Lay off and Short time working
This advice note set outs an employer’s options when it comes to dealing with a temporary downturn in work when redundancies would ideally be avoided. If you have any specific questions about either Lay Off or Short Time Working, please contact your Employment Advisor on 01274 864999 for further advice but in the meantime, we hope that this guidance will assist.
The planet is experiencing unprecedented times and businesses are having to react and respond quickly to emerging pressures to ensure financial viability into the future. Some businesses are experiencing or anticipating an overall (hopefully) temporary reduction in work which in turn is leading to less work for employees.
Laying employees off or, placing them on short time working is very different to making employees redundant or requiring a permanent change to terms and conditions. Lay off and short time working rights exist with the intention of addressing a temporary reduction in work only.
Please note that this is general advice, for your specific issues please take advice.
A genuine lay-off situation arises when:
- There is a reduction in the requirements of the employer’s business for work of the kind which the employee is employed to do; or
- There is any other occurrence which affects the normal working of the business in relation to this type of work.
During a period of lay-off an employee is not expected to attend work for the entire period so this procedure is a good option for employers who experience a serious downturn in work over a specific period. During any period of lay off an employee is only entitled to be paid what are known as ‘guarantee payments’.
Where an employee has been laid off for a consecutive period of 4 weeks they can give you written notice of their intention to claim a redundancy payment. When an employee has been laid off but not for consecutive weeks then the employee can request redundancy after they have been laid off for a maximum of six weeks in any thirteen week period. We would expect/hope things to have picked up well before this six week window passes and that you will be in a position to engage staff fully before any applications for redundancy payments are received.
Short time working
Short time working is slightly different to lay off insofar as it occurs when employees are laid off for a number of contractual days each week, or for a number of hours during a working day rather than for whole weeks. As in the case of a lay-off, the employer must have an express or implied power in order lawfully to put someone on short time working and reduce their pay.
Employees placed on short-time working may be able to claim Jobseekers Allowance for the balance of the hours they do not work. Advice on eligibility may be obtained through a local Jobcentre.
Pay during lay-off
With regards to pay, an employee who is not provided with work throughout a day during which he would normally be required to work under his contract of employment is entitled to be paid a guarantee payment by his employer (a day classes as the 24-hour period from midnight to midnight).
The statutory entitlement to a guarantee payment is limited to five days in any period of three months. If the days of the lay-off are not consecutive, the three-month period must be calculated separately for each day.
Where the number of days worked varies from week to week, the average number of days worked over the preceding 12 complete working weeks should be determined. The calculation should be based on the contract of employment in force on the day for which guarantee payment is due. Please note that on days on which a guarantee payment is not payable, employees may be able to claim Jobseekers Allowance and should contact their local Job centre about eligibility.
Guarantee payments can be made only in respect of a complete working day lost. They are not required to be made in respect of a day in which some work is provided, even if that work is provided outside normal working hours. In addition, to qualify, an employee;
- must have been continuously employed for at least one month;
- must comply with any reasonable requirements imposed by an employer to ensure that his services are available;
- must not unreasonably refuse an offer from an employer of suitable alternative work (which need not be work he is under his contract employed to perform) ;
The guarantee payment is currently £29.00 per day.
Redundancy Payments following a period of lay off or short time working
An employee is entitled to request statutory redundancy pay subject to a number of conditions being fulfilled. The conditions are that:
- the employee is laid off and it has lasted for at least four consecutive weeks (or six non-consecutive weeks during any 13 week period) or the employee has been put on short time working (that is, receives less than half a week’s pay) for four consecutive weeks- or for six non-consecutive weeks during any 13 week period;
- the employee has resigned (essential before being entitled to receive redundancy pay in respect of time laid off) and given a minimum of one week’s notice, which can be informal; and
- the employee has within four weeks of the end of the lay off period given a written “notice of intention to claim” redundancy money. This notice of intention to claim can be given before or after resignation.
Subject to conditions, the employer can contest an employee’s claim for statutory redundancy pay by reason of lay-off or short-time if it is likely that normal work will be resumed within four weeks, again giving you some scope to avoid having to pay redundancy payments.
Employees who are concerned about the impact that any lay off or short time working may have on their pay can take annual leave. This may be an option that you want to discuss with your employees from the outset.
Do I need a contractual right to lay staff off or, place then on short time working?
You will have no automatic or immediate right to lay staff off or place them on short time working without a contractual right. If you don’t have a contractual right, you can still lay staff off or place them on short time working if you get an employees’ consent to do so.
How much notice do I have to give to lay off/place on short time working?
Employers should follow their contracts of employment in this regard, but if the contract is silent lay offs and short time working can be implemented immediately. If you have to get your employee’s consent then lay offs/short time working can be implemented as soon as consent is obtained.
How long can I lay staff off for/place them on short time working?
There is no limit on how long an employee can be laid off for or, placed on short time working. The measures are intended to address temporary reductions in work though and after 4 continuous weeks or, 6 non-continuous weeks of either lay off or short time working, employees can request a redundancy payment.
When is the statutory guarantee payment due?
An employee must have worked for their employer for at least one month and be earning less than half of their normal pay.
The guarantee payment should be paid in the same way as normal wages.
Can my employees claim benefits during lay off or short time working?
Possibly. Employees should contact the Job Centre to see if they are eligible for Universal Credit.
Can my employees do other work whilst laid off or on short time working?
As long as alternative work does not conflict with an employee’s contractual obligations to you, this shouldn’t be an issue.
An employee must however, be sure that they can return to work with you as soon as you have work again. If an employee doesn’t do this then you may be able to assume that they have resigned and not make any redundancy payments.
Do all employees have to be laid off or place on short time work, or can it just be certain individuals/departments?
An employer can choose who to lay off/place on short time working but their selection has to be based on business needs and selection must not be discriminatory. Where possible, asking for volunteers in the first instance can sometimes be helpful.
If someone who is laid off/on short time working has to self-isolate, what happens?
Where employees are required to self-isolate or, when they fall ill their absence should be recorded as sickness absence and SSP/company sick pay paid accordingly.
Can Howarths help us to work out a lay off/short time working strategy and meet with employees to confirm any business decision in this regard?
Yes! Our HR Projects Team are ready to assist any business that needs proactive support when it comes to the matters of lay off and short time working. Our HR Project Advisors can help you devise a full strategy for the management of stuff during any temporary downturn in work including, addressing other pay and working time queries. Our Advisors can also meet with your employees to explain the business rational for any lay offs or short time working requirements and carry out any necessary consultation for you.
How do I get some help from the HR Projects Team?!
Our HR Projects team specialise in onsite support and guidance. They support our clients in many areas where they feel they need some hands on / face to face support. We are able to substitute onsite support via video calls.
Here are a few areas that we are able to support in: helping plan redundancies and restructures, attending meetings, note taking and helping communicate changes to your employees. Call us on 01274 864999 or drop either Katie or Cath from our Projects Team an email on either: firstname.lastname@example.org or email@example.com