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Furlough and the wellbeing of the workforce

This week the government announced that it is extending the Coronavirus Job Retention Scheme (JRS) by four months, until the end of October. Around 7.5 million employees from nearly 1 million businesses are now being paid via this scheme at a cost of £12 billion per month.

But what are some of the potential implications of furloughing employees for an extended period and how should employers and line managers seek to support their furloughed staff?

Before 20 March many of us had never heard of the term ‘furlough’. The practice of putting employees on a temporary leave of absence has been used in the past by businesses in the US as a way of coping with short-term economic downturns. Following the economic crash in 2008, US businesses used furloughs to avoid making valued employees redundant during temporary shutdowns and slumps in business.

Due to Covid-19 lockdown restrictions, many businesses had to rapidly change the way they work or even shut down operations completely. Quick decisions were made about which employees should be furloughed and which were needed to carry on working. The initial challenges for employers concerned consulting with employees and clarifying any uncertainties about scheme rules. Now JRS is being extended for another four months, the challenge is to consider how organisations should further support their furloughed employees.

Whilst UK employers will have established practices and policies for redundancies, furloughing employees is very different. During a period of furlough both the employment contract and the psychological contract needs to be maintained with the employee. The psychological contract is the unwritten aspects of the relationship between the employee and employer based on the employee’s beliefs about the mutual obligations between the two parties.

Employers can support this by:

  • keeping in touch with furloughed employees in order to maintain a positive employee-employer relationship based on trust and commitment
  • supporting employees’ health and well-being during a period of furlough
  • planning for the next stage when businesses start to re-open
"Consulting with employees about decisions facing the business is a way to keep employees engaged."
Dr Louise Thomson

In other situations when people are away from the workplace for an extended period of time (e.g. long-term sickness absence, maternity leave), it is important for them to remain in touch with their employer and feel connected to the workplace. As the JRS will continue until the end of October, employers should now focus on how to maintain levels of engagement with their furloughed employees through active and open communication. Keeping employees updated about the business, sharing news, signposting to internal or external sources of support, and giving them an opportunity to ask questions will help to foster the employees’ relationship with work.

Consulting with employees about decisions facing the business (e.g. how to maintain social distancing, how to stagger shifts) is another way to keep employees engaged. This can also help employees to adjust to any changes made at work and to maintain their perception of procedural justice, i.e. how fair the employer’s procedures and processes are, which in turn affects employee commitment and satisfaction.

We know from research during the 2008 economic crisis that furloughing has a negative impact on wellbeing and mental health. The context in 2020 is very different. For many employees with caring responsibilities the prospect of being furloughed on 80% pay may have been a welcome outcome in the short-term. But for many others, being furloughed can bring a loss of meaningful activity, self-identity, social interaction, and also raise concerns about job and financial security. Employers can further support their furloughed employees by signposting them to sources of support for mental health, but also encouraging them to take on activities which could benefit their health and wellbeing and provide a sense of purpose and structured routine, such as volunteering and taking up new hobbies.

Many furloughed employees will also miss social support from colleagues, which is an important aspect of work that can help protect mental wellbeing. Employers could support and promote interaction between colleagues during furlough by setting up virtual non-work activities to keep people in touch.

Employers will also be planning for return-to-work. In some sectors these plans have been put into action this week with the publication of the government’s guidance on working safely during coronavirus. In line with these guidelines, employers are likely to be prioritising social distancing measures, but they must also consider the psychological needs of employees.

"The 7.5 million furloughed employees in the UK are facing an uncertain future, but they are clearly in a far better situation than they would have been without the JRS."

Many employees will have anxieties about returning to work, or caring responsibilities that make a full-time return impossible at the moment. Employers will need to take a flexible approach, and, where possible, have an open conversation with each employee about their situation and what a practicable return to work could look like. For furloughed employees, this may include a discussion of redeployment opportunities and any training needs. It is expected that many employers will have to make redundancies in the coming months, especially in the service sectors. So preparing for redundancy procedures and putting support in place is another action that employers can be taking now.

The JRS has had a critical role to play in preventing widespread redundancies to date. One of the criticisms of the initial JRS had been the all-or-nothing approach which would prevent employers from enabling a gradual return for furloughed employees. The Chancellor’s announcement this week of the scheme’s extension and amendment to allow short-time working or ‘part-furloughing’ has been welcomed as a way of supporting the gradual re-opening of businesses and avoiding potential redundancies. It gives businesses more time to plan for re-opening using new models of working and to fully consult with their employees. However, we await to hear further details of the extended scheme and particularly about the contributions to pay that employers will be asked to make from August, and whether these will vary by sector.

The 7.5 million furloughed employees in the UK are facing an uncertain future, but they are clearly in a far better situation than they would have been without the JRS. Employers can take actions now to help to maintain the psychological contract of their furloughed employees, support their wellbeing and mental health, and consult about a future return to work.

In addition to the furloughed employees, there are many self-employed who are unable to work, many on zero-hours contracts who are likely to have reduced or no hours of work, those who have already been made redundant, and those who are still working during the lockdown and may be dealing with additional pressures and demands (e.g. health and social care workers, teachers, shop workers, as well as those juggling demands of working from home and caring responsibilities).

The impact of Covid-related changes to individuals’ work status and the associated demands and pressures are likely to impact on their mental health and wellbeing over the coming months. Our research team at the University of Nottingham and Institute of Mental Health has worked with colleagues at Nottingham Trent University to launch the Wellbeing of the Workforce (WoW) Study to track these changes during and after the Covid-19 outbreak. This study aims to understand how these different work-related experiences have affected people’s wellbeing, their feelings about their work and their future employment, and whether certain sources of support or resilience help to protect people from some of the negative experiences. To find out more about the study please visit

After the virus

Read more from our researchers as we reflect on the challenges we face after the coronavirus crisis, as well as opportunities to rebuild a more resilient, fairer society.

Louise Thomson

Dr Louise Thomson is an Assistant Professor in Occupational Psychology, based at the University’s Division of Psychiatry and Applied Psychology and the Institute of Mental Health.

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