce by a certain percentage through a furlough. This is, however, not a termination of employment. A furlough tries to retain jobs for employees should operations, and revenue incomes go back to normalcy.
Introduction to Furlough
A Furlough is an unpaid absence from work and could be voluntary or involuntary. Furloughs, in most cases, are used as a cost-saving action when a company is not generating enough cash flow to pay the Employee (s) their usual salaries fully. It is often mandatory as it is seen as a necessary attempt to ensure the company survives, and if not executed, it would lead to the collapse of the business hence permanent loss of employment by the Employee (s). A furlough is an alternative to layoff. The duration of a furlough could be in the range of a week to months or a year in some cases.
What is a Furlough Letter?
A furlough letter is a notification to an employer’s staff members, alerting them of the furlough and how the employer intends to implement it while giving them a chance to make queries before the furlough is in effect. A furlough letter is also referred to as a notice of temporary layoff.
COVID-19 Furlough is a furlough implemented by an employer when they can no longer maintain their workforce due to the coronavirus pandemic’s effects on their business operations. Before furloughing employees, an employer should discuss the changes to be made to the contract of employment with their staff. If your enterprise has been negatively affected by COVID-19 19, it is advisable that you furlough some of your employees rather than lay off if you want to remain operational. To assist with employees who have been furloughed and businesses that have been impacted by the Covid-19, the government has made certain interventions like providing stimulus packages and grants.
Usage of Furlough Letter
A furlough letter is used to notify the staff members of an upcoming furlough, how the employer intends to carry out the process. A furlough letter is important when listing some of your employees as “furloughed workers” in an attempt to secure the government’s job retention grant.
An employer can also use a furlough to modify the regular working schedule to reduce the working hours for employees whose salary they aim to reduce. During a business reorganization, a furlough can be used to lay off employees temporarily are reallocated to their new positions.
How to Write Covid-19 Furlough Letter
As an employer, it would be in your interest, as a business owner, to ensure your company survives the pandemic and to retain the services provided by your employees after the pandemic or when business resumes. A furlough could be the only way to achieve these two, and in such a case, you would have to come up with a furlough letter to this effect. The following are considerations and steps you should take when writing a Covid-19 furlough letter.
As with many letters, the first thing should be to declare who the letter is being addressed to, that is, the recipient, who in this case is the Employee (s) at the top left corner. The author should include information such as the date, the official names of the Employee, and their address. After writing the header, you can include a salutation as a gesture of courtesy.
The general format of the header should appear like this.
Dear Mr./Mrs/ [surname]
First paragraph (Purpose)
After declaring the Employee being addressed, you can then proceed to inform them of the purpose of this letter. You should aim to go direct to the point as this is a formal letter, and the action is not a personal vendetta against them as individuals.
An example of such a section in a covid-19 furlough is as follows.
I am writing this letter to officially notify you that your Receptionist position is temporarily being eliminated due to the covid-19 pandemic restrictions in offices. This is expected to be in effect from the 4th of June 2020. You shall be eligible for full benefits as per your employment contract; however, you will not be eligible for payment during this period. Kindly be assured that the company’s decision is in no way a reflection of any discontent with your services and performance.
This example specifically declares the employer’s intent and gives the reason why the action taken was necessary. It is imperative to assure the Employee that the company still values them, and the furlough is in no way an act of dissatisfaction with their performance at work. The date on which this is expected to take effect s also indicated.
Middle paragraph (Comprehensive description)
A description of the furlough then follows the purpose of the letter in detail. Specific information, such as the length of the furlough deemed relevant to the furlough, is included in this section. Since the Employee, in some cases, might not be familiar with the term, it is advisable to define for them what it means.
An example of such a section is as follows;
The duration of this furlough is indefinite at this moment as the government has not given a timeline for which these guidelines are to be effected. However, we will keep you updated pending any changes that allow the employees to come back to work.
A furlough is a temporary unpaid leave from work initiated by a company due to unavoidable reasons well known to the company. It is not an initiation of any contract of employment, express or implied. A furlough’s duration can be changed at the will of the company.
You shall remain to be a beneficiary of the company’s health insurance package. However, this will augment the Employee’s cost during the furlough period. Upon resumption of work duties, they will be billed as per an agreement to be made at that time. Should the employee not return to work, they will not be billed.
Here the employer lets the Employee know that the furlough duration is prone to review depending on the guidelines given to them by the government. The duration varies from one company to the next and is dependent on the situation; when writing a furlough letter, it is best to keep this in mind. The benefits the Employee can still enjoy have been given, and the means to which they are to be reimbursed have been stated. Depending on your company’s policy, benefits and compensation can be given as applicable.
