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This note has been prepared to assist employers who are experiencing a temporary shortage of work for employees to do (caused, for example, by disruption at a supplier, severe weather or a number of other causes beyond the employer’s control, such as the coronavirus outbreak). It will be specifically relevant to employers who are unable to access the Coronavirus Job Retention Scheme for some or all of their employees.

 

What is lay-off and short-time working?

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

Is it my choice to use lay-off or short-time working?

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 the employee specifically agrees to be laid off or put on short-time working.

Can I place just some of the workforce on lay-off or short-time? If it’s short time, does everyone have to have the same drop in hours?

The employer has quite a wide discretion in relation to who is placed on lay-off or short-time working. Employers need to ensure they do not exercise the lay-off clause in such a way that breaches trust and confidence, is discriminatory, or is for a protected reason, e.g. whistleblowing.

Therefore, you can place just some of the workforce on lay-off and/or short-time work. The employer should consider how they will do this fairly in order to avoid arguments of discrimination of repudiatory breach. In extreme circumstances, we have seen some employers who have decided to pull names out of a hat to see who went off, although it is likely to be far more beneficial to work out who to retain based on business needs.

Is any pay due to employees during lay-off?

During a period of lay-off, employees may be entitled to a Statutory Guarantee Payment for days when they would normally be required to work under their contracts of employment, but no work is available for them to do, and the lack of work leads to no pay.

Guarantee payments are only required to be made for complete working days when no work (and no pay) is provided (workless days). An employee must not unreasonably refuse alternative work that is offered by the employer on a workless day.

To qualify for a guarantee payment, the employee must have been employed for at least one month.

An employee is entitled to a guaranteed payment for up to 5 days in any three-month period except when the employee works fewer than 5 days per week. In those circumstances, the entitlement is limited to the number of days he works per week under his contract.

Note - A guaranteed payment is not payable where the failure of the employer to provide work is caused by industrial action at the employer or a group company.

How much is a statutory guarantee payment?

The daily guarantee payment is calculated by dividing the week’s pay by the normal working hours. There is a maximum daily limit. This is currently £30 (for the period 6 April 2020 – 5 April 2021).

How long can I lay my staff off for?

There is no maximum time that staff can be laid off, so, in theory, the lay-off could last indefinitely. However, if a lay-off period lasts for more than 4 consecutive weeks or more than 6 weeks in any 13-week period, employees are entitled to serve notice 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.

What can an employer do if any employee serves notice to terminate their employment and claim a redundancy payment?

If this happens, the employer can accept that a redundancy situation exists and pay the redundancy payment (and, if the employee is required only to give a statutory minimum notice of a week to terminate the contract, full pay for that week) 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, which will decide whether there is a reasonable prospect that work will be provided for 13 weeks.

 

If you need to place some or all of your employees on lay-off or short-time working, please contact Bira Legal on 0345 450 0937 or by email bira@worknest.com for further guidance.

 

For more advice, visit Bira Legal or our Living with COVID Hub.

 

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