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IBM U.S. Furlough Program

A new program allows temporary pay cuts
for selected employees

Oct. 12, 2003

As you may know, IBM in Burlington, VT. recently had an involuntary furlough for approx. 3000 Technology Group employees. Employees took off one week without pay. This was the first of what could be more furloughs in IBM U.S.

Here's how the Furlough program works.

First, participation in the program is involuntary - employees will have no choice. Employees receive no pay, overtime or shift premiums - and their annual variable pay will be lower as a result.

Benefits will continue through the period, but you will pay for them exactly as though you were working.

The program is intended to be 1-4 weeks long.

Management can choose if the group to be furloughed is by job category, business unit, location, or excess bench resources. Management defines the eligible population.

For leaves of absence, FMLA and military leaves will be granted; however, personal or education leaves cannot be initiated during the furlough period.

It is unclear how H1-B visa holders would be affected.

In some states, employees may be eligible for unemployment payments for the duration of the furlough - check with your state labor department for advice.

IBM characterizes the Furlough program as one more lever that can be used by management to help manage costs. Unfortunately, it doesn't help employees manage the costs of their lives. Perhaps we should now create our family budgets for 1-4 weeks less pay in the year? Or the quarter? We are not sure...