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Lay-Off & Short-Time Working

The term ‘lay-off is often confused with ‘’redundancy’’ and it’s very important to know the difference.  ‘Lay-off’  is a temporary measure where an employer provides employees with no work (and so no pay) for a period of time while still retaining them as employees.

A shortage of work

If an employer is experiencing a temporary shortage of work, as an alternative to redundancy, it may decide to lay employees off temporarily.

A lay-off is where there is no work provided to the employees and in consequence they are paid no salary or wages. An alternative to lay-off is short-time working, where employees’ working hours are reduced and in consequence their pay is reduced in proportion.

A contractual right or agreement

An employer cannot lay employees off or put them on short-time working unless the contract of employment states that there is a right for the employer to do so or, alternatively, employees specifically agree to be laid off or placed on short-time working.

Where an employer needs to deal with an unexpected downturn in its business or unforeseen circumstances but does not have a contractual right to lay employees off or put them on short-time working, the employer may wish to consult with them (and with trade unions or other representatives, where appropriate) to try to agree a temporary reduction in pay and benefits.

Where the alternative is closure and job losses, employees may be willing to reach an agreement.

If  an  employer  lays off an employee or  puts them on short-time working in the  absence of a contractual right to do so, the employer will likely be in fundamental breach of contract.

A notice of intention to claim a redundancy payment

If a period of lay-off lasts for more than 4 consecutive weeks or more than 6 weeks in any 13-week period, employees with two years’ continuous service are entitled to serve “notice of intention to claim” to terminate their employment and claim a redundancy payment.  The same applies to short- time working where the employees’ remuneration is reduced by more than half for the same periods.

If this happens, the employer can:

  • Accept that a redundancy situation exists and pay the redundancy payment or,
  • Serve a counter-notice stating that it expects to be able to provide the employee with at least 13 weeks’ continuous work. If the employee does not withdraw his claim to a redundancy payment the matter is referred to an Employment Tribunal.

Guarantee Payments

During a period of lay-off or short time working, an employee may be entitled to a statutory guarantee payment (SGP) on up to 5 “workless days” in a three-month period. A “workless day” is a full day during which the employee would normally be required to work in accordance with their contract but is not provided with work by their employer

An employee will not be entitled to an SGP where:

  • They do not have at least one month’s continuous employment
  • The workless day is due to industrial action.
  • The employee has unreasonably refused an offer of alternative work.
  • The employee does not comply with reasonable requirements imposed by their employer with a view to ensuring that their services are available.

If a free consultation could help you work through what options might be available to your business as an alternative to redundancy please reach out to us at legal@lexleyton.co.uk

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