Our client has asked about the prospect of placing their staff on lay off or short-time working whilst business is slow. What should they know about this?
Lay off or short-time working, collectively known as LOST, will be available to our client if they wish to address a temporary shortage of available work, without resorting to a redundancy procedure. Although they are often grouped together, there is an important distinction between the two that will be explained in more detail below.
Lay off will involve our client asking staff to stay at home and not attend work for a temporary period because they aren’t able to provide them with work to do. On the other hand, short-time working is when our client still requires their staff to do some work, however, this work is less than their normal contractual hours e.g. 5 days a week instead of 3.
If our client is interested in utilising lay off or short-time working they must first obtain their employees’ written consent, as trying to enforce LOST without this will be considered unlawful. It would help if our client already a specific LOST clause within their employment contracts, however, they can always look to gain employees’ consent at the time in question.
Gaining consent may prove difficult, as staff is unlikely to take kindly to the idea of a temporary reduction in work and overall pay, however, our client should consider persuading staff that this solution is much more favourable to redundancy, which may see them lose their job entirely.
It should be noted that our clients’ decision to place staff on LOST must be fair and non-discriminatory. Having said this, they are within their rights to decide to place less productive staff on LOST, in favour of their high performing colleagues, to ensure what little work is available is still completed on time.
Whilst placed on LOST, employees with one month’s service will be eligible to receive statutory guarantee pay (SGP) to compensate for the reduction in available work. Staff will be entitled to SGP for every workless day – this is a day in which they would normally be required to work but aren’t provided with any work by our client.
To calculate SGP you must multiply the normal hours that the employee would have worked on the ‘workless day’ by the ‘guaranteed hourly rate’. However, the most an employee can receive each day is capped at £29. The payment of SGP is also limited to a maximum of 5 days within any rolling 3-month period.
It is important that our client only utilises LOST for temporary work shortages, as employees can resign and claim redundancy pay if they have been placed on LOST for either 4 weeks in a row, or a total of 6 weeks in any 13-week period and are earning less than half their normal weeks’ pay. (1)
[1] Reproduced with permission of Croner Taxwise