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Introduction to this document

Lay-off and short time working clause

Consider inserting a lay-off and short time working clause into employment contracts enabling you to temporarily lay off an employee with no work and no pay, or to temporarily reduce their hours/days of work during a week with a corresponding reduction in pay.

No general right to lay off

You have no right to lay off employees without pay in the absence of an express term in the contract. Thus, where you do so, you will still be obliged to pay them their full pay, even if trading conditions are poor and even if you don’t have any work at all for the employees to do. If you fail to pay full pay in these circumstances, your employees will have a claim for unauthorised deductions from wages. They may also resign and claim unfair constructive dismissal if theyve been employed for two years or more. If your business may require lay-offs or short time working to be imposed from time to time, always include an express clause to this effect in employment contracts. That way, you protect yourself. Our Lay-Off and Short Time Working Clause provides that, in the event the employee is laid off, they won’t be required to work and their entitlement to pay during the lay-off period will cease and, in the event they’re put on short time working, their working hours will be reduced as you see fit and their entitlement to pay during the short time working period will be proportionately reduced. However, if they qualify, they will receive statutory guarantee payments at the prevailing statutory rate during lay-off or short time working for up to five workless days in any three-month period.

Right to a redundancy payment

Be aware that if an employee has been laid off or kept on short time working for four or more consecutive weeks or for six weeks in any 13-week period, they may be entitled to claim a redundancy payment from you if certain conditions are satisfied. Bear this in mind when reviewing the length of any lay-off or short time working period.