Furloughs and Layoffs: Understanding the Difference


The impact of COVID-19 on the economy grows deeper with each passing day. The Department of Labor releases unemployment data every week and with each announcement comes a growing chorus of new jobless claims.

Furloughs and Lay Offs
Furloughs and Lay Offs

Employers across the country are taking drastic measures to ensure their employees are taken care of during this unprecedented situation. From requesting their staff take temporary pay cuts to furloughing employees so they’re able to collect unemployment without being laid off. 

What is the difference between furlough, lay off and sick lave?

Some CEOs have even taken the drastic step of waiving their own salaries to help their staff remain employed. Furloughing employees has become a new reality allowing those impacted by COVID-19 to collect unemployment, without the sacrifice of their previous position when the pandemic has passed. 

To help you better understand these options, we’ve broken them down further here:

  • Lay Off – This is the most common result due to a loss of business income. If an employer chooses to lay off an employee, it is usually considered a permanent dismissal. If an employee is laid-off due to a loss of business, an employer will need to go through the re-hiring process should they choose to retain them again later.
  • Furlough – This is most common when it comes to government shutdowns. Generally, non-essential employees are asked not to work during this time. Furloughed employees are still able to collect company provided benefits while collecting unemployment until they are able to return to work. Furloughing staff is generally more cost-efficient than laying off and re-hiring new employees.
  • Sick Leave – Sick leave, or Leave of Absence, is meant for an employee who needs to take extended time off from work due to personal illness or to help care for a sick family member. Depending on the job and location, sick leave is usually considered an unpaid leave.

Of course, none of these options are ideal. But it’s reassuring to know the government is working diligently to provide as much assistance as necessary during this time.

PayWow understands this is a difficult situation and we’re here to help in any way we can. Please don’t hesitate to reach out to our US-based customer Support anytime via email, chat or phone to assist you.

Please be safe and take care. 


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