Disclaimer: These FAQs are intended to provide information and guidance on the HR and employment law implications of the Covid-19 situation. They do not constitute legal advice and should not be relied upon as such.
Lay-off and short-time working
Last updated: 21/10/2020.1. What if we need to temporarily close our business and send staff home, e.g. because of supply chain disruption, or reduced demand for products or services? (Last updated 21/10/2020)
Today’s supply chains are increasingly global in nature and many are therefore vulnerable to potential disruption due to Covid-19, e.g. if factories are located in countries operating strict lockdowns and are therefore unable to fulfil orders.
If UK businesses are therefore unable to obtain parts in sufficient volume, they may need to consider closing some of their production facilities or reducing production – not because of the virus itself but because they will not have the parts they need to continue production at normal levels.
Since it was introduced in March 2020, furlough under the Government’s Coronavirus Job Retention Scheme (the CJRS) allowed many employers to avoid implementing lay-off or short-time working arrangements. However, with the CJRS ending on 31 October 2020, employers whose business is still suffering decreased demand may need to consider temporarily laying off their employees, or putting them on short-time working. Note, however, that if you are thinking of implementing short-time working, you may wish to consider whether you can use the Government’s Job Support Scheme (JSS), which is available for six months from 1 November and provides Government funding to support employers to retain employees in ‘viable’ jobs on reduced hours. We summarise the JSS here and will produce specific FAQs on the JSS once detailed guