How and when to ‘lay-off’ or place employees on ‘short time’ working

This week Samira Ali of SCE Solicitors looks at laying people off work.

In some industries work is seasonal and employees expect a short lay off and/or ‘short time’ working period per year to cater for this, most employees use this period to take their annual leave. Unfortunately for the majority of businesses laying staff off or putting them on short time hours has resulted from the challenging economic climate.

As businesses continue to face hard decisions like whether they should make staff redundant or whether they should consider a temporary ‘lay off’ period in the interim to ascertain whether business will eventually pick up. This short blog is designed to guide you, as a business owner, as to when a ‘lay-off’ or ‘short time’ is appropriate.

Please note: the statutory procedure for lay-offs/short time working as set out in the Employment Rights Act 1996 (ERA) under sections 147-154 is very complex and if you intend to invoke it please ensure that you obtain specific legal advice in relation to your situation from a qualified professional.

When can I lay-off or put my employees on short-time hours?

First you need to satisfy the criterion that there is a diminution in the work the employee or employees are contracted to do.

The next hurdle is whether you have any contractual right to lay-off or put employees on short time working i.e. if there is a lay-off/short time working clause in their contract. If no such clause exists or you believe that such a clause exists however you have no signed employment contract, then you should ensure that you obtain your employees consent before proceeding. If this is achieved, ensure that the agreement is put in writing.

What if my employee will not agree to a lay-off or short time hours?

You will need to commence a fair and proper redundancy procedure. My blog in respect to a redundancy checklist may help to get you started with the procedure –http://www.scesolicitors.co.uk/news/redundancy-checklist-for-employers.

What happens if I lay-off/put an employee on short time working without having a contractual right to do so?

This is likely to amount to a serious breach of contract and your employee is likely to bring a claim for constructive unfair dismissal. There will be a good possibility that they will succeed under such a claim.

How long can I lay-off or put my employees on short time hours?

For either:

  1. Four or more consecutive weeks or
  2. Six or more weeks (of which no more than three were consecutive) within a period of thirteen weeks.

What happens if the business conditions have not improved after my employees have been put on the maximum number of weeks for lay-off or short time working hours?

Providing your employee provides the required notices as set out under the ERA they will be entitled to a redundancy payment.

How do I calculate the redundancy payment?

Providing you do not have a contractual redundancy payment scheme in operation, your employees will be entitled to the statutory redundancy payment which is calculated as follows:

–       1½ weeks’ pay for each complete year of employment in which they were not below the age of 41;

–       1 week’s pay for each complete year of employment between the ages of 22 and 40 inclusive; and

–       ½ a week’s pay for each complete year of employment in which they were under the age of 22.

A week’s pay is capped by statute and is currently £430*.

* As at 16 August 2012.

If you have any specific question relating to the above topic why not contact Samira Ali direct on samira.ali@scesolicitors.co.uk.

Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with me or other professional counsel before acting on the information contained here.