Redundancy and short-time working
Contract and statutory issues relating to short-time working, including statutory guarantee and redundancy payments
Short-time working is where there is a reduction in the work provided for an employee in a week to the extent that their pay for that week is less than half a week's pay.
You can only put an employee on short-time working where you have expressly agreed it with them. Such an agreement may be set out in:
- their contract of employment
- a national agreement for the industry
- a collective agreement between you and a recognised trade union
National and collective agreements can only be enforced if they are included in the employee's contract of employment.
You may also be able to put an employee on short-time working:
- Where you have clear evidence that shows that short-time working has been a widely accepted practice in your organisation over a long period of time.
- If you agree with the employee to change their employment contract to allow them to be put on short-time working. This change will not necessarily give you the power to put the employee on short-time working without their consent in the future. Read more on how to change an employee's terms of employment.
Where there is no contractual agreement already in place and the employee refuses to agree to short-time working, you may have to consider other options which would include terminating the employee's original contract and offering them a new, revised one.
Terminating the contract would only be one of the options which the employer should consider.
However, this involves dismissing the employee and could lead to a claim of unfair dismissal.
Wrongful short-time working
You will be in breach of contract if you put an employee on short-time working without a contractual agreement or the employee has not agreed to it.
As a result, the employee may:
- choose to accept the breach of contract and treat the contract as continuing while claiming a guarantee payment
- sue for damages for breach of contract in a civil court or, in certain circumstances, at an industrial tribunal
- bring a claim of unlawful deduction of wages before an industrial tribunal
- claim that your action amounted to a dismissal which could lead to a claim of unfair dismissal and/or for a statutory redundancy payment (SRP)
Statutory guarantee payments (SGP) and short-time working
Eligible employees are entitled to statutory guarantee payment if you don't provide them with work on a day which they would normally be required to work. The maximum payment is five days in any three months.
Statutory redundancy payments (SRP) and short-time working
Employees can claim a statutory redundancy payment if the short-time working runs for:
- four consecutive weeks or longer, or
- any six weeks (with not more than three of the weeks being consecutive) in a 13-week period
Under the short-time provisions of the legislation, employees who are put on short-time and receive less than half a week's pay for four consecutive weeks, or any six weeks (no more than three of the weeks being consecutive eg the six weeks cannot be made up of a four week and a two week period) in a thirteen week period, may also claim a redundancy payment from their employer. The claim must be in writing and may be contested by the employer if normal working is likely to be resumed within four weeks and there is a reasonable prospect of work for not less than 13 weeks, during which the employee would not be put on short-time.
There is a strict timetable of requirements, one of which is the resignation of the employee, whereby the employee may ultimately complain to an Industrial Tribunal if they consider that they are entitled to a redundancy payment and it remains unpaid.
The employee must give you written notice in advance that they intend to make a claim for an SRP.
The Labour Relations Agency (LRA) redundancy webinar provides useful information on the topic of redundancy and how to ensure the redundancy process is managed fairly and in line with employment legislation.