Furlough an employee

When you furlough an employee do you need to add any special language to the severance agreement? Do you have to state the date that they will be asked back to work? Does the employee stay on the company health benefits?


Any insight would be helpful. Thanks


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  • Hi,

    Normally, one of the postive things about a furhough is that furloughed employees keep their benefits and wage levels.  Usually, employees would know how long the furlough will be--i.e. a week, a month, etc.  As long as your empoyees are at-will, you can extend the furlough. if need be. As far as severance agreements, they're usually executed when there is a layoff, not a furlough.   



  • Thanks. For a salaried employee, would we pay out vacation? Can they take all their vacation time? Do we just not pay them during the time they are on furlough? I guess I am just a little confused how this would work...They would remain on benefits, but we would not collect their portion of the cost?
  • Hey There!

    Here is a copy of the policy I have written for furlough actions that may help answer some of your questions. Where you see ><, it's just where I have taken out the name of the company for security. Hope this helps! Please see below




    ><, in conjunction with the Executive Director, may declare a temporary reduction in operations with appropriate documentation of an emergency status, where the Partnership is kept open on a reduced-staffing and/or reduced-schedule basis – which could include schedule reductions, furloughs, and/or pay rate reductions. A furlough is defined as a temporary layoff of an employee or employees with the expectation of recall.

    <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> 

    The Partnership is committed to:

    • Every possible effort to maintain operations and avoid furloughs.
    • Every possible effort to maintain employee benefits
    • Every possible effort to provide adequate advance notice of reductions
    • Continued compliance with applicable employment laws, including the federal minimum wage and the federal definitions of both “exempt” and “non-exempt” employees.


    In the event that a furlough is activated, employees are ensured of the following benefits:

    • Timeframe:
      1. Less than 30 Days: Continued participation in the Partnership’s medical benefits plan. There will be no changes to the sustaining of benefits in this condition.
      2. 30 Days or More: Continued participation in the Partnership’s medical benefits plan. In addition, the Partnership will pay 100% of the premium for previously enrolled dependent coverage for the month following the furlough’s initiation. The premium payment made by the Partnership in good faith for dependent coverage for one month is with the provision of repayment by the employee within three months of recall.  
    • Continued accrual of vacation and sick leave, as well as accrual of the quarterly personal day allotment, if the quarterly personal day has not been expended at the initiation of the furlough. Benefit time accrued during an active furlough may not be used during the course of the furlough.
    • Continued accrual of time in service.


    Employees furloughed for more than one week (5 consecutive work days) may be eligible for Unemployment Compensation Insurance Benefits through the North Carolina Employment Security Commission. The Partnership will assist any eligible employee in applying for unemployment from the Partnership. This assistance is voluntary and the Partnership does not guarantee the award of unemployment benefits. If, at the end of the furlough period, the Partnership finds that it no longer requires the services of this employee or these employees, the Partnership’s layoff provisions will apply.


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