A furlough letter is a communication an employer uses to place an employee on furlough, which may be necessary for a company to remain in good financial standing.
What Is Furlough?
A furlough is a temporary, unpaid leave of absence from work. Employers often use furloughs to cut costs during periods of reduced business activity and financial hardship. Examples of businesses that often use this leave include landscaping companies, ice cream shops, hotels, movie theaters, manufacturing companies, and universities.
Employers require furloughed employees to take some time off without pay. However, they are still employed by the company. Furloughs are distinct from permanent layoffs, where the employer doesn’t plan to bring the employees back.
What Is a Furlough Letter?
An employer uses a furlough letter to tell an employee they are being placed on furlough. It can be a written confirmation of the employer’s verbal notice to the employee.
Every furlough letter should contain the following:
- The names and addresses of the employer and employee
- Why the employer is placing the employee on a leave of absence
- The starting date and duration of the furlough period
- Whether the employee will continue receiving benefits
When to Use a Furlough Letter
Employers should use a furlough letter whenever they need to place an employee on furlough until further notice. This leave type may be necessary for the following situations:
- When there is a temporary decrease in business operations (i.e., winters for ice cream shops, reduced demand for manufacturing companies)
- During times of economic hardship
- When the business must close to circumstances beyond the employer’s control, such as a pandemic or natural disaster
- When an employee requests a temporary leave of absence
Furlough Letter Example
Reference a sample furlough letter so writing your own becomes easier:
How to Write a Furlough Letter
A furlough letter allows employers to communicate compassionately and clearly with their employees during a furlough. Follow these steps to create your letter:
1. State the Names and Addresses of the Employer and Employee
First, write the name and address of the employer’s company and the date of the letter. Next, add a space and write the employee’s name and address.
2. Write the Greeting
Write the greeting after writing the date and both parties’ contact information. Furlough letters are formal, so they should begin with “Dear” and the employee’s name.
3. Write the Body of the Letter
Include the following elements in the letter’s body:
- A clear and concise statement of the letter’s purpose. Inform the employee why the employer is implementing a furlough program. Then, tell them that the program affects the employee’s position.
- The duration of the furlough. State the leave’s starting date and duration (i.e., four months). Assure the employee that the employer will monitor and inform them of any changes.
- Employee expectations and duties while on furlough. Tell the employee they will not be required to perform work-related responsibilities and will not receive their regular salary during the leave. You should also outline expectations for continued training, if applicable.
- Employee benefits during furlough. Record whether the employee’s health insurance and other benefits continue during the leave. Mention whether these benefits are subject to continued payments of required employee contributions.
- A list of financial assistance resources, such as government programs, internal company resources, and non-profit organizations. Include a list of financial resources for employees facing financial difficulties due to their changed employment status. It can show employees that the employer cares about them.
- A short thank-you to show the employee you value them. The last paragraph of the letter should thank the employee for their service. It should also alleviate their worries by reminding them that the leave is only temporary and that you look forward to resuming normal operations when possible. Include the names and contact information of supervisors or HR representatives who can address the employee’s questions and concerns.
4. End and Sign the Furlough Letter
Once you’ve finished the body of the letter, add a space and write the closing remark. Most people end formal letters with “Sincerely,” but you can also use “Thank you,” “With appreciation,” or “Respectfully.”
After writing the valediction, add a space and write your name, title, and company name. You can then sign, proofread, and send the letter.
Furlough Implications
Furlough has certain implications for both the employer and employee:
For the Employee:
- The potential reduction or suspension of income during the leave.
- The loss or reduction of employer-sponsored health insurance.
- Changes to benefits like retirement contributions and PTO accruals.
- Eligibility for unemployment benefits, depending on the employee’s circumstances and state regulations.
For the Employer:
- Understanding compliance requirements and legal obligations with employment law, including providing proper notice and adhering to collective bargaining agreements.
- Maintaining open communication with furloughed employees to promote transparency and offer support during their temporary unpaid leave of absence.
- Managing workforce logistics during the leave.
- Addressing potential issues such as low morale and restoring productivity when the employees eventually return.
Furlough Letter Sample
Download an employee furlough letter template below in PDF or Word format:
