Establish terms for temporary unpaid leave: Furlough Letter
What is a Furlough Letter?
A Furlough Letter serves as a formal declaration to an employee that they will be placed on furlough or unpaid leave. This letter can also act as a written record of the employer's verbal notice to the employee. Written documentation of a furlough decision is recommended for keeping good records as an employer, but it can also be helpful for employees who are seeking relief and/or need to provide proof of their changed employment status to creditors.
While layoffs are one method of cutting payroll costs, a furlough can be beneficial in many instances as a temporary solution for putting work (and wages) on hold without losing your workforce permanently.
During a furlough, employees must do no work for an employer, but they are able to keep their employer-sponsored health insurance and other benefits while still collecting unemployment. Unlike a layoff, which is a permanent termination of an individual's employment, a furlough is temporary unpaid leave and employees are expected to return to work after the furlough period is over.
When to use a Furlough Letter:
- You have a downturn in business and/or business closure that requires your business to cut payroll costs.
- You need to notify an employee that they will be placed on furlough.
- You would like provide documentation of a decision to furlough an employee.
Have questions about your Furlough Letter?
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Sample Furlough Letter
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Re: Furlough Letter -
Dear ,
As a result of the economic climate, we have taken measures to secure the financial stability of the business. The current situation has affected our business significantly and therefore we must make some difficult personnel decisions.
I refer to our discussion with you on , during which we explained how the current state of the economy has impacted our business. With the temporary closure of your place of work, we are planning to "furlough" your employment. During the furlough period, you will:
• Continue to be employed by us;
• Not receive any work from us;
• Not need to attend work; and
• Not receive any compensation (salary, wages etc.) from us
Your change of employment status to a "furloughed" employee will be effective from .
All other terms and conditions of employment and your continuity of employment will not be affected during this period.
At the time of writing, the length of this period of disruption is unknown and as such your employment will be furloughed until further notice. We will keep you updated via the contact details we have on file for you and will notify you when we require you to return to work. If your personal phone number, email or postal address has changed recently, please provide your current contact information to us immediately. We will try to give you at least days' notice of when we need you to return.
You may be eligible for unemployment benefits under these circumstances. Contact your local unemployment office for additional information regarding your eligibility.
Please look out for further updates and do not hesitate reach out to us at if you have any questions or concerns.
Sincerely,
| By: | Date: |
