My company is going through a difficult period and work is drying up. We may need to lay people off or put them on short-time. How do I go about this? Is there anything in particular I should be aware of?
Lay off or short-time working can be a useful alternative to carrying out redundancies, where you are experiencing a temporary reduction in work. Before you lay an employee off or put him/her on short-time working, you should check if you have the right to do so in the contract of employment. If there is such a right in the contract, then you can impose lay off or short-time working. Otherwise, unless you can establish a custom and practice of operating such a system, you would first need to obtain the employees' agreement to implement short-time working or lay off. Whilst it may seem unlikely, employees may agree to a period of short-time working or lay-off as an alternative to compulsory redundancies.
Employees have certain statutory rights where they are laid off or put on short-time working, as defined under the Employment Rights Act 1996. If, for example, an employee has no work to do in a relevant week, (and so receives no pay for that week), he/she may be entitled to receive a guaranteed minimum payment. This is currently £20.40 per day but is only payable for up to a maximum of 5 days in any 3 month period. Therefore, if, for example, an employee is laid off for 2-3 weeks, he/she would still only receive a total of £102.00 for that period. The employee may be able to claim benefits from the Government during the period of lay-off or short-time working.
You should also be aware that if any employee is laid off or put on short-time working for 4 weeks or more, then he/she may be entitled to serve notice on your company, to claim a redundancy payment. This involves a complicated statutory notice procedure and so if it is to be used, you should take specific advice. However, you should note that if the lay-off or short-time working could last 4 weeks or more, you may be forced by your employees to consider redundancies.
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