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Laying off staff

06 November 2008

With an uncertain spell in prospect, a number of clients have asked for advice on laying off staff.

One, for example, runs a seasonal business and needs to reduce overheads for a short period in January but does not want to part with capable, experienced staff. Lay offs can be used as a means of riding out such short-term difficulties.

Most employees have no legally-enforceable right to work but employers have no general right not to pay staff because there is no work. If you lay off an employee without pay (unless you have a contractual right to do so) you are in breach of contract. The employee may bring a claim for the breach or for unlawful deduction from wages, or may resign and claim that your action amounted to a dismissal.

As long as the employee agrees to alter the contract terms so that the lay-off is by mutual agreement (eg where the only alternative is redundancy) then you will not be in breach. You should note though that this does not necessarily mean that you can lay the employee off unilaterally without pay in the future: it is likely to be just for this occasion.

If employees agree to the lay-off (or if you decide to take the risk and proceed without their agreement) they will be entitled to a statutory guaranteed payment. Should a lay-off last for four consecutive weeks, or six weeks in a 13-week period, an employee can claim a redundancy payment. Please note, there are particular rules about the notice that must be given. We will be happy to advise on the relevant rules.

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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