During a bad patch, it’s common for an employer to attempt to make changes to your employment contract to save money, rather than make redundancies.
[Updated for 2018]
In our article about Written Contracts and Statements, we look at how an employer can make changes to your contract of employment, but here we look at two other options your employer may consider:
A lay-off can occur when an Employer doesn’t have enough business to enable them to employ all or part of their work-force for a temporary period. An employee is laid-off if they don’t work for a week and get no pay for that week. The employer may euphemistically describe this as unpaid holiday rather than a lay-off (although it’s still a lay-off).
2. Short-time working
This is when your hours of work are reduced (by reducing the number of days or shifts per week you work, or the hours per day you work) by more than 50%. Your pay is reduced accordingly, because there’s not enough work to operate normal working hours.
This can also apply if your if your employer’s business premises is temporarily closed (e.g. due to flooding, fire, power supply failure).
Lay-offs or short-time working will not apply if you are a temporary worker, only if you’re an employee.
There is a general right in common law to tell most employees not to turn up for work, but there is no general right to not pay employees because work is not available.
Therefore, lay-offs or short-time working can be imposed on you only:
- If there’s a contractual right to do so (e.g. it’s written in your contract of employment)
- A collective agreement (with a Union) to do so exists, or
- A precedent has been created through previous customs and practices at your workplace.
In 2016, the Employment Appeal Tribunal considered the case of Craig v Bob Lindfield & Son Ltd and whether there was a ‘reasonable’ amount of time a lay-off could continue. The employer had a contractual right to lay-off its staff and one employee resigned after five weeks of lay-off without pay, claiming he had been constructively dismissed as the period of the lay-off was unreasonable. He didn’t succeed; he couldn’t show there was an implied term in his contract that the lay-off period had to be reasonable. There was no breach of contract, so it couldn’t be considered constructive dismissal. However, employers should be careful about keeping employees laid-off with no reasonable prospect of there being more work – this is likely to be a breach of contract since it could deny the employee a redundancy payment (see below).
If none of these scenarios exist, your employer should consult with you (or your Union representatives) about why this change is necessary, with a view to seeking your consent.
If your contract (or other circumstances above) does allow for lay-off or short-time working an employee may be entitled to:
- Receive a Statutory Guarantee Payment (which ‘keeps’ the employees’ length of service during the lay-off period) – for more information on Guarantee Payments see below, or
- Claim a Redundancy Payment (if they’ve worked for their Employer for two years, and the lay-off or short-time working lasts for four consecutive weeks or for any six weeks in a 13 week period) – for more information on how to claim a Redundancy payment in these circumstances, see below.
If your contract does not allow for a lay-off or short-time working then an employee who has had no pay of any kind for a particular week (because they have not been provided with any work, or has been put on short-time working) may be entitled to:
If, however, an employee agrees to a lay-off or short-time working, this could constitute a change in their contract of employment and they may be entitled to:
- Receive a Statutory Guarantee Payment (as above), or
- Claim a Redundancy Payment (as above).
- These payments can be received for a maximum of five days in a three month period (if the lay-off days don’t follow on immediately from each other, the three month period is calculated separately for each day of lay-off)
- Guarantee payments are currently up to £28.00 per day (from 6th April 2018)
- On days when a guaranteed payment isn’t payable, it may be possible to claim JobSeekers Allowance
- You should usually be able to do other work for another employer if you’re laid-off or on short-time working (unless you contract prohibits this), but this shouldn’t be for a competitor of your employer
- If you want to do other work you should let your employer know and get their agreement to this. You should make sure that you can return to your normal job as soon as your employer is able to offer you work again. If you don’t do this your employer may argue you’ve resigned by taking up other work
- If your employer fails to pay a guarantee payment you can make a claim to an Employment Tribunal within three months
- You can’t be dismissed or selected for redundancy for challenging an employer’s refusal or failure to pay a guarantee payment or for taking a claim about this to an Employment Tribunal.
Guarantee payments are not made where:
- You have less than one months service
- The lay-off is as a result of industrial action
- The employer offers you suitable alternative employment (i.e. other work) for the day in question and you refuse this
- You refuse a reasonable request to remain on standby during the lay-off period.
Redundancy Payments in these circumstances
- You’re entitled to claim a redundancy payment if you have been laid off or kept on short-time working for at least four consecutive weeks.
- You must give your employer notice of your claim for redundancy within four weeks of the last week of lay-off or short-time working
- Your employer has seven days to accept your claim or give you written counter notice of the claim (a counter claim will be given where the Employer believes work will re-start soon)
- If your employer doesn’t give you counter-notice of the claim, they’ve accepted your claim to redundancy
- A counter-notice by your employer means they expect work will start again (within four weeks, that must be continuous for at least 13 weeks)
- The employer can withdraw their counter-notice in writing
- You must give notice to terminate the contract of employment by resigning after seven days after you’ve told your employer you’re claiming redundancy and they have not counter-claimed, or they’ve withdrawn their counter-claim (you have up to three weeks to hand in your notice of resignation after the first seven days)
- If you follow the correct procedures to claim a redundancy payment, but your employer argues you’re not entitled to it or doesn’t pay it you may be able to make a claim to an Employment Tribunal for this payment.
If you are an Employer and need ongoing professional help with any staff/freelance issues then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.
Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an accurate, up to date or authoritative interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.