The current situation around coronavirus brings uncertainty for many organisations and it is inevitable that it will have a significant impact on the sustainability of some businesses.

Many employers are already exploring options for retaining their workforce during this pandemic and emerging economic impact.

Lay-offs, short-time working and alternative working arrangements are all measures that employers may be thinking about in order to manage their workforce over the coming months and protect the stability of their business in the long run.

Lay-offs The employer provides employees with no work and no pay for a period while retaining them as employees.
Short-time working Employers provide employees with less work and less pay for a period while retaining them as employees.
Why use them? They are both temporary solutions (and alternatives to redundancy) to the problem of organisations having no or less work and can be used by employers to manage an unexpected downturn in business.
What is the legal position?

In order to use lay-offs or short-time working, there must be an express clause in the contract of employment making provision for these.

It is very difficult to imply a right to lay-offs or short-time working.

It will be a breach of contract for an employer to lay-off employees or put them on short-time working without pay when there is no express or implied right to do so. This will entitle the employee to resign and claim constructive dismissal giving rise to claims for unfair dismissal and/or redundancy pay.

Given the present job climate, employees may choose to not resign and instead claim unlawful deduction from wages.

Guarantee payments and statutory redundancy payments

Employees may be entitled to guarantee payments if they are laid off or on short-time working.

Guarantee payments are £29 per day (£30 per day from 6 April) for a maximum of five workless days in a 3-month period (i.e. maximum payment of £145 over 3 months (£150 after 6 April)).

If an employee is laid off or kept on short-time working for either 4 consecutive weeks or 6 weeks in a rolling 13 week period, the employee is entitled to resign and treat themselves as dismissed on the grounds of redundancy. This means a statutory redundancy payment is payable (provided they have the requisite years employment).

The employee must follow the statutory scheme for claiming redundancy pay following lay-off or short time-working.

No contractual provision for lay-offs / short-time working

The reality is that many employment contracts so not include lay-off or short-time working provisions.

Given the current exceptional circumstances which employers and employees find themselves, clear communications and engagement is key. Employers should seek to engage, communicate and consult with employees to discuss the current situation and options available to safeguard employment and businesses –including seeking agreement to incorporate a laying-off and/or short-time working provision into the contract. With well-managed communication, a contractual change may well be agreed to produce a solution which works for both employers and employees.

If you are not sure whether your staff contracts of employment contain lay-off and/or short-time working provisions, please get in touch with our employment team and we would be happy to advise further.

Alternative working arrangements

If your organisation does not want to pursue lay-offs or short-time working, there are a number of alternative working arrangements that you can consider in order to manage a downturn in business.

These include:

  • Annual leave – employers have the right to tell employees when to use holiday. Employers could ask or instruct employees to use their annual leave entitlement over the coming weeks and months. Sufficient notice must be given.
  • Dependants leave – employees can take a reasonable time off to deal with an emergency or unforeseen situation. There is no statutory right to be paid during this period, although employers may wish to exercise some discretion.
  • Parental leave – up to 18 weeks and unpaid. This can be shared with a spouse.
  • Unpaid or paid leave – employers can agree with employees that they are to take a period of unpaid or paid leave. If this is agreed, it is important to ensure that it is time limited.
  • Other flexible working arrangements – other arrangements that suit the needs of your business can be considered and agreed with your employees. The key is ensuring that you appropriately consult with employees about any new arrangements before putting them in place and obtain their agreement.


For further advice about lay-offs, short-time working and alternative working arrangements, including how to communicate these issues to employees, please get in touch with our employment team.

Find out about our COVID-19 Advisory Service

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