Furlough

Meaning & Definition

A furlough is when you take time off from your job because of how the company is doing or for some other reason, but you still technically work there and aren’t getting paid the usual amount for that period. Employers use furloughs to help keep salaries down without actually firing workers.

Importance of Furlough

• Enables companies to reduce expenses in times of financial or operational difficulties. 
• Prevents long-term layoffs and keeps additional employees who have high levels of experience. 
• Provides support for business continuity through economic decline and crisis periods. 
• Maintains an employment connection between the employer and employee, even though they will not have an assignment assigned to them. 
• Facilitates managing a flexible workforce even when business conditions are not certain.

Legal Compliance & Requirements 

In India, “furlough” has yet to be defined by law. To reduce the risk of a dispute due to unpermitted absence from work while unpaid on a temporary basis, when companies apply furloughs, they must take into account the terms of their staff’s employment contracts, the company’s policies and procedures, and other applicable employment legislation.