Considerations When Making Temporary Lay-Offs in England

Running a business and employing staff is not always easy. There may be times when business is slow, and you simply do not have enough work for your employees. When this occurs, you may find that you need to consider temporary lay-offs. There are legal considerations to note as an employer if you are engaging in temporary lay-offs. Otherwise, you could risk consequences such as a claim in an employment tribunal for constructive dismissal. This article will explain temporary lay-offs in England. 

What is a Temporary Lay-Off?  

A temporary lay-off is where you temporarily send your employees home for at least one working day as you do not have any work for them to do in their job. Alternatively, you may introduce short-time working, which is asking your employees to work fewer hours. If you temporarily lay off your staff, it is usually a short-term situation, but there is no legal time limit. 

However, you should note that if you lay off employees for more than 4 weeks consecutively or a total of 6 weeks in 14 weeks, your employee may legally apply for redundancy and redundancy pay. It follows that a temporary lay-off should only be short-term. 

When you carry out temporary lay-offs, your staff can build up their holiday entitlement as though they are still physically carrying out their job role.

What to Consider Before Temporarily Laying-Off Staff

If you are thinking about temporary lay-offs, you should consider if you can take alternative actions. For example, your business could:

• ask employees to take annual leave;
• ask your staff to work from home;
• introduce flexible working; or 
• ask staff to take unpaid leave.

In addition to considering alternative options, you should check that you have the legal right to lay off staff temporarily. No law states that you can carry out temporary lay-offs as an employer.

You can only legally temporarily lay off staff if one of the following applies:

• you can demonstrate that it is the custom and practice of your workplace to do so;
• the industry you work in has a national agreement stating that you can; 
• you and a trade union have an agreement in place to do so; or
• your employee’s employment contract states that you can or have agreed with your employee that you can change their terms and conditions to include this.

If you temporarily lay off your staff where your employment contract does not state that you can, and you have no other legal right to do so, your employees could claim constructive dismissal. In this scenario, an employee would claim that you have broken the terms of their employment contract.

Pay and Temporary Lay-Offs

If you are thinking about temporary lay-offs, you must still pay staff their full pay during this period. The only reason you may not have to is when you have:

• agreed with your employee that you will not do so; or
• stated in their employment contract that they can be unpaid or given reduced pay.

Where your employees do not carry out any work for a full day, and you do not pay them for the temporary lay-off, they may still have a right to ‘statutory guarantee pay’. This is £31 per day for five days within three months, but you can pay your staff more. Your staff may have the right to this if they:

• are legally an employee;
• have been employed by you for at least one month continuously;
• have not refused any alternative work you offer within reason; and 
• are not laid off as a result of industrial action.

Further, if you agree to a reduced pay with your staff in their employment contracts for days when you temporarily lay them off, it cannot be less than the statutory guarantee pay.

Key Takeaways

Before laying off your staff, there are many legal considerations to note. For example, you need to check that you are legally allowed to temporarily lay off your staff, as it will depend on your employment circumstances. You must also consider alternatives to temporary lay-offs, such as reducing employees’ hours. Finally, it is essential to know that temporary lay-offs are just temporary – anything more permanent becomes a redundancy situation.

If you need help understanding temporary lay-offs in England, 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. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions