An employer may not always have enough work to go around. To lay off employees can help your company stay afloat during difficult times. However, there are legal guidelines to follow when letting staff go for a week or just a few days. If you do not handle your layoff process properly, you may face unfair dismissal lawsuits, compensation penalties, and commercial damages.
This article will explain what a lay off is, how it differs from short-term work, payment entitlement and pay for short-term working, the law regarding layoffs, and how to apply for redundancy.
What Exactly Is a Layoff?
A layoff occurs when an employer temporarily cuts an employee’s work hours or days. The length of the layoff will be determined by the gravity of the circumstances. For example, if a business does not have enough work, they may lay off a few employees for a few days or weeks. Employees are almost always expected to return to work. If this is not a possibility, their employer may have to consider permanently dismissing them.
Is There a Legal Time Restriction on Lay-offs?
There are no legal restrictions on how long an employee can be laid off. This applies to both layoffs and part-time jobs. Every company should make every effort to keep layoffs as brief as possible. If an employee is laid off or assigned to part-time work for an extended period, he or she may be able to file a constructive dismissal claim.
However, only employees with at least two years of service are eligible to file this type of claim with an employment tribunal. During their layoff time, employees are entitled to statutory guarantee compensation. Unless you have a contract condition that allows you to offer reduced compensation if necessary, they should get this as their full salary.
Employees with at least two years of employment may be eligible for statutory redundancy pay (SRP). They will be paid if they are laid off for:
- For four weeks in a row.
- Six weeks out of a total of thirteen weeks.
(The compensation standards are a little different when employees are permanently laid off or put on short-term employment.)
What Is the Law Regarding Workplace Layoffs?
The Employment Rights Act of 1996 (ERA) governs most layoffs and short-term employment conditions. They’re referred to as ‘LOST’ in legal parlance. An employer can only lawfully compel layoffs or part-time work if they have contractual authority to do so. This means that this explicit entitlement must be incorporated into an employee’s contract. Layoffs are typically seen in contracts with ‘ shortage of work’ clauses. Employees will have already done so.
If no contract clause exists, employees may agree to layoffs if it is a better choice than redundancy. An employer may be forced to lay off employees due to unanticipated business consequences. That is why it is usually advantageous to include an express contractual right in all employee contracts. Employees will benefit from this through temporary layoffs and short-term work periods. And offer them the necessary legal information and assistance.
What Exactly Is The Pay Entitlement?
While unemployed, an individual will be paid £29 a day for each unworked day up to a maximum of 5 days (whether consecutive or spread out). This £29 “guarantee pay” applies exclusively to an unworked day that would normally be working. As a result, if the worker is willing to accept shorter shifts, any working days of any length will be paid at the regular hourly rate and will not count as one of the five days. Any additional time is unpaid once they have received a payment of £29 for a maximum of five days.
A layoff may be eligible for benefits. Employees who do not meet the following conditions are not eligible for the £29 “guarantee pay” hours or shifts:
- Must have been continuously employed for one month or more (regardless of normal working hours or shifts)
- the employee is reasonably available to work throughout the layoff periods; the employee is not refusing to do any other reasonable alternative work that you may offer; and the layoff situation is not the result of industrial action.
- and their ordinary days’ pay exceeds £29. (If their usual working day salary is less than £29, they are entitled to their days’ pay for the five days.)
Pay For Working for a Short Time
Employees should be paid in full during short-term work unless otherwise agreed or their contract permits for unpaid or reduced compensation. Some employees are entitled to statutory ‘guarantee pay’ for days off work if they:
- Having been employed continuously for one month (part-time workers included),
- They are available for work
- will not turn down any reasonable alternative employment (including work not specified in the contract)
- have not been laid off as a result of industrial action
The statutory maximum amount of guaranteed pay is £30 per day for five days in any three months. If the employee makes less than £30 per day, they should be paid at their regular daily rate. Part-time employees’ entitlement will be computed pro rata.
Guaranteed pay is not provided on days when an employee works only a portion of the day.
If the employment contract includes a guaranteed pay system, it cannot be less than the statutory levels. Employees are not permitted to claim both contractual and statutory guarantee pay. If an employer fails to provide guaranteed pay, they may face a wage deduction claim.
Examples of Layoff
- Employee A worked 8 hours per day, Monday through Friday, and was willing to accept inevitable layoffs, and the employer had to lay them off immediately until further notice. For the first week, they would receive £29 each day, Monday through Friday. Any additional non-working days would not be eligible for the £29 payment.
- If Employee B worked 8 hours on Mondays every week and was willing to accept inevitable layoffs, but the employer could give them 4 hours on every alternate Monday, they would receive half their usual wage on working Mondays and £29 on non-working Mondays until they had received all five £29 payments, and any additional non-working Mondays would be unpaid.
- If Employee C worked 8 hours per day, Monday through Friday, as front of house and was willing to accept inevitable layoffs, but the employer was able to prevent their layoff by asking them to do reasonable alternative work back of house, which the employee refused, there would be no entitlement to any £29 “guaranteed pay” for any day where work could have been provided reasonably.
What Is the Difference Between a Layoff and a Short-Time Work Period?
People frequently mix up the phrases layoffs and part-time work. A layoff occurs when an employee is not given paid labour for at least one full working day. This could be because the company has to downsize or manage its workforce. Short-term work occurs when an employee works fewer hours than the typical working hours specified in their contract. Working three days a week (for six weeks in a row) instead of five.
