We examine what routes are available in this situation – and if layoffs or redundancy become necessary, what the main considerations are.
Where home working is not possible, employers have the following options:
- Pay their employees whilst they do not work (which is not sustainable for a length of time).
- By agreement, pay employees a reduced rate of pay whilst they do not work, and permit them to take annual holiday on full pay despite it not having fully accrued.
- Lay off employees without pay (subject to the government grant announced on 20 March. Please read our analysis here).
- Make employees redundant.
Lay off occurs when employees are not provided with work by their employer, their pay is reduced, but the employment contract is not terminated by the employer as the situation is expected to be temporary.
The following points arise:
- There is no statutory right for employers to lay off employees without pay or reduced pay.
- Some employers may have a provision in their contract allowing for lay off without pay or reduced pay. If so, follow the provisions in the contract.
- If an employer needs to implement a lay off there is no minimum notice or information requirements that must be given to the employee, however it may be beneficial to consider the following when informing employees:
- meet with the affected employee(s) to explain the circumstances, and the proposal to implement a lay off period;
- provide information about when it will take effect, and for how long it is expected to last;
- give the employee(s) an opportunity to ask questions, raise concerns or make alternative proposals;
- explain what arrangements are proposed in relation to pay (bearing in mind any contractual entitlements in this regard), and, if relevant, the process for claiming a guarantee payment;
- explain that the arrangement may be more favourable than the alternative of being made redundant;
- give the employee(s) as much notice of the arrangement as possible;
- follow up in writing, confirming the outcome of the meeting.
If employers inform their employees that they are going to lay them off without pay or on reduced pay the employees can accept the lay off and treat the contract as continuing, but varied by consent.
If employees do not accept the lay off without pay and the employer goes ahead anyway, the employee can:
- affirm the original contract and sue for damages for breach of contract or claim that there has been an unlawful deduction of wages;
- claim the actions amounted to a repudiatory breach of the contract, giving rise to potential claims for breach of contract unfair dismissal and/or redundancy pay;
- claim statutory redundancy pay provided they have been laid off without pay, or had their pay reduced by more than 50%, for four consecutive weeks or for six non-consecutive weeks out of 13 weeks.
Employees must let employers know their intention to claim statutory redundancy pay.
An employee’s right to a statutory redundancy payment does not crystallise unless they terminate their contract.
Employers can respond to an employee’s intention to claim for statutory redundancy pay by serving a counter-notice in writing within a week of receiving the employee’s intention to claim. The counter-notice sets out what is known as the Special Defence that ‘normal work’ will be resumed within four weeks and will continue for at least 13 weeks after that.
‘Normal working’ means a period of employment during which there is no lay off or short-time working for any week
Employees may not initially want to accept lay off, but with the employment market being bleak, employees may consider it. It allows them continuity of employment and keeps open the prospect that pay will be resumed in the foreseeable future.
The Coronavirus Job Retention Scheme – how does it work?
Read our update here.
All content on this page is correct as of March 16, 2020.