April 17, 2020

Layoff / Short-time Working is a temporary measure that an employer can use when there is a temporary shortage of work.

It is ordinarily used for an unforeseen circumstance, such as the current ongoing pandemic. 

This can help you avoid having to instigate more permanent measures such as redundancy. 

Contents

How To Initiate Layoff?

Layoff must be initiated by communicating the situation to your employees.

In the absence of an express clause within your employment contracts, you can approach your employees informing them of the situation and ask for their consent to initiate layoffs. 

We have found that many companies are having to approach staff with Layoff and that it is being met with understanding and sympathy, as of course, the only other option would be redundancy. 

What Is The Pay Entitlement?

While an individual is laid off, for each unworked day up to a maximum of 5 days (whether consecutive or spread out) will be payable at £29 per day. 

This £29 “guarantee pay” is only applicable to an unworked day which would ordinarily be working.

Therefore if the individual can accept reduced shifts, any working days of any amount will be paid at the normal hourly rate and not count as one of the five days. 

After they have received payment of £29 for the maximum five days, any further time is unpaid.

A layoff is subject to eligibility.

  • If an employee doesn’t meet the following criteria, they are not entitled to any £29 “guarantee pay” sum;
  • Must have been continuously employed for a period of 1 month or more (irrespective of normal working hours/shifts);
  • The employee is reasonably available to work throughout the layoff periods;
  • The employee is not refusing to carry out any other reasonable alternative work that you may offer;
  • The layoff situation is not due to industrial action; and
  • Their ordinary days’ pay exceeds £29. (if their ordinary working days’ pay is less than £29, they will be entitled to their days’ pay amount for the five days).

Layoff Examples:

  • If Employee A worked 8 hours each day Monday – Friday and was agreeable to inevitable layoffs, and the employer had to lay them off immediately until further notice. They would receive £29 each day Monday – Friday for the first week. Any further non-working days would not be entitled to any £29 payment.
  • If Employee B worked 8 hours on Monday every week and was agreeable to inevitable layoffs, but the employer was able to give them 4 hours on every alternate Monday; they would receive half their usual wage on the working Mondays’ and £29 for the non-working Mondays’ until they had received all five £29 payments and any further non-working Mondays’ would be unpaid.
  • If Employee C worked 8 hours each day Monday – Friday as front of house and was agreeable to inevitable layoffs but the employer was able to prevent their Layoff by asking them to carry reasonable alternative work back of house of which the employee refused; there would be no entitlement to any £29 “guaranteed pay” for any day where work could have reasonably been provided.

Ending Layoff

Hopefully by this point Companies will be getting back on track and able to reinstate employees.

But if an employee has received less than half their usual week’s pay due to layoffs / short-time working for a period of 4 or more weeks in a row, or 6 or more weeks in a 13 week period they can ask to be made redundant. 

This would be dealt with as a redundancy situation, meaning any employees with over two years continuous service would be entitled to a redundancy payment.

Government Closure

It is expected that if you are forcibly closed by the government that there will be some guidance on funding and how this is meant to be dealt with.

Sickness and Layoff

Please note that Layoff must be a genuine situation where there is no work for readily available employees to carry out their normal hours of work. 

If an employee is off ill, they are not readily available for work; therefore, Layoff guaranteed pay would not be appropriate until they were eligible (readily available). 

Any employee already off due to sickness cannot be subject to Layoff whilst they continue to be absent for sickness and their sick pay will continue as they are not available for work. 

Layoff cannot be initiated to avoid SSP or Company Sick Pay responsibilities.

Pensions and Layoff

Please also note that pensions contributions are still payable by the employer during Layoff if;

  • an individual is under a contract of employment as an employee or a worker; 
  • they earn £833.00+ in that month (may still be applicable if retaining some working hours); and,
  • they are aged between 22 and the state pension age.

Holiday entitlement and Layoff

An employee is able to request and take annual leave/holiday entitlement within this period of Layoff of which will be payable at their usual rate of pay. 

Recruitment and Layoff

If an employee has not yet started with the Company, but the Company does not have any work for them, there is the option to contact them and postpone their intended start date.

Make it very clear that employment hasn’t yet started to avoid any holiday accrual or begin the timer on the continuity of service. 

Alternatively, the offer of employment could be retracted due to uncertainty, and if the situation were to improve a re-offer could be made.

Permanent Closure

If a company is having to close rather than take temporary measures, Layoff would not be appropriate, and they should consider the redundancy procedure.

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About the author 

James Rowland

James is the Commercial Director at Neathouse Partners and regularly writes articles surrounding issues in HR & Employment Law. Outside of the office, James is a keen Cricketer, playing in the Cheshire League for Nantwich CC. He also loves going to watch his football team, Crewe Alexandra. Feel free to connect with James on LinkedIn.

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