We are frequently receiving calls about the process of laying off staff or imposing short-time working arrangements.
- Laying off employees means that the employer provides employees with no work (and no pay) for a period while retaining them as employees;
- Short-time working means providing employees with less work (and less pay) for a period while retaining them as employees.
Unlike dismissal, it is a temporary solution to the problem of no or less work and can be used as an alternative to making redundancies. An employer will be able to save money when it lays people off or puts them on short-time working, by not paying them or by paying them less for a certain period.
We encourage employers to consider these options prior to making redundancies during the coronavirus pandemic, as it is an unprecedented situation.
Guarantee payments
An employee may be entitled to a statutory guarantee payment (SGP) on up to 5 “workless days” in a three-month period. You pay guarantee payments directly to the employee, as you would their normal wage.
Employees are entitled to guarantee pay during lay off or short-time working. The maximum you need to pay is £29 a day for 5 days in any 3-month period – so a maximum of £145.
If any employees usually earn less than £29 a day, they’ll get their normal daily rate.
For people that work part-time, their entitlement is worked out proportionally.
Holiday accrual
Annual leave will accrue at the full-time rate during a period of lay-off or short-time working.
Pension contributions
You may need to pay employer pension contributions during a period of lay-off or short-time working. Check with your pension provider.
How long can I impose lay-off or short-time working for?
There’s no limit for how long you can lay people off or put them on short-time. However, employees can apply for redundancy and claim redundancy pay if it’s been:
- 4 weeks in a row
- 6 weeks in a 13-week period
Imposing lay-off or short-time working
The first thing to do is to check your contracts of employment to see if there is a clause that allows you to lay-off or impose short-time working.
Contract permits lay-off or short-time working
If the contract permits lay-off or short-time working then you can look to implement this with immediate effect (unless your contract states that you will give notice). You should have a face-to-face meeting with staff explaining the situation and that you wish to invoke the lay-off or short-time working clause. Some staff may propose alternatives, you should consider these. Make sure somebody takes note of the meeting. It’s important to consider suggestions made by staff before informing them that you wish to enforce a period of lay-off or short-time working.
You should confirm in writing in a letter that you enforcing a period of lay-off or short-time working, refer to the clause in the contract that permits this and explain why the decision has been made. In this letter, inform them how long the measures are for and explain to them how to guarantee payments work (if laid off) or how many hours they will be working (if short-time is imposed).
At the end of a 4 week period if you don’t think you will be able to provide work within the forthcoming 4 weeks, then you will need to place them at risk of redundancy and begin a consultation period with a view to terminating their employment by reason of redundancy (and paying statutory redundancy payments).
The contract does not contain a lay-off and short-time working clause
If your contract of employment does not contain a clause, then you can only impose a period of lay-off or short-time working with the agreement of the staff.
If you believe that the current downturn of business is likely to result in redundancies, you can ask staff to agree to a period of lay-off as an alternative to this. It’s important that you consult with the staff rather than just telling them that it will be happening. You are at risk of breach of contract and unlawful deduction from wages if you do not consult adequately as where there is no clause in the contract of employment to permit lay-off or short-time working, you are varying their terms and conditions of employment by implementing lay-off or short-time working.
Consultation is a process that involves meeting with the staff; explaining the situation, setting out the proposed variation to terms and conditions, discussing the pros and cons of this and answering questions.
Some staff may propose alternatives to the measures that you are proposing, you should consider these. Make sure somebody takes note of the meeting and what is said by all parties. It’s important to consider suggestions made by staff before informing them that you wish to vary their terms and conditions and enforce a period of lay-off or short-time working.
If you can come to an agreement with the staff, you should then agree the varied terms in writing with them. This can be done in a letter format, signed by both parties.
You can’t force employees to agree to accept the variation and you may need to start a redundancy process if they do not agree.
Even if staff agree to the variation and you have an agreement in writing, this does not eliminate risk of a dispute arising, however, consulting properly and having an agreement in writing does reduce the risk considerably.
Alternatives to lay-off or short-time working
Some suggested alternatives that you may want to consider:
- Temporary reduction in pay (note the national minimum and living wage requirements)
- Temporary reduction in benefits
- Stopping all overtime
- Recruitment ban
- Reduction in sub-contract or agency labour
- Temporary reduction in hours (but not to amount to short-time working).
At the end of a period of lay-off or short-time working
At the end of a 4 week period if you don’t think you will be able to provide work within the forthcoming 4 weeks, then you will need to place them at risk of redundancy and begin a consultation period with a view to terminating their employment by reason of redundancy (and paying statutory redundancy payments).
Lay-off and zero-hours workers
If the zero hours worker genuinely does sporadic shifts and there is no pattern of work established then it may be possible to not give zero-hours workers shifts during a period of reduced workload, however, if there has been a pattern or number of hours worked each week for a period of time so to establish ‘custom and practice’, then the same principles of lay-off and short-time working will apply to them. For example, if you have a worker on a zero-hours contract who has worked 20 hours each week for the last 2 years, it is likely that by custom and practice this person is entitled to 20 hours each week and it will be unlawful to cut their hours without consultation.
If you need any help or advice in this difficult time, then please do not hesitate to call to speak to one of our team on 0114 3032300 or 020 329 0280 or email us [email protected]
