When Can I Lay Off an Employee in England and Wales?

As an employer, you may have experienced times where your work is quiet or, in the worst-case scenario, almost non-existent. Where there is a temporary change to your workflow, it can cause problems for you, as you have little or no work to give to staff. However, you may have options during these circumstances, one of which is to lay off staff. However, a temporary lay-off should be the last resort, and you are required to consider other options before choosing this. When you decide to lay off staff, you should be aware of the rules. This article will explain to you when you can lay off your employees. It will explain what a lay-off is and the rules associated with this, such as any entitlement to pay.

What is a Lay-off?

Where you do not have enough work for your employees, you have the right to ask them for a temporary period not to come to work. Where you ask your employees to do this for one working day or more, it is considered a lay-off.

You should only lay off your employees as a last resort, potentially to avoid redundancies. Before deciding upon a lay-off, you should consider other courses of action that you must discuss with your employees. These are to:

• take holiday leave;
• work from home;
• work flexibly, or
• go on unpaid leave.

When Can an Employer Lay Off Their Employees?

You can only lay off your employees under certain circumstances. These are where either:

• the potential to be laid off is in your employee’s employment contract;
• there is clear evidence that lay off is custom and practice in your business;
• in your industry, there is a national agreement to carry out lay-offs if required;
• you agree with a trade union that lay-offs can take place; or 
• you and your employees have agreed that you can change their employment contract terms.

When you select your employees for a lay-off, you must ensure that you do not discriminate when doing so. You must not discriminate based on the nine characteristics protected by law:

• race, which includes colour, nationality, ethnic origin and national origin;
• sex;
• disability;
• pregnancy and maternity;
• age;
• religion or belief;
• sexual orientation;
• gender reassignment; and
• marriage or civil partnership. 

What is the Timeframe of a Lay-off?

There is no set time frame for a lay-off. It can be anything from one day to as long as you deem it necessary. However, it is also determined by your employees’ employment contract terms. However, where your employees are laid off for:

• four consecutive weeks; or
• for six weeks over a duration of 13 weeks,

they are entitled to apply for redundancy and also redundancy pay.

Are Employees Paid During a Lay-off?

You may decide to pay your employees full pay during a lay-off. Their contract will state whether they receive full pay or reduced pay. This is your own guarantee pay scheme. 

You can also detail within your employees’ employment contracts that you can call an unpaid lay-off. However, regardless of this, all employees are entitled to statutory guaranteed pay during a lay-off, even if your employment contracts state that they are subject to an unpaid lay-off. Where your employee carries out some work during the working day, they are not entitled to statutory guarantee pay.

Statutory Guarantee Pay

Statutory guarantee pay is a legal lay-off pay for your employees where you do not have your own guarantee pay scheme in place. It is a maximum of £30 a day. This amounts to £150 per week for three months. For your employees who work part-time, their rate is prorated.

Your employees are entitled to statutory guarantee pay where they:

• are legally classed as an employee;
• have continuously been your employee for at least one month;
• reasonably ensure they are available should you require them to work;
• do not reject any reasonable alternative work, regardless of whether or not you have stated this work in their employment contract; and
• are not laid off as a result of industrial action.

It is a legal requirement to pay your employee’s statutory guarantee pay. If you do not, it is considered an unlawful deduction from your employees’ wages, and they may claim you at an employment tribunal. Your employees may also be entitled to benefits whilst on a lay-off.

Can Employees Work Elsewhere When They Are Laid Off?

If your employees’ employment contract allows, they can carry out other work for another employer while laid off. However, if they do, they must:

• receive your agreement regarding the work first;
• ensure the work is not with a competitor; and
• ensure they are available to you at the end of the lay-off.

Key Takeaways

As an employer, you are responsible for giving your employees work to carry out. However, if you are unfortunately in a position where you have little or no work for your employees to carry out, you may have the right to lay off your employees. This will depend upon, for example, what their employment contract states or whether there is a national industry agreement to carry out a lay-off. Where you do lay off staff, rules apply to this, for example, in terms of guarantee pay. The minimum you are legally required to do is provide them statutory guarantee pay where they qualify for this. If you do not, you could face an employment tribunal.

If you need help understanding when you can lay off your employees in England and Wales, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.

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