Coronavirus: what is furlough and how will it affect workers?
Governments in the UK and US have committed to supporting businesses and furloughed employees during the coronavirus crisis. But what does furlough mean?
As the economic crisis caused by the coronavirus pandemic deepens, many companies are opting to furlough workers while their business operations have been shut down or greatly reduced.
Instead of carrying out lay-offs, either or temporarily or permanently, companies have opted to furlough employees backed by the support of the government, who will pay affected workers during this period.
As the coronavirus has grinded many industries to a halt, several major companies have already announced that they will furlough staff: British Airways will suspend work for 36,000 of its employees, while in the US, Macy’s, Kohl’s, Disney and the Gap have all confirmed they will furlough several hundred thousands of workers.
So what exactly does furlough mean?
Like a temporary layoff, furlough is a forced period of unpaid leave. However unlike laid off workers, furloughed employees are kept on the payroll, even though they aren't working.
The specific conditions of a furlough period, such as those related to health insurance and other entitlements, depend on where you work but the furloughed period can last for a few weeks or as long as several months.
US and UK furlough entitlements during COVID-19 pandemic
Governments across the globe have committed to supporting businesses and furloughed employees, with the level of support and eligibility varying from country to country. In the US and UK, for example, furloughed workers will respectively receive 100% and 80% of their salaries.
During the furlough period, UK businesses can claim a large portion of their employees’ wages from the government, leaving the company the right to choose to top up the remaining amount.
The British government will pay 80% of a furloughed workers wage, but up to a maximum of £2,500 per person, per month before tax. The scheme began on March 1 and will remain in operation for at least three months.
Meanwhile in the US, part of the Senate’s $2 trillion coronavirus rescue package will be used to pay the wages of furloughed and unemployed workers, who are eligible to receive their unemployment benefit, based on previous earnings, for up to 39 weeks. They will also receive an additional $600 per week for up to four months until July 31.
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