Short-term work differs from layoffs in that the hours have been reduced but not completely ceased. The employee’s income and labour hours are still offered per week; they are simply less than before. Employees frequently accept layoffs or part-time work when offered. They perceive them as a stopgap remedy when there isn’t enough work. And they hope it will help them avoid forced redundancies in the future.
What Happens If Your Layoff Procedure Is Illegal?
If an employer fails to follow a fair and legitimate layoff procedure, it may face severe legal implications. Some layoff procedures treat employees unfairly in comparison to others (i.e., employees are selected unfairly). Discrimination based on nine protected characteristics is prohibited for all employees:
- Disability
- Age
- Gender transition
- Marriage and/or civil union
- Maternity and pregnancy
- Belief or religion
- Sex
- Sexual preference
If an employee believes they were mistreated during a layoff, they can file a complaint with an employment tribunal. They may investigate a constructive or unfair dismissal allegation, depending on the wrongdoing. If the employment tribunal finds clear evidence of unlawful discrimination, you may be ordered to pay unspecified monetary damages.
Along with financial penalties, an organisation may lose talented employees for good. Not to mention the reputational and productivity costs associated with employment tribunal processes. Combining your guaranteed pay system with regular payroll is a solid business practice. Keep in mind that you cannot pay them less than the required guaranteed payment amount.
If you do not give sufficient guarantee payments, it is considered an illegal wage deduction. Employees may also take this violation of the contract to an employment tribunal.
Remember that employees should be paid in full during their layoff or short-term working period. (Unless their work contract specifies otherwise.) Employees may choose to accept lower pay when they recognise how the firm is struggling.
Making a Redundancy Application
Even if your company is permitted to lay you off or place you on short-term leave, if it lasts long enough, you may be eligible for redundancy pay. However, this only applies if your wage is contingent on your employer assigning you work (for example, if you are a piece-rate worker). You must adhere to a strict procedure:
- In this situation, ‘laid off’ refers to being out of work for a whole week, while ‘ short-time’ refers to earning less than half of your weekly income.
- If you are laid off or on short-term leave for four weeks or more in a row or a total of six weeks or more in 13 weeks, you may be entitled to redundancy pay.
- To get the money, you must notify your employer in writing that you plan to claim redundancy and explain why within four weeks of the end of the layoff period for which you are claiming.
- If your employer sends you a ‘counter-notice’ that work lasting at least 13 weeks will be available within four weeks, you will not receive redundancy pay unless an employment tribunal rules in your favour.
- If your employer does not issue a counter-notice, you may resign and ask for redundancy pay.
If you are confused about how this process works, get guidance.
What Are the Three Different Sorts of Layoffs?
Employees are laid off involuntarily when a corporation needs to downsize its personnel. Employees who opt to leave the company because they have been offered a severance package are referred to as voluntary layoffs. Downsizing, right-sizing, and natural attrition are other sorts of layoffs.
What Is the Distinction Between a Layoff and a Retrenchment?
Layoffs are temporary suspensions of employees by their employers. The permanent termination of an employee is referred to as retrenchment. It usually happens as a result of financial difficulties or a brief corporate shutdown.
What Are the Negative Consequences of Layoffs?
Unexpected job loss causes substantial physical and mental suffering in displaced individuals and can have life-altering implications. Layoffs have been connected to sadness, anxiety, the onset of new health problems, substance addiction, violent behaviour, and self-harm.
Should I Include the Fact That I Was Laid off on My Resume?
First and foremost, here’s some encouraging news: If you are laid off, you may not need to mention it on your résumé. If your layoff was less than six months ago, you do not need to reveal it on your résumé.
Is It Preferable to Resign or Quit?
When negotiating the terms of your departure, you may be entitled to certain benefits, such as temporary health insurance. Another advantage of resigning is that you will not have to explain to potential employers why you were fired. When you resign from a job, you can phrase your exit in a favourable light.
Do Employers Mind if You’ve Been Laid Off?
While some hiring managers may recognise that a layoff is not always related to a worker’s performance, others may be wary of employing an employee who was fired for any reason, so it’s important to be smart in deciding whether or not to discuss it.
Can You Work Again After Getting Laid Off?
Before deciding that a layoff was a mistake, companies frequently rehire former employees as temporary workers. If you are now in this circumstance (working as a freelancer for your old employer) and have been given your full-time position back, you should be cautious about your future.
Conclusion
If your employer fires you, check to see if it is permitted under your contract or by law. You have the option of agreeing to alter your contract to allow for layoffs. Another alternative is to agree to take some annual leave instead of being laid off.
If layoffs are permitted, make sure your employer understands that you are still entitled to statutory guarantee pay. And If it is not permitted, you should be paid in full (unless you agree to accept less). If your employer fires you without compensation and you believe they have no right to do so, or if they fail to pay you guaranteed compensation, you can file a claim with an employment tribunal.
Related Articles
- Ways You May Be Alienating Your Employees & How To Stop
- What is PTO (Paid Time Off): A Complete Guide
- Chief Operating Officer (COO): Definition, Duties & Job Description
- Sick Pay Insurance: Income Protection Cover for Employees
- Office Christmas Party Ideas:
References