To finalize the letter’s body, it is important to inform the Employee of unemployment benefits that they can access to cope with their financial needs. For example;
We understand this furlough can cause a restrain in your financial needs; you can therefore file for unemployment compensation or the Covid-19 stimulus package as per your state guidelines. To get more information on how to apply, requirements, and specific benefits, visit their website at [website address]
This shows a company’s concern for its employees. You should, however, consider consulting your legal team for more accuracy.
Finally, you can provide contact information for the Employee in case they have pending questions. For example;
We appreciate your services to the company and the time you have been with us. Should you have any queries, you can contact HR at (111) 5744-888.
Showing appreciation for the employees also goes a long way. You can do so before signing off. It would help if you would use a formal and sincere tone.
Here is a sample letter for you ;
A Covid-19 furlough letter sample
18th April 2020
234 W 3rd Avenue
Marysville, CA 95999
Dear Mr. Hill,
I’d like to officially notify you that the Administrative Assistant position at our Marysville Branch is being eliminated due to covid-19 restrictions, which have prompted the closure of various Jay Tech branches nationwide. This will be effective from 1st May 2020. I take this opportunity to declare that this is in no way an expression of the management’s dissatisfaction with your performance.
The furlough duration is to be for three months as from the 1st of May. However, this is prone to change should the Ministry of Health ease the restrictions and give directives that influence the resumption of normal operations.
A furlough is an unpaid absence from your employment duties directed by the company. It is based on unavoidable reasons after careful consultations. It is, however, not the commencement of any employment contract, express or implied. Its spell can be adjusted at the discretion of management.
You shall be entitled to your leave allowances and health insurance benefits. The accrued costs will be deducted from your monthly wages upon resumption to work. Should there be no resumption, the costs will in turn not be billed.
This letter can be provided as proof of your eligibility for the Covid-19 unemployment compensation stimulus package should you choose to apply. To learn more about the package, visit www.covidpack.govt or visit a city hall near you.
We appreciate the time you have been with us and your continued commitment to your work. For any questions, contact human resources.
Employment decisions such as furloughs are subject to federal and specific state laws. Covid-19 is a novel event; therefore, there are few or merely any federal and state laws that address the consequences of the pandemic. Thus, federal and local governments have been tasked with the responsibility of developing legislation and policies employees and employers can use to implement decisions they make in their places of work. You should therefore strive to stay up to date with developments on the issue. Such laws include the employment and labor laws.
Benefits of COVID-19 Furlough
There are various benefits that emanate from carrying out a furlough. One of the advantages includes managing the rate of unemployment after every economic crisis. During the coronavirus pandemic, most companies have been struggling with raising enough revenue to pay their workers. Instead of laying off employees, a furlough gives the company an opportunity to avoid firing and increasing the number of unemployed individuals while reducing the financial burden of paying workers during this period.
Furloughs help the employer avoid the costs of firing and rehiring staff members during and after a pandemic such as COVID-19. These costs can be in terms of compensation or send off packages when firing.
Also, since a furlough only absolves the Employee of their duties at work on a momentary basis, it ensures employees retain their employment even though they will not be paid. When conditions become favourable again, employees can return to work. During a furlough, in some instances, an employee can still enjoy some of the benefits, which is not the case for the unemployed.
Free Templates and Examples
The coronavirus pandemic is a novel event and one that has necessitated most employers to write furlough letters in an effort to cope with the circumstances. Having to come up with one covid-19 furlough letter from scratch can be a stressful task; that is why we have provided you free templates for you to download. You can then customize the template to fit your needs. Download now and get started!
There is no specified duration that a furlough should last, even though, in most cases, it is usually short. Therefore, it can last as long as deemed necessary; for example, in the case of the covid-19 pandemic crisis and its effect on businesses, the crisis has lasted for more than a year, which could not be predicted as it would depend on the restrictions imposed by the government. Furlough duration is susceptible to review pending any changes. Should the employer be in a position they can determine the duration, it is recommended that they indicate it in the furlough letter.
Yes. An employee can be furloughed more than once, and a person can be furloughed by more than one employer. This is because a furlough is usually involuntary and the last course of action for an employer in an effort to save their business.
A furlough letter is, in most cases, out of necessity. It is important that when writing one, you can communicate effectively what you intend, and therefore familiarizing yourself with the information that should be included goes a long way in ensuring that you achieve your objective. Such information includes the date, Employee’s details, purpose, and closing. The letter should be polite as possible, and you should keep it formal as it is an official document. A furlough letter is legally required in most cases, and it would be considered unethical if an employer was to furlough an employee without prior notice. Before implementing a furlough, a furlough letter presents an opportunity for the employer and the Employee to discuss the entire process. Take your time when crafting a furlough letter as it is a temporary leave from work can be a sensitive issue to most employees.