Can an employer lay off its employees due to a lack of work?2021-02-11T18:29:53+00:00
They are both contractual and temporary solutions that can be used instead of redundancies. The ideal situation is for all contracts of employment to contain lay-off and short-time working clauses, which can be relied on in difficult times. If there are no such clauses, agreement should be obtained from employees.
Employees who are laid off are eligible for a small Guarantee Payment, but this is limited to a maximum of £150 over three months.
In the current situation, if workplaces are forced to close to prevent the spread of the coronavirus (COVID-19) virus, employers will still have to pay employees in most cases. Lay-offs and short-time working may give employers greater flexibility and savings on salaries during a temporary closure but employers can only implement lay-offs or short-time working if there are express, correctly drafted clauses in their contracts of employment or if they receive employee consent. Clauses should reserve the right to reduce pay according to the reduction of work. Employees may agree to this if they feel their only alternative may be redundancy.
The existence of furlough leave and pay is likely to have reduced the need for and popularity of lay-off, (especially where no lay-off clause exists) but it remains a possibility as an alternative to redundancy and may be popular with employers as the furlough scheme is scaled back and employer contributions increase.
Please download our full guidance on implementing contractual variations which includes detailed examples of how to navigate the different scenarios and types of clause.