If you have a shortage of work available to your employees, but you’re expecting it to only be temporary dip (i.e. not a significant lack of work that would warrant redundancy), you can instruct your employees not to attend work for a set period of time (known as a layoff), or to only come into work for a few days or hours per week (known as short-time working).
If you have a clause in the employee’s contract allowing you to make use of layoffs and short-time working, the employee is obliged to work to the new arrangements.
If the contract doesn’t have this wording, you’ll need to get the employee’s permission, ideally in writing, otherwise, if you try to enforce this arrangement, you’ll be in breach of the employee’s contract (which can lead to you being accused by the employee of constructive dismissal at an employment tribunal).
Constructive dismissal is where you impose terms on the employee that are not contractually permitted. If the employee feels they have no choice but to resign as a result of this, and they do so, they can then bring a claim against you, alleging that you essentially dismissed them by imposing these terms.
While employees won’t receive their full pay during these arrangements, depending on meeting certain criteria detailed below, they may be entitled to receive:
• Statutory guarantee payments:
By law, within any 3-month period of an employee being laid off or put on short-time working arrangements, you must pay an amount (this can vary yearly, so ensure you have the latest figures) for up to 5 workless days.
However, guarantee payments are only relevant if:
1. the employee has worked for you for more than 1 month before the first workless day
2. the employee considers reasonable alternative work if you offer it
3. the employee is available to work and
4. the reason for lack of work isn’t a result of strike or industrial action.
If a layoff of short-time working arrangement means the employee is on less than half a week’s income for 4 consecutive weeks (or 6 weeks within a period of 13 weeks), you may need to pay your employees redundancy pay.
As the employer, you do not need to initiate this. To claim this the employee must write to you and request redundancy pay within 4 weeks of the last day of the lay-off or short-time working period.
With 7 days of receiving the request, you must either accept or give a counter-notice (confirming that you expect to be able to offer them at least 13 consecutive weeks of employment within the next 4 weeks (without any more need for layoffs or short-time working arrangements).
Then to receive redundancy pay, the employee must also resign within 3 weeks and 7 days of them giving you their redundancy request notice (and if you didn’t give them a counter-notice), or – if you did give them a counter-notice and then withdrew it, they have 3 weeks from the date of withdrawal.
If the employee wants to appeal your decision to reject their claim, they may make a claim against you to an employment tribunal, who will make a decision about whether the employee is entitled to their redundancy pay claim or not.
While still technically employed when laid off or on short-time working arrangements, the employee may be able to claim Jobseekers’ Allowance. They can get more information about this from their local Job Centre or at https://www.gov.uk/jobseekers-allowance.
Keep any layoffs or short-time working arrangements for as short a time as possible, causing as little disruption to employees as you can, and to prevent employee dissatisfaction that could lead to resignations.
If you think that the shortage of work may go on for longer than anticipated, take a look at our guide to redundancies to understand your options and get some advice. Situations like these can be unavoidable and stressful, much of your legal risk hangs on whether you take the right steps and communicate the right things at the right time. If you’re doing this, then while you can’t prevent employees from complaining (they probably will), you can at least minimise your exposure to legal actions and costly pay-outs.
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