Employment: Coronavirus (COVID-19): Lay-off and short-time working

James Tunley explains how employers can avoid redundancies by introducing lay-off’s and short-time working during Coronavirus (COVID-19).

Laying off employees or switching to short-time working are two measures employers can take to avoid redundancies.

Employers can lay someone off without pay where there is an express contractual right to do so). It cannot be imposed unilaterally. Therefore, and in the unlikely event that an implied right has arisen though a long-established custom and practice, it will be a matter of negotiation and agreement, which may be forthcoming where there is a stark choice between being laid off and redundancy.

In the absence of a contractual term or agreement, employees are entitled to their full pay. To assist, the Government’s Coronavirus Job Retention Scheme, which is backdated to cover the cost of wages from 1 March 2020, will cover the cost of 80% of employees’ wages. This is subject to a cap of £2,500 per month. Employers will need to designate affected employees as ‘furloughed workers’ and submit pay information to HMRC through a new portal to be set up imminently.

Even businesses that remain open will see a downturn in business as a result of this pandemic. They may seek to reduce their business costs by putting employees on ‘short-time’ working and reducing their hours.

As with laying off employees, the employer needs a contractual right to do so otherwise they may face claims for unlawful deductions from wages, breach of contract, or constructive dismissal and a redundancy payment on the basis that they are dismissed by reason of redundancy.

For the purposes of redundancy under the Employment Rights Act 1996, short-time working is defined as being on less than half of the normal week’s pay (Section 147). If that definition is met, then the employee is eligible for a redundancy payment if there have been six or more weeks of short-time working in any 13-week period. Ultimately the employee must resign but to seek a payment they must, after the relevant eligibility has arisen, give written notice to their employer of their intention to claim a redundancy payment in short-time.

An employer can serve a counter-notice within seven days, but to avoid liability for a payment they must be able to show they reasonably expected to provide at least 13 weeks’ continuous work within the following four weeks. No-one knows how long the current public health measures will remain in place but from every perspective, one can but hope that any such expectations prove reliable.


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