In difficult economic times, employers may see a significant drop in the amount of work available for employees to do; in some cases this may reduce to nothing.
Instead of taking the drastic step of making redundancies, employers may be able to use ‘lay off’, or short time working’. However, the rules must be fully appreciated.
Temporary Downturn Of Work
Lay off and short time working are methods employers can use when there is a temporary period of no, or a reduced amount of, work to do whilst maintaining the continuous employment of employees. Where work has ceased or reduced significantly for good, redundancies may be the only option.
‘Lay off’ means providing employees with no work for a full day. ‘Short time working’ is where hours are still provided but these are less than normal.
Any employee can be selected for lay off as there is no obligation to apply a selection criteria, however the employer must be aware of any form of discrimination or detrimental treatment when choosing who to lay off or put on short time working.
Contractual Wording Is Important
In order to enforce lay off or short time, you must have the express contractual right to do so. This means having wording within the contract to the effect that you may require employees to stay away from work, or require that their hours of work are reduced. The clause should also reserve the right to reduce pay according to the reduction of work.
If there is no such right in the contract, you can attempt to agree with employees the introduction of the clause at the time to place them on lay off or short time in order to preserve their employment, however, this move may face some resistance.
How Long Can Lay Off/Short Time Last For?
There is no maximum length of time employees can be kept on lay off or short time. If it lasts too long, however, employees may claim constructive dismissal. There is no room for employees to claim that they should be kept on lay off/short time for only a ‘reasonable’ period; there is no concept of reasonableness to be implied, as shown in Craig v Lindfield & Son.
Claiming Statutory Redundancy Pay
A mechanism exists which allows employees to claim statutory redundancy pay if they are kept on lay off/short time for:
- 4 continuous weeks; or
- 6 weeks in a period of 13 week period with no more than 3 consecutive weeks.
For these specific purposes, a week of short time will only count where the amount of work provided is less than 50% of normal hours.
The application must be made within 4 weeks of the periods mentioned above. You can counter an employee’s application if you can reasonably foresee providing them with work lasting 13 weeks which will start within the next 4 weeks.
Employees are required to resign if they are to claim the statutory redundancy payment.
Statutory Guarantee Pay
Employees on whole days of lay off are entitled to receive statutory guarantee pay for a maximum of one working week (subject to a maximum of 5 days) in a period of 3 months. SGP is currently set at £27 per day, or the employee’s normal day’s pay if this is less than £27.