The COVID-19 pandemic brought about changes in the working world. One of the main strategies to cope with the economic situation during lockdowns was to furlough employees. In the current study, we propose that psychological contract breach and violation between the organization and the furloughed employee act as underlying mechanisms that explain the relationship between the employees' furlough status and the increase in their emotional exhaustion and decrease in affective commitment. Furthermore, we suggest that perceived organizational support can act as a buffer that attenuates the association between furloughed employment status and perceived contract breach. The study was conducted at two points in time: during the first lockdown and 4 months afterward (N = 336). Results supported the predicted indirect sequential associations. However, perceived organizational support served to buffer the relationship between furloughed employment status and perceived psychological contract breach only in the case of employees who continued to work.

Although reduced working time and furlough policy initiatives are widely regarded as important for economic and business reasons, little is known about their impacts on workers’ mental health at the onset of COVID-19 pandemic. Using data from the UK Household Longitudinal Panel Study data from 2018 to February 2020 and April 2020 and change score analysis, this study aims to compare mental health changes between those who worked reduced hours, were furloughed and left/lost paid work. The results suggest that at the onset of COVID-19 reduced working time and furlough can protect workers’ mental health, but only for men not for women. The gender differences remain significant even after controlling for housework and childcare responsibilities at the onset of COVID-19. These results highlight the importance of distributing paid work more equitably and formulating gender-sensitive labour market policies in protection of workers’ mental health.