Lay off and short time working
Lay off is a temporary measure where an employee is required not to do any work by their employer in any given week and does not receive any salary for that period. This is sometimes used interchangeably to refer to redundancies; however, this is not correct and lay-off is different to redundancy.
Lay-off may be very useful to achieve short or medium-term cost savings in response to a temporary reduction in demand for products or services. Whether the employer has the right to implement lay-offs and how swiftly they can expect to be able to do so will depend on whether the relevant contracts of employment have specific provisions which deal with lay-off.
Short time working is where an employer temporarily reduces an employee’s working hours, with a corresponding reduction in their pay to less than 50% of their usual salary. This could be through reducing the number of working days, reducing the length of working days or a combination of both.
Short time working provides the employer with the ability to reduce staffing costs whilst providing flexibility in deciding the form of working pattern. As with lay-off, whether the employer has the right to unilaterally impose short-time working and how swiftly they can expect to practically implement this will depend on whether the relevant contracts of employment contain a short time working clause.
Where there is a contractual right to lay off or impose short time working: There is no strict process which has to be followed. We would advise transparent communication and confirmation in writing.
Where there is no contractual right: Imposing these options without a contractual right to do so will be a fundamental breach of the employee’s contract of employment. In these circumstances the employee’s options are: accept the situation and keep working; claim for lost pay; resign and claim constructive dismissal. The best approach for employers in these circumstances is to instead seek to agree lay-off or short-time working arrangements with employees.
Selecting employees for lay-off or short time working: There is no prescribed method for selecting which employees are to be laid-off or placed on short-time working, provided that the employee cannot argue that the method of selection is discriminatory in some way. We would advise selection based on objective business reasons.
Entitlement to pay during lay-off or short time working: Employees must be paid for the time they work. Additionally, while on lay off or short time working, an employee is entitled to receive statutory guarantee pay for the first 5 workless days in any 3-month period. The maximum statutory guarantee pay in any 3-month period is £150 (i.e. £30 for each workless day up to a maximum of 5).
Entitlement to statutory redundancy pay: Once employees have been on lay-off or on short-time working for 4 consecutive weeks or for a combined total of 6 weeks during any 13-week period, they may seek to claim a statutory redundancy payment (provided that they have two years’ service). There is a prescriptive process for this – please seek advice.
Related FAQs
We have developed a Toolkit to help with these issues. The Toolkit contains:
- LO1 How to Guide: Lay off and short time working
- LO2 Letter directing employee to take annual leave
- LO3 Letter confirming lay off (contractual right)
- LO4 Letter confirming short time working (contractual right)
- LO5 Letter proposing lay off (no contractual right)
- LO6 Letter proposing short time working (no contractual right)
- LO7 Counter notice disputing entitlement to claim redundancy payment
- LO8 Script for announcing lay off or short time working (contractual right)
- LO9 Script for announcing lay off or short time working (no contractual right)
- LO10 Letter proposing reduction in working hours and pay
The cost of this Toolkit is £500 plus vat. If you would like to find out more about the Toolkit, please speak to your usual Ward Hadaway employment contact, or get in touch one of the contacts at the bottom of this page.
The Charity commission has issued the following guidance
https://www.gov.uk/guidance/coronavirus-covid-19-guidance-for-the-charity-sector
The Government’s Corporate Insolvency and Governance Act introduces amendments to the current rules for companies on holding meetings, to address the difficulties companies are facing due to the Covid-19 pandemic.
The new provisions apply to meetings held between 26 March 2020 and 30 September 2020 (referred to as the “Relevant Period”). Subsequent regulations by the Government can be used to shorten this period or extend by up to 3 months but not past 5 April 2021.
The provisions will have retrospective effect, so meetings that were held after 26 March 2020 that may not have met the usual legal requirements due to lockdown, will be validated under these new provisions. These provisions under the Act make amends to relevant legislation and override a company’s articles of association.
