Clarifying short time working and layoff

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Key points from the proposed Good Work Plan – April 2020
December 9, 2019
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Clarifying short time working and layoff

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Short time working is when an employee does some work on their normal day but for less hours or receives less than half their normal weekly wage.  For example, the employee is contracted for 8 hours per day, but the business can only provide 6 each day so they are working shorter hours.

Lay-off occurs when an employee is offered no work on a day that they would normally do some work.

How long can you do this for?

Technically there is no min or max timescale applied to either option but realistically they are designed as short-term interventions – less than 4 weeks for example.  After 6 weeks the employee can claim redundancy (see below).

Why use these options?

Using layoff or short time working is a mechanism that preserves the employment relationship whilst giving some flexibility for employees to flex their business to cope with short term shocks.  Historically companies have used these options when faced with things like floods, lack of stock or the supply of parts needed to make products.

Essentially the business is sound and secure but needs to flex its costs to cope with a downturn in work or income.

Where does redundancy come into this?

An employee has the right to claim redundancy if they have been laid off or paid less than 50% of their normal wages for a period of 4 weeks in a row or 6 weeks in a 13-week period.

The right to claim redundancy can be made by the employee, but they will only be entitled to redundancy pay if they have more than 2 years’ service.

Do I need the contractual right to do this?

In order to enforce short time working or layoff (doing this without the employees explicit consent) the employees contract must give the employer the right to do this, so you’ll need to check if the contract or clauses in the handbook that are tied to the contract allow you to enforce either option.

If your contract or handbook do not specifically give you this right, then technically you cannot force an employee to work less hours, take a cut in pay or stay at home without their consent – especially for no or less pay as it could be seen as a deduction from wages or a breach of contract.

How do I notify employees of the need to invoke short time working or lay off?

You can use the attached letters and modify accordingly.

·      Letter 1 – Letter to confirm a period of lay-off or short-time working where an agreement exists

·      Letter 2 – Letter seeking agreement to a period of lay-off or short-time working, where no contractual right exists with form to accept

What happens if the contract or handbook don’t mention short time working or layoff?

In this case you would need to consult (group or 1-2-1) on what you intended to do and ask the employee to give their formal consent to it happening.  Realistically the option of some money as opposed to losing their job may well be an appealing argument, especially if the employee believes it is only a short-term measure.

In terms of what the consultation would look like, it would be reflective of the size and scope of the change that was being proposed and the time available to do it.

What happens with pay during Short time or Layoff?

Assuming you have the right to lay the staff off or invoke short time working then you’ll need to check the terms of the employees’ contract or handbook for detail on how pay is handled.

Normally, if there is a specific clause, they are written to state that periods of layoff and short time working are unpaid, but the employee may qualify for statutory guaranteed pay (see below).

If the employees’ contract does not refer to layoff or short time working, you can consult on how pay will be handled as part of this process.

The contract doesn’t mention layoff but it it says the employer has the right to vary terms

A lot of contracts do contain a right to vary terms clause (normally towards the end) which can be helpful in this scenario.  Whilst its unlikely to say exactly what can be varied an employer could frame an argument to say that due to exceptional circumstances it is being forced to vary the terms of the contract as a short term measure to solve a critical problem and protect the business and the ongoing employment of its workforce.

This approach would be open to challenge on the grounds that the change was not reasonable, but this is likely to come after the period of layoff or short-term working has ended.

This should be seen as a last-ditch solution if consultation has proved to be unsuccessful.

Statutory Guaranteed Pay

This is a sum of money that an employee can claim (if they have more than 1 month’s service) from the employer for any day where they have undertaken nowork when they would have normally worked.  So, if the employee does less hours each day, but works some hours each day then they do not qualify for statutory guaranteed pay.

Statutory Guaranteed Pay is payable for up to 5 days in a 3-month period at the rate of £25 per day – this is pro-rata for part time employees.

If the employee earns less than this per day, then they get their normal wages.