Although employers continue shedding jobs due to the recession, alternatives exist, such as sabbaticals and mandatory furloughs. Although leaders at yourSABBATICAL, an Atlanta-based company that sets up sabbatical programs, assert that a well-designed program can be low-cost and buoy morale, such programs - furloughs especially - can be a legal and personnel gamble.

"At first glance, business leaders may think that sabbaticals are managerial insanity, particularly in times like these," says Elizabeth Pagano, co-founder of yourSABBATICAL. "However, once they take a deeper look, they understand that the benefits of sabbaticals far outweigh the perceived unorthodoxy."

Circles, a concierge company in Boston, offers its sabbatical program to employees after every five years of service. Workers receive month-long paid sabbaticals to enjoy activities like painting lessons, world travel and volunteer work with sea turtles.

The program, which has been in place for 10 years, requires a formal application and approval two months ahead of time, though CFO Hugh Merryweather advises applicants to submit applications six months in advance, if possible.

The selection committee, which never has denied a sabbatical application, interviews applicants about their plans for the break, as well as the employees who will be assuming their responsibilities at the office.

Finally, the program requires that employees who leave the company within six months after their sabbatical pay the time back on a prorated basis.

"The cost is not insignificant, because you're losing a lot of people's productivity for the month, but I would say it more than makes it up in terms of the retention benefit. Literally, I would say it's two years you're adding to an employee's lifecycle at a company because they will not leave within the 24 months surrounding their sabbatical," says Merryweather.

According to yourSABBATICAL, employers may implement a sabbatical program to:

1. Circumvent layoffs.

Unpaid sabbaticals can become a short-term strategy to save money now while retaining key workers.

2. Preserve and protect human capital by motivating and inspiring employees.

"People say, 'There's no way I'm going to leave., because I have my sabbatical in less than 12 months,'" explains Merryweather.

Not only do employers safeguard the individual on sabbatical, they further the career trajectory of co-workers left behind.

"You need to take emerging leaders and give them opportunities," says Rob Tautges, an officer at Tautges Redpath Ltd., an accounting firm in Minnesota. "When a senior person [takes a sabbatical], an individual gets to step up and get a greater opportunity."

3. Nurture innovation.

A paid or unpaid sabbatical - which yourSABBATICAL defines as at least a four week break - may rejuvenate employees and infect the workplace with their renewed vitality when they return.

4. Become a talent magnet.

In a weakened economy, least productive workers are most likely to stay when wages are cut or frozen, while the high achievers look elsewhere.

"As pay increases are nearly extinct, time has become the new currency," affirms yourSABBATICAL.

5. Increase loyalty.

Organizations that treat their human capital well in difficult times will see their considerations reflected in the staff's loyalty and general goodwill.

On the other hand: Mandatory furloughs

Another option available for employers considering layoffs is mandatory furloughs, like those introduced by American Airlines Inc., Gannet Co. and Media General Inc. According to a February Watson Wyatt survey, 11% of employers had instituted mandatory furloughs, and 4% planned to do so in the next 12 months. Nevertheless, with furloughs come a number of challenges that the employer must be aware of before initiating such a program.

First off, employers should make sure no employment agreement exists to bar them from taking action or that would allow employees to claim that they were "legally promised" a certain amount of pay, explains Doug Christensen, a partner in Dorsey & Whitney's labor and employment law practice group.

He points out that the Federal Labor Standards Act, along with most state wage and hour laws, are not designed to be flexible or to expedite the concerns of the present workplace. With this in mind, wage and hour issues must be carefully examined by employers contemplating furloughs.

In addition, if exempt employees are involved, the furlough should not be conducted in a way that converts those exempt individuals into nonexempt employees who could claim entitlement to overtime pay. This is especially difficult when employees have access to a VPN network or Blackberry.

"Now [that work] overlaps so much with what you do at home . . . it gets very tricky with exempt employees," says Christensen.

Employers that opt to implement furloughs must settle on a constant salary and work schedule. Employers should also be wary of mandating vacation or "paid time off" days during the furlough, as some state laws do not permit this.

Finally, furloughs can depress employee morale, says Christensen.

"Employees seem to be more forgiving of employers in this current era, I think in large part because everybody realizes that this is a bad situation that we're all going through," Christensen explains. "I think employees are more willing to shoulder that burden [of a furlough] right now because of the sad state of the economy. However, the longer these things go on, the harder it's going to be to keep that attitude."

In addition, discrimination claims are a definite risk. Employers with unionized workers should ensure a furlough is in line with the collective bargaining contract. Further, a furlough is usually a temporary solution, but if it begins to appear permanent, the Worker Adjustment Retraining and Notification Act, which requires employers to give written advance notice of mass layoffs, and state mini-WARN statutes, may come into play, warns Karen Glickstein, shareholder of Polsinnelli Shughart in Kansas City and former chair of the Employment Law Committee of Defense Research Institute.

However, furloughs, sabbaticals and reduced workweeks don't save as much on the bottom line as a reduction in force because most employers continue to carry employees on their benefit plans, Christensen says.

Thus, employers should weigh the costs of laying off poor performers rather than forcing all employees to take a furlough.