What is LOST?

Lay-Off: A lay-off is where employers are unable to provide any work, for various reasons, to an employee for an entire 24 hour period and the situation is expected to be temporary. It is not, as frequently thought, the same as dismissing someone through redundancy.

Short-Time Working: Short-time working occurs when employees are provided with work but this is less work than normal working hours e.g. they still work on all their normal working days, but for fewer hours.

Employers may occasionally experience downturns in demand but know that it will pick up again in the near future. One option open to employers to get through this period is to look at placing the workforce on lay-off or short-time working (LOST). By doing this, it allows employers to maintain employee’s employment but, at the same time, reduce the overheads at a time when money may be tight. Ultimately, what is happening is employees’ working hours are reduced to less than normal, or completely removed for a temporary period.

How is LOST implemented?

Ideally, the contract of employment will contain the right to implement LOST. However, if it does not, LOST can still be achieved where both parties expressly agree to it.

Employers should arrange an informal meeting to discuss the situation and tell employees that the contractual right to lay off will be invoked (ideally with as much notice as possible). Ensure minutes are taken of the meeting and are dated and signed by attendees. Then a letter should be sent to employees confirming the situation, detailing as exactly as possible how lay off or short time will be implemented e.g. whether hours are completely removed temporarily (lay off), or that reduced hours are to be worked, and by how much they will be reduced.

Are employees paid during LOST?

Employees who have at 1 month’s service when placed on a full day’s lay off will be entitled to Statutory Guarantee Pay (SGP). SGP is currently paid for a maximum of 5 workless days in any rolling 3 month period, at a rate of £26 per day for each day. If an employee only works 3 days a week, their maximum entitlement is 3 workless days in the 3 month rolling period. If a normal day’s pay is less than £26, the employee will receive their normal day’s pay as SGP.

Employees on short time working are entitled to be paid according to the hours they actually work. It is important that the contract refers to the right to reduce pay during LOST.