The Mechanics of Lay-Off and Short-Time Working

David Reid
Director
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If there is a downturn in work, employers may decide to place employees on a period of lay-off or introduce short-time working. These measures are often implemented to avoid the need to make redundancies, particularly if an employer envisages that work is likely to pick up again shortly. Where the downturn in work is likely to be temporary, employers may well prefer to not have to propose permanently reducing their workforce by reason of redundancy, if it can be avoided.

Lay-off

When an employee has been laid off, they will not be required to work for at least one working day.

There is no time limit on how long an employee can be laid off for, but if an employee is laid off for four weeks in a row or for six weeks in a thirteen-week period, they would be permitted to apply for a statutory redundancy payment if they have continuously worked for their employer for two years or more.

If an employee has over one month’s service, and they remain available to their employer for work during the period of lay-off, they will be entitled to ‘guarantee pay’ of £39 per day for five days in any three-month period. However, if an employee earns less than £39 per day, they should receive their normal daily rate of pay.

Short-time working

Short-time working is where an employer reduces the employee’s hours of work for a period of time, often, again, as a result of a temporary downturn in work. In short-time working situations, the employer only pays the employee for the hours that they work.

If the employees who are on short-time working are earning less than half of their normal weekly pay for either four or more weeks in a row, or for six or more weeks in a 13-week period, then an employee with two or more years’ service with their employer would be entitled to claim redundancy pay.

Placing an employee on a period of lay-off or imposing short-time working

To lay an employee off, or to impose short-time working, an employer must have the contractual right to do so within the contract of employment signed by the employee.

Where this contractual right exists, the employer can explain to the affected employees that there is a downturn in work and explain that, in accordance with the employees’ contracts of employment, the employer is placing them on a period of lay-off or imposing short-time working. It is then good practice to follow this conversation up in a letter to confirm the arrangements for the affected employees.

If an employer does not have the contractual right to impose short-time working or lay-off, they would need to consult with employees to encourage them to agree to such an arrangement on a temporary basis. Employees may agree to these measures as a temporary variation to contract as a way of avoiding their role potentially being made redundant. Again, any arrangements agreed with the employees should be followed up in writing

If you have any questions about about lay-off or short-time working, or if we can provide support or assistance on any other employment law matter, please do not hesitate to contact a member of the team on 0141 331 5150.

Topics: lay-off, short-time working