Ask The HR Expert: 'Lay-off' periods

Peninsula Team

December 09 2011

What happens when bad weather means I don’t have any work for my staff to undertake and I don’t have any express rights in my contracts of employment? Occasionally, circumstances beyond an employer’s control may mean that there is no work that they can give their employees to do. This may result in a period of ‘lay off’. This can include times when, for example, a contract has been lost and there is some time until the next contract starts, or, as has been a frequent event in the last couple of years, freak weather stops businesses from being able to operate fully or even open at all. The question of whether employees are entitled to be paid during a period of lay off is generally determined by looking at their employment contract. Some contracts contain what is known as a lay off clause which will stipulate that during times of lay off, the employee is not entitled to be paid. The employee is, however, entitled to guarantee pay, the amount of which is set by the government at a low daily amount and its rules mean that it is only due to be paid on certain days. Without this reservation being part of the employee’s existing contract, the employer cannot generally withhold any money during times of lay off – the employee is entitled to receive full pay although they are doing no work. So, the employee’s contract must contain this term. However, terms and conditions of employment do not always have to be written down on a piece of paper. Some terms of employment can be ‘implied’ which means that they are not written down – they are simply taken to exist without actually ever being spoken. It is, however, not easy to show that a term is implied into a contract and it is especially difficult to establish that a lay off clause is present. This task is much easier in certain industries, for example, the construction industry. A tribunal – for it is a tribunal who would have final say over whether a term was implied or not – would be more likely to agree that it was present in relation to such an industry rather than others. In this case, employers could rely on this unwritten term to pay only statutory guarantee pay. If the term cannot be implied in the current contract, employers could attempt a variation of contract to newly insert the clause into the employee’s terms and conditions. This should only be done by mutual agreement which means getting the employee to give their consent to the insertion, after which the employer will be able to rely on the clause to lay the employee off without pay other than statutory guarantee pay. Whilst it is likely that employees will not agree to this change to their contract, some may see it as a better alternative to redundancy, which ultimately may well be the only other option. If none of the above are viable options, attempt to find any other alternative work within your organisation that could be done while you are waiting for full work to be able to start again so that some work can be offered in return for payment. This is easiest done if you have a flexibility clause in your contracts, or even a mobility clause which reserves your right to send employees to carry out work elsewhere, for example if you have more than one site. If you only have a single workplace, would it be possible to ask your staff to help move snow, or help out in some way in preparation for full operation once again? You should always consider health and safety implications of such work. Failing all else, without either an express or implied clause in a contract, employees should be paid their full pay during times of lay off. To do otherwise may result in an unlawful deductions claim at tribunal. If you have any queries regarding this issue please call our 24 Hour Advice Service on 0844 892 2772.

Suggested Resources