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Furloughed, fired, laid off: what’s the difference?

Furloughed, fired, laid off: what’s the difference?
Image source: Getty Images


Let’s face it, employment terminology can be a little confusing. What is furlough, and what happens if you’re fired? And if you’re laid off, can you still claim employment benefits? Don’t worry, we’re here to walk you through what you need to know. 

What is furlough?

Think of furlough as a temporary ‘break’ from work. In other words, you still have a job – you’re just not required on shift right now. 

Why do companies use furlough? Well, it’s generally because there’s not enough work to go round right now. So, for example, companies are using furlough during Covid-19 because they don’t have any work for some (or all) of their employees. But unless companies make those employees redundant, they still have jobs. 

Who can be furloughed?

Anyone can go on furlough if they’re on the company PAYE payroll. This includes:

  • Full-time and part-time workers 
  • People on zero-hours contracts
  • Agency workers 

It doesn’t include freelance contractors or the self-employed.

What are the benefits of furlough? 

First, furlough’s better than redundancy because:

  • You’ve still got a job, so there’s no need for the company to ‘rehire’ you when the workload picks up
  • Because you’re employed and still earning some money, it might be possible to get new credit, like loans or credit cards
  • You can still take holidays

On the other hand, here’s why it’s not so great:

  • If your employer can’t bring you back on shift, they can make you redundant or lay you off.
  • You probably won’t receive your full pay. For example, during Covid-19, most people on furlough receive, at best, 80% of their wages.
  • Unless it’s in your employment contract, you can’t do paid work elsewhere. You can, however, volunteer at a charity or with another business. 

Finally, your employer doesn’t need to pay minimum wage because you’re not actually working, but you can apply for benefits.

What benefits can I get on furlough?

There are two main benefits you could apply for:

  • Universal Credit: if you’re not working at all or you’re on a low income. It might be worth applying for Universal Credit if you’re struggling to pay your bills. 
  • New Style Jobseeker’s Allowance (JSA): you can apply if you’re contracted to work 15 hours or less per week.

Check with HMRC if you’re unsure. 

What is a lay-off? 

Lay-offs are a little different. Basically, you’re still an employee but you typically won’t get paid.

Companies usually lay people off because they want to:

  • Downsize 
  • Close a department 
  • Save money

Lay-offs are especially common during recessions caused by, for example, the coronavirus pandemic. But why is furlough different from lay-offs? 

  • You’re usually paid up to 80% of your wages if you’re on furlough. If you’re laid off, you often won’t get paid unless it’s provided for in a contract.
  • Some lay-offs are temporary, but there’s a higher chance you’ll be made redundant than if you’re furloughed.
  • You might be entitled to a redundancy payment if you’re laid off. 

On the whole, being furloughed is better than being laid off. 

Can I claim benefits if I’m laid off?

Yes. As with furlough, you can claim Universal Credit or JSA, if you qualify.

And if you’re laid off for more than six weeks, you can argue that you’ve been made redundant. In this case, you might get redundancy pay. Check with Citizens Advice to explore your options.

What does it mean if I’m fired? 

If you’re fired, then you’ve lost your job. It’s generally because the company thinks you did something wrong.

Reasons you might be fired include:

  • Theft
  • Breach of contract
  • Persistent lateness or unexplained absence 

You still have rights, though:

  • Make sure your employer explains their reasons for firing you in writing.
  • You’re still entitled to payment for accrued holidays. 
  • Ensure you get any outstanding wages you’re owed. 

Can I get any benefits if I’m fired?

Maybe, but if you were fired for misconduct, you will not receive JSA for up to 13 weeks. You can apply for emergency help if you’re struggling in the meantime.

If I’m fired, can I get another job?

Yes! Here are some tips to help you move on:

  • Be honest with any new employer about what happened.
  • If you’re worried about a ‘bad’ reference from your previous employer, ask them for a basic one. This just confirms that they employed you and it doesn’t include any comments.
  • Check out agencies and temp work – temp employers are sometimes less likely to ask why a job ended.
  • Struggling to find work? Start a side hustle or go freelance. 

Takeaway

If there’s one thing these scenarios have in common, it’s this: job setbacks are really stressful. If you’re struggling, don’t be afraid to ask for help.

And if you can’t pay your bills, contact creditors as soon as possible. They’ll want to help you manage your payments. 

What next?

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