Do you have a lay-off or short-time working clause in your employment contract?
With a period of economic uncertainty ahead, employers are certainly going to need to keep a strong control on their costs and be able to quickly address these should turnover start to fall.
All employers, but specifically SMEs, should take the opportunity now to consider inserting lay-off or short-time working clauses in their employment contracts to give them some degree of flexibility in their staffing costs without having to take steps to permanently reduce headcount.
Both lay-offs and short-time working are legally recognised tools to allow an employer to ask employees to remain at home for the short-term if there is not enough work for them to do. This could be due to a temporary reduction in work; a delay in securing a project; or a crisis such as a flood or fire. Lay-offs cover periods of time from 1 day upwards whereas short-time working is a reduction in the weekly hours. There is no maximum period for which you can lay-off or use short-time working however, after 4 consecutive weeks of lay off or 6 weeks of short-time working in any 13 week period, an employee can request that they are made redundant.
The real value of these tools is only realised however, if there is a contractual clause in the employee’s contract which states that the employer may reduce salary or not pay employees during lay-offs or short-time working. If there is no contractual clause, an employer can still use these but will be forced to continue to pay their employees as if they were working normally which rather defeats the object. If an employer does have a contractual clause, they may still be liable to pay employees a ‘guarantee payment’ however the maximum is £26.00 per day for 5 days in any 3 month period and hence a lot lower than most employees’ normal salary.
As well as adding this clause to contracts for new staff, they can also be inserted into existing employee contracts, however, it needs to be done with care and consultation. Streets HR would therefore recommend any employer looking to adopt these to get specialist advice to ensure the process is implemented with minimal risk.
Streets HR is a human resources solution that is only available to Streets’ clients and is tailored to suit individual client needs. Streets HR is provided by Beststart Human Resources and Irwin Mitchell Solicitors, a UK Top 20 law firm, who specialise in the education sector.
For further advice and guidance please contact Streets HR
No Advice
The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.
Information
The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.
Share this article