17 Mar Lay Off and Short Time Working
Are you concerned about being able to provide your staff with enough work? Are cash flow issues making you wonder whether there are options to providing full pay to your staff? We explain what is meant by LAY OFF andSHORT TIME WORKING and share with you key points that you will need to consider.
Remember – any action which could affect staff pay and contractual rights needs careful thought and a clear understanding of what you can and cannot do. For advice and support related to your individual circumstances, please contact us on 01904 360295.
- What is ‘lay off’?
This is when you don’t provide work or pay for your employees but they remain ‘on the books’. This is a temporary measure that is used when there is an unexpected downturn in work such as seen when the coronavirus hit the UK. If you plan to reduce headcount on a permanent basis then you would be required to follow the correct redundancy procedure, dependent upon number of posts to be made redundant and the timescale for this action to be taken.
- What is ‘short time working’?
This is when you reduce the working hours and pay of your staff for a temporary period of time. There is no fixed definition for ‘short time’ but if you provide work that only equates to pay at below half of their normal weekly wage then eligibility for redundancy can apply.
- Are there any restrictions on using lay off or short time working?
Absolutely – staff have contractual rights that protect them from employers varying their hours and pay without agreement. Staff on zero hours or similar variable hours contracts need to be considered individually. For permanent staff, you need to find out whether their contracts of employment explicitly allow you to lay them off or to reduce their working hours/pay.
- But surely all staff realise that we may need to lay them off for a period of time?
If you don’t have an explicit contractual right agreed with staff then you can rely on what is known as an ‘implied term’. This is where it is commonly accepted that such a right exists. The bar for this argument being accepted however is high and relies on you as an employer being able to prove that such a right is reasonable, fair and commonly known. Staff might say in passing that they understand the current situation but care must be taken not to undermine their contractual rights as you could easily end up having to defend a claim for constructive dismissal or unfair deduction from wages.
- So, can I now change staff contracts to give me an explicit right?
Contracts are based on an agreement between two parties. There are some limited cases where a change can be imposed or re-engagement of staff take place, but in general, you will need to agree a variation of terms. This involves appropriate consultation and the application of a ‘consideration’ to demonstrate that the employee was not coerced into the change. In current circumstances, the continuing employment of the employee may be sufficient consideration and an additional payment or concession (such as enhanced holidays) may not be required. You are strongly urged to seek our specialist advice should you be considering making such contractual changes.
- I do have a lay off clause in our employment contracts so what do I need to do to make it happen?
You will need to notify staff in writing so that they understand what is happening and why this is a necessary step. There isn’t any need for a formal selection process. However, if only some staff are affected, it is important that you are non-discriminatory (e.g. you can’t choose all those with children or who work part time). You don’t need to give staff notice of their return date but if possible, should confirm whether there is a fixed day to return to normal working hours or if a further update will follow.
- What are the implications for staff?
If properly entered into, an employer can lay off staff or require them to work shorter hours for up to four consecutive weeks (or six weeks in any thirteen-week period). After this time, the staff member can claim that they are in a redundancy position, subject to eligibility criteria including earning under half their usual weekly wage.
Staff may be entitled to a minimal payment called the ‘statutory guarantee payment’. This is currently £29 per day (pro rata for part time staff) and is only payable for a maximum of five days within a three-month period.
Staff can choose to request holidays during the planned lay off/short time working period. If approved, this is paid at the usual rate of pay. Staff still accrue holidays during a period of lay off/short time working.
- Is there anything else I need to consider?
Laying off or putting staff on short term working is a major step to take and can have longer term implications for the morale and motivation of your team. You should be aware of this and consider how such concerns can be best managed through effective communications, liaison with trade unions etc.
Consider who else will need to know about your decisions. This will include your payroll provider but may also include third parties and customers.
What to learn more? Please contact us on 01904 360295 or email firstname.lastname@example.org for tailored support.