Employers Guidance on Short Time Working & Temporary Lay-off

At present, there is growing uncertainty both within the UK and worldwide since the onset of Coronavirus (COVID-19) and its ongoing spread. Given the effects and impact this has within the workplace and on business continuity as a whole, employers may need to consider placing their staff on short time working or temporary lay-off, in accordance with contractual and statutory rights.

This guide will provide further information for employers should they be in a position to ask their staff to stay at home or take unpaid leave if there is not enough work for them to do, and can act as measures to avoid compulsory redundancies.

Short Time Working

Short-time working is when an employer cuts an employee’s contractual hours of work due to a down-turn in work.

Lay-off

A lay-off is when an employer lays an employee off work for at least 1 working day due to a down-turn in work.

Legal Position

There is no statutory right to lay-off employees or keep then on short-time working.  Employers can impose a lay-off or short-time working arrangement only if there is a contractual right to do so, for example in the employee’s contract or collective agreement. It might also be possible to imply a contractual right through custom and practice, although caution should be exercised. Where there is no contractual right to impose a lay-off or short-time working, the employee’s express consent is needed.

If an employer imposes a lay-off or short-time working unilaterally where there is no express or implied contractual right to do so, this will amount to a fundamental breach of contract.  In these circumstances, the employee could pursue a claim for an unlawful deduction from wages, breach of contract or resign and claim constructive dismissal.

Eligibility

To be eligible for statutory lay-off pay, an employee must:

  • have been employed continuously for 1 month (includes part-time workers)
  • reasonably make sure they are available for work
  • not refuse any reasonable alternative work (including work not in your contract)
  • not have been laid off because of industrial action

Guarantee Pay

As long as an employee is eligible (see above), they are entitled to a guarantee pay during lay off or short-time working. The maximum an employee can get is £29 a day for 5 days in any 3 month period – so a maximum of £145 in total. In the event an employee earns less than £29 a day, they will be entitled to receive their normal daily rate of pay. The entitlement for part-time employees is worked out proportionally.

Duration

There is no limit for how long employees can be laid off or put on short-time working.  However, employers need to be mindful that employees can apply for redundancy and claim redundancy pay if they have been on lay-off or short-time working for either 4 weeks in a row, or for 6 weeks in a 13 week reference period.

Redundancy

As above, employees can apply for redundancy and claim redundancy pay if they have been laid off without pay or put onto short-time working and receive less than half a week’s pay for:

  • 4 or more weeks in a row
  • 6 or more weeks in a 13 week period

In this instance, the following will apply:

  1. Employees should write to their employer to claim redundancy within 4 weeks of the last day of the lay-off or short-time period
  2. Employers have 7 days to accept an employee’s claim or give their employees a written counter-notice
  3. If an employer does not provide an employee with a counter-notice, the employee can assume the employer has accepted their redundancy claim
  4. A counter-notice means an employer expects work will soon be available – it must start within 4 weeks and must last at least 13 weeks

Resignation

Employees must resign in order to get redundancy pay. The timing of this is crucial as employees have 3 weeks to hand in their notice, starting from:

  • 7 days after an employee gives written notice to their employer (if the employee did not get a counter-notice)
  • the date an employer withdrew their counter-notice

Extra work or claiming benefits

Employees can take on another job whilst they are laid off or on short-time working (unless their employment contract states they must not). In this instance, employees should get their employer’s agreement, make sure they are not working for a competitor and make sure they are available for their original job once the lay off or short-time working period ends.

Employees may be able to claim benefits such as Universal Credit or ‘new style’ Jobseeker’s Allowance (or both) whilst they are laid off or on short-time working.  Further information on this can be found on gov.uk website.

Communication

In the event that an employer exercises their right to impose lay-offs or short-time working, it is best practice to meet with all employees as soon as practicably possible in order to advise them of this and to outline the business rationale alongside this. Employees should then receive confirmation of this in writing in order to ensure due process is followed, and HR Services Scotland Ltd can provide a number of various template letters which can support employers through this process.


If we can help you with this or any other HR issue, please do not hesitate to contact a member of our HR Team at HR Services Scotland Ltd on 0800 652 2610