For general meetings and certain other meetings of companies, the Act states that:
- The meeting need not be held in any particular place;
- The meeting may be held, and any votes may be cast, by electronic means or other means;
- The meeting may be held without anyone being in the same place
- Persons attending the meeting no longer have the following rights: the right to attend in person, the right to participate in the meeting other than by voting, or the right to vote by particular means.
The aim of these changes is to facilitate virtual meetings, and remove the need for a physical venue.
Where a company was required to hold its AGM between 26 March and 30 September 2020, it can be held at any time before 30 September 2020. The Secretary of State has the power to make regulations to further extend the deadline.
Remote mediations have become increasingly popular as a way of settling a dispute before it goes to court. There are a number of ways in which you can mediate remotely, but the most common platform is Zoom, due to its easy-to-use nature and the ability to have ‘break-out rooms’. We have answered some FAQs and set out a quick guide to remote mediations below.
What is remote mediation?
- Mediation is a form of assisted negotiation, in which a neutral 3rd party mediator seeks to help the parties resolve their dispute. The process on the day is managed by the mediator and adopts certain key ground-rules. These are that discussions are private and cannot be referred to in court; and the process is entirely voluntary and non-binding, if and until a settlement is finalised. In the current pandemic mediations are now usually conducted remotely by video conference, instead of an in-person meeting.
- The structure of the mediation will depend on the matters that are in dispute. Before the mediation the parties will exchange their views in position papers and prepare a bundle of the key documents.
- Generally the parties will start the mediation in the same ‘room’ as the mediator, where they will be invited to set out their positions. The mediator will then put the parties into ‘break-out rooms’. These rooms serve as your own private ‘room’ which the mediator will join. You will therefore be able to have private discussions with the mediator without the other side being able to hear those discussions. The mediator will go between the ‘break-out rooms’ to discuss a party’s position further in order to attempt to reach a settlement.
- If an agreement is reached, at the end of the mediation the Settlement Agreement will be drafted. The Settlement Agreement works as an enforceable contract. The Settlement Agreement will outline the details of what has been agreed and the intentions of the parties, such as any actions required, payments to be made and appropriate timescales. Each party will sign the Settlement Agreement, which can be done electronically.
- It is not always possible to reach a resolution/agreement by mediation, but the mediator serves as an impartial third party in order to aid the process. If no agreement has been reached, the mediation may still prove useful as it will give you a better understanding of the other side’s position.
What should I do before the mediation to prepare?
- Ensure that you are in an area with minimal distractions. Mediation is a confidential process, so make sure that you are in a private location.
- Ensure that your microphone and camera work and that you have access to the online platform that will be used. We send our clients a link to the website in advance so that this can be tested out.
- Consider any agreed dress code and dress appropriately.
- Have a copy of the mediation bundle to hand, whether in hard or soft copy, and be aware of what documents are in there.
Any tips on what to do on the day?
- Remember to make sure that before you have any private conversations with the mediator you are in your break-out room.
- You may contact the mediator whilst being in the break-out room. On Zoom there is an ‘Ask for Help’ button on the screen. The mediator will then be prompted to join your room.
- Ensure that you inform the mediator if you or others enter/leave the room. It is important that the mediator knows who is present.
- Be mindful of body language and facial expressions as these can appear more enhanced on the screen, and they are easier to pick up in a remote mediation.
- Stay calm and focussed at all times. When you have a dispute it is sometimes tricky to maintain a calm manner, but this is always vital in attempting to reach an agreement.
- When engaging with the mediator avoid any external distractions such as text messages and emails, as it may come across that you are not interested in the process. It is important to pay attention so that you do not miss any dialogue which may be key to any agreement that is reached.
- When you are in the break-out room without the mediator make sure that you take breaks and keep refreshed, as virtual mediations can be tiring.
Yes, however holiday pay during furlough must remain at the normal rate of pay and not the reduced furloughed rate. You can still claim for this period under the scheme but you will be responsible for any amounts beyond the maximum you can claim. Employers have flexibility to restrict when leave can be taken both during and after period of furlough in the normal way.
If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then you would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu.