The COVID-19 pandemic has been a scary experience for many of us. Job losses and layoffs have been the order of the day. When companies are undergoing economic stresses, they are bound to let go. However, if you are caught between this crossfire then furloughed leave maybe a middle ground between unemployment and employment.
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What is Furloughed Leave?
One of the easiest ways to understand furloughed leave is to consider it to be the opposite of temporary employment. Temporary employment means that the company seeks the work of individuals on a short term basis. On the other hand, furlough means that the company is seeking the temporary unemployment of an employee. It is also called an extended leave of absence.
During the tenure of the furloughed leave. The employee remains on the rolls of the firm. Put all practical purposes, the employees considered being a part of the organization. However, there is no work expected and usually, the leave is unpaid in nature. However, in the case of certain government employees furlough can be paid.
What are the advantages of furloughed leaves?
- First and foremost, the person retains the job. Being retained even at no salary is better than being fired.
- Secondly, the employee is not considered to have taken a break. In this situation that the furlough extends more than a year, it can have an impact on the resume of the person. This is taken care of by the furlough. The person shows continuous employment with a firm.
- Furlough schemes are protected by government laws in some countries. This means that the employees are protected from being exploited by a firm. However, in case of coronavirus or COVID-19 pandemic, things have not been that clear.
- It is applicable to all kinds of employees. You are covered if you are a full time or a part time employee. Additionally, it also covers certain agents working for a firm.
The situation regarding furloughed leave in different geographies
United Kingdom
Currently, in the United Kingdom, the government is paying about 60% of the salary to furloughed employees. This comes under the coronavirus job retention scheme or CJRS. This scheme has been extended till 31st of March 2021. The conditions for claiming furlough in the United Kingdom are:
1.You must be a part of the pay as you earn or PEYE system.
2. Your job must have been started before 31st of October 2020.
3. You must have a bank account with the Channel Island Bank, UK bank or the Isle of Man Bank to claim the benefits.
United States
On the other hand, United States is not new to the concept of furlough. Previously there have been furloughs during government shutdowns as well as during the recession. Certain companies in the United States have announced that although they are not paying for the furlough, employees will get other benefits. Typically some of the benefits that are retained are health benefits and tax benefits. Sometimes the pension fund is also contributed by the employer. You need to check with the specifics with your HR team regarding this. Certain rules regarding the furloughed leaves in United States:
- The employees who are undergoing furlough, may claim the unemployment benefits.
- Most of the workers can get dollars 600 per week for their unemployment benefit.
Paid time offs are not counted within the gambit of the furlough period. However, the employees continue to accrue whatever leaves they are entitled to. For example, if you are entitled to 10 days of leave for six months. Then you would have accumulated that by being furloughed for six months. When you join back, you are entitled to take 10 days off as PTO.
India
There is a provision for furlough in some Indian Government departments. The officers of the defense forces can take a furlough. They have sanctioned a pay that is roughly half of their original salary. However, this entitlement is only for 20 days per year. However, in the private sector, there is still uncertainty in terms of the laws regarding the furlough. While on one hand, many companies have offered a haircut to the salaries of the working employees. On the other hand, some of the companies have asked employees to go on a furloughed leave until further notice.
The Chief Human Resources Officer of Titan Limited, Raj Narayan said that it is the ideal solution for times when a company struggles with the cash flow. Alternatively, another technique used by some of the other firms is to as for partial employment. Employees are called for 50% of the days and they are paid accordingly. This kind of arrangement is working in certain manufacturing companies.
European Union
European Union is known for its extensive social policies. The governments that come under the EU have granted furlough for over 18 million people. The respective governments are bearing the unemployment benefits. This could not be feasible for the very long term. However, owing to the recovery in many sectors, many people are returning to work. Overall, the performance of the job market has been better in Europe compared to the United States. The unemployment rate at the end of June was around 10% in the European zone. On the other hand, it was around 17.5% in the United States.