There is no legally uniform basis for when an employer may furlough staff. Generally, a company will consider previous experiences and current circumstances to make a decision about whom to furlough and when. Furlough may be ordered for any of the following reasons:
- The business provides seasonal work.
- Furlough is written into your contract of employment or the official labor agreement.
- The company is no longer operable because a key person or the owner dropped out. This can occur, for example, in a doctor’s surgery or law firm.
- The company is facing an unexpected economic crisis.
The main reasons for furlough are usually of economic nature. Employees are furloughed, for example, to save a company from insolvency. However, companies do carry a certain economic risk which means that not every crisis qualifies for furlough. For example, if a company is getting fewer orders, machines are failing, or its production temporarily halts, the legal basis for furlough is weak at best. In these cases, furlough would be an unfair shift of the operational risk upon the employee.