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Lay-off and short-time working

20 March 2009

Announcements of redundancies, lay-offs or reduced working hours are becoming depressingly familiar.

The news media is often inclined to use the terms ‘redundancy’ and ‘lay-off’ interchangeably though legally they are two separate situations.

Redundancy is a dismissal by the employer. Lay-off is when, for a temporary period, the employer does not require the employee to work. Short-time working is where employees are laid off eg for a number of days each week or hours each day.

The fact is that most employees have no legal right to be provided with work by their employer. However, generally they have the right to be paid their salary. The exceptions are where the contract of employment or a collective agreement provides for lay-off without pay or where the right has arisen through custom and practice over a long period.

Lay-off and short-time working are temporary variations to the contract of employment. So, in the majority of cases, employers should consult with employees and obtain their agreement before implementing a period without pay. In better times, it may be harder to obtain that agreement but in the current climate, employees may agree to a four-day week rather than risk being without a job at all.

An employer who simply imposes lay-off or short-time working without obtaining agreement runs two risks. An employee may resign and claim constructive unfair dismissal or remain in employment but bring a claim for breach of contract. (A year’s service is required for the first but none for the second.)

If staff agree to a period of lay-off or short-time working, they may be entitled to a statutory guaranteed payment of up to £21.50 per day. After four consecutive weeks if they are receiving less than half a week’s pay, or six weeks in a 13-week period, they are entitled to give notice to end their employment and claim a statutory redundancy payment.

This is an area with which employers may, thankfully, be less familiar. If you are at all uncertain, seek expert advice.

As always, if you need commercial and pragmatic legal advice, we’re here to help so please get in touch.

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Jenny Hawrot LLB (Hons)
Senior associate, solicitor
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Jenny Hawrot
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