The Sunday Times - Business Doctor: Lay-offs and short-time working

LT Writes: We have recently lost a client contract, which has decreased my workload significantly. There is a chance that work could pick up again, but this isn’t guaranteed. What can I do in this situation? Employers may think that there is no other option in this situation but to make employees redundant. However, if this is the course of action taken and then work does pick up again, the employer may not have the workforce available when needed to undertake the work. The best thing to do would be to place the employees on lay off. Lay off is the legal term for a period when no work is provided to the employees because there is no work to give them. They will not be required to attend work but must be available for work should it arise. Their employment is not ended by a period of lay off; they are still your employee and their length of service with you is not broken. The options available to you when you want to invoke a period of lay off are dictated by the employees’ existing contracts of employment, so this is where you should look first. Some contracts will reserve the right to place the employee on a period of unpaid lay off when there is no work available. In this case, the employee is not entitled to normal wages but is entitled to receive statutory guarantee pay for the maximum of one working week per 3 months of lay off. Statutory guarantee pay is currently £26 per day in Great Britain. If there is no ‘lay-off clause’ in the contracts allowing you to reduce pay, you are still able to place the employees on lay off, however, this will be with full pay. You should speak to the employees and inform them that you are placing them on lay off and then follow this up in writing. When work picks up again, you simply need to call the employees back to work. If work does not pick up again, a statutory scheme enables employees on lay off to claim statutory redundancy pay. They must first have served 4 consecutive weeks, or 6 weeks in 13 weeks and have at least 2 years’ service. If you cannot challenge the request by promising work, they will be entitled to receive redundancy pay and their employment will terminate.

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