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March 20, 2020

What are Lay-offs and Short-time Working?

Lay-offs and short-time working are options employers may choose to take when there’s a shortage of work. They allow businesses to retain their workforce for a while, in the hope that work picks up again soon.  

COVID-19

Important Note: The COVID-19 Job Retention Scheme allows all UK employers to access financial support to continue paying part of their workers’ wages for those that would have otherwise be laid off during the COVID-19 outbreak. Find more information here.

Further, lay-off is not suitable for people who are self-isolating with COVID-19 based upon government advice. If these people have been instructed by either NHS 111 or by a doctor who has advised self-isolation, they’re entitled to SSP. If this is not the case, they may not be entitled to SSP.

Lay-off and short-time working

  • A ‘lay-off’ is where no work is offered to an employee during a particular week. 
  • ‘Short-time working’ is where an employee works normally for part of the week, but is laid off for another part of it.  

The right to lay-off employees or put them on short-time working resides in a specific clause in the contract of employment and/or employee handbook allowing you to do so.

If you don’t have a clause in your employment contracts or employee handbooks, you may potentially have an agreement with a union. Or in some cases, it may be ‘custom and practice’ in your organisation or industry.

Alternatively, your employees may agree to certain changes to pay (rate and frequency) – these changes must be in writing, preferably with signed agreement from both parties.

Without these procedures, you’re exposing your business to the risk of claims of breach of contract or constructive dismissal. What that will mean in practical terms once the current crisis period has passed, we don’t know. We may anticipate that many courts and employment tribunals will be sympathetic to the overwhelming circumstances faced by some employers, but we can’t know for sure and every case will be different.

Statutory pay for laid off staff

When employees are laid off, they’re entitled to Statutory Guarantee Pay of £29 per day, or their daily rate (if this is lower). This payment lasts for five days in any three-month period. Some employers may have additional guarantee payments set out in their contracts of employment.

Employees laid off for extended periods can make a claim for statutory redundancy pay. There may be other risks too. This should therefore be treated as a temporary solution.

What next?

If you want to lay off staff, put them on short-time working, make redundancies or propose any other changes to pay, you MUST take advice from qualified employment law experts. You’ll need to understand how these scenarios would work within the specifics of your organisation. If you don’t, you may be putting your business at risk.

If you’re a Moorepay customer and you need to speak to our team, call 0345 073 0240, press option 2. Please make sure you have answers to the following:

  1. How long do you think you will lay off members of staff for? 
  2. How many employees will be affected?
  3. Do your contracts of employment and/or handbook have a lay-off clause? 
  4. Do you offer any kind of payment guarantees in excess of the statutory payment scheme? 
  5. Are any of the affected people part-time workers? Or do any earn less than £29 per day? 
  6. What pay changes are you proposing? Why and how many people are affected? And do you have a recognised employee representative/recognised trade union? 

If you don’t currently have access to our HR, Employment Law and Health & Safety Advice Line and would like to find out how we can support your business, please speak to your commercial account manager or telephone 0345 184 4615. 

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About the author

Audrey Robertson

About the author

Audrey Robertson

HR Consultancy & Insurance Manager, Audrey, has a strong background in HR, Employment Law and related insurances in a career spanning over 15 years leading teams in-house and as a consultant supporting clients across retail, education and the B2B sectors. At Moorepay, Audrey heads up the Policy & HR Consultancy team as well as the insurance claims department. With a strong commitment and investment in employee wellbeing, having studied counselling and coaching, Audrey is a qualified Mental Health First Aider and supports our staff on-site.

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