Household names announcing proposed redundancies have been grabbing the headlines this year, highlighting the difficulties that even large businesses face. But, what if your business is experiencing a shorter-term issue – a bit of a ‘bump’ in the road?
A temporary issue such as a short slump in work, a brief interruption to your supply chain or a problem with your premises, such as flooding, can cause a real headache for businesses. Redundancy may not practically (or legally) be the answer. Instead, you may want to consider whether placing employees on lay-off or short-time working could be the stop-gap you need.
If you’ve never dealt with lay-off or short-time working before, here are some fast facts that can be helpful to know:
- What is lay-off and short-time working?
- Why contractual rights are key
- Keep your eye on the clock
- What to do if you are thinking of using lay-off or short-time working in your business
What is lay-off and short-time working?
A ‘lay-off’ is where you temporarily shut down your business/part of your business because you cannot find any work for your employees. This could be caused by all sorts of things. In our experience, one of the most common reasons is a short-term drop in work.
Broadly speaking, ‘short-time working’ is a partial lay-off where, due to an issue affecting your business, you maintain your operation but on a reduced scale. To spread out the work you have available, you would temporarily reduce the amount of hours/days your employees work per week.
Two reasons lay-off/short-time working can be helpful for businesses is because employees remain employed during a period of lay-off or short-time working. Using it can also help a business to make a financial saving.
With the right contractual clause in place (see below), unworked hours are generally unpaid (although there can be an entitlement to a statutory guarantee payment for completely workless days but this is a very small amount).
Why contractual rights are key
It is important to be aware that businesses need to have an appropriate contractual right to place an employee on lay-off or short-time work and to pay them accordingly. If this is not in place and an employee is laid off or put on short-time working anyway, you could find your business facing employment tribunal claims such as constructive unfair dismissal and unlawful deduction from wages.
To check you have the contractual clause you need before acting, get in touch.
Keep your eye on the clock
In some circumstances, employees who are laid off or put on short-time working have a right to terminate their employment and claim statutory redundancy pay. In outline, to obtain a statutory redundancy payment, your employee will need to have continuity of service of two or more years, must have been on short-time working/lay-off for a specific period and must comply strictly with a statutory procedure.
An employee can seek a redundancy payment once they have been laid off or kept on short-time work meeting the statutory definition (or a combination of both) either for four consecutive weeks, or for a total of six weeks (of which no more than three are consecutive), in any period of 13 weeks. It may be possible to arrange the work you have to avoid these provisions being triggered, so get in touch for specific advice on your situation.
What to do if you are thinking of using lay-off or short-time working in your business
When it comes to lay-off and short-time working, it is important to make sure you have the information you need to make decisions for your business. If you are thinking of using lay-off/short-time working, your first step should always be to seek advice on the facts of your case.
We are here to help, so please reach out.