Every business goes through ups and downs and sometimes needs to make cuts when there is less work. In this case a 'lay-off' may occur. This means that employees are not provided with work (and possibly pay) by their employer, and the situation is expected to be temporary. However, they are still generally retained as employees and not dismissed.
A lay-off is where employees are not provided with work by their employer and the situation is expected to be temporary. For example, if a place of work needs to be temporarily closed for office refurbishment or construction works.
Short-time working occurs when employees are laid off for a number of contractual days each week, or for a number of hours during a working day.
There is a general right to tell most employees not to turn up for work but there is no general right not to pay them because work is not available.
To lay an employee off there must be an express contractual right under their contract of employment. Alternatively, there may be an agreement covering the issue between the company and the union, or a national agreement for the industry which the employer follows. Such an agreement has contractual force only if it is incorporated into the individual employee’s contract of employment.
The right to lay off an employee may also be implied if it can be shown that it has been established over a long period by custom and practice. There must be clear evidence that this is customary and has been established over a long period of time.
An agreement may be reached by the employer and employee to alter the terms of the contract to allow lay-offs by mutual agreement. Any such agreement will only be valid for that one particular situation where the employer and employee have agreed. However, this will not necessarily mean that the employee has agreed to allow future lay-offs without pay.
Both parties may agree to alter the contract terms so that the lay-off is not a unilateral act by the employer but by mutual agreement (for example, where the only alternative is redundancy). For more information, read Change of employment terms.
An employee who is laid-off or put on short-time working may be entitled to apply for a statutory redundancy payment in certain circumstances, subject to meeting relevant statutory conditions.
Alternatively, they might be entitled to a statutory guarantee payment from the employer, limited to a maximum daily amount over 5 days in any period of 3 months. The daily amount is subject to an upper limit which is reviewed annually. On days when a guarantee payment isn't payable, it may be possible to claim Jobseekers Allowance through the local Jobcentre Plus office. For more information, see the Government guidance.
Where the lay-off amounts to dismissal, the employees may have an entitlement to redundancy pay or, subject to certain conditions, they may be able to complain of unfair dismissal to an employment tribunal.
How long lay-off lasts also will also depend on the terms specified in the contract.How long lay-offs may last will also depend on the terms specified in the contract.
This may be considered a breach of contract. This may lead employees to resign and claim constructive dismissal in response to a breach of contract by the employer.