Coronavirus: Can employers lay off staff or introduce short time working?

All businesses will be affected by the coronavirus crisis but we know that certain businesses, and indeed, whole industries, have been and will be affected more than others. Employers will be considering what they can do to keep their businesses going.

A huge financial support package is being worked on and employers should look at that carefully in the days to come to see how access to loans, business rate holidays and grants for retailers and pubs may help them.

Before making lay-offs, employers should consider the alternatives including: restricting recruitment, withdrawing job offers for new employees, deferring the start date for any new joiners, voluntary unpaid leave/sabbaticals, asking employees to take holiday (bearing in mind the employer needs to give 2 days’ notice for each day it wants the employee to take off) and overtime bans.

However, if employers suffer a downturn in work or need to close their businesses temporarily and need to lay staff off or reduce their hours, can they? Laying off employees is where the employer provides its staff with no work (and no pay) for a period while retaining them as employees. The employer can do this if there is a specific term allowing them to do this in the contract of employment.

Similarly, with short time working, an employer can reduce an employee’s contractual hours if there is a term in the contract which allows them to do so. If there is no term in the employment contract (and such a term tends to be found only in limited industries), the employer and employee can agree to a lay-off or reduction in hours and pay.

The employer should consult with employees (and any relevant trade unions or representative bodies) to see whether agreement can be reached. A voluntary discussion could also take place before any formal process is commenced.

Whilst employees and trade unions would not usually agree to such measures, there may be a willingness to agree in the current climate and particularly if the alternative is job losses or business closure.

If agreement cannot be reached, the employer may decide (following careful consideration) that it has to take the risk of acting in breach of contract and make the decision to lay off or reduce hours or proceed with a redundancy process.

There is no limit to how long an employer can lay off someone. The employee can apply for redundancy and claim statutory redundancy pay (if eligible) if s/he has been laid off for four weeks in a row or six weeks in a three-month period. If the employer does not pay them during the period of lay-off, then the employee will receive a statutory ‘guarantee pay’ (a low sum of a maximum of £29 a day for five days in any three-month period (pro-rated for part timers)).

If it is anticipated that the crisis is going to result in requiring a smaller workforce after the crisis abates, then the employer may need to consider making redundancies.

Details of the support available is here and will, no doubt, be updated regularly.

There is also guidance from ACAS for employers here

For further guidance and support on employment issues, please contact Emma or Louise using the below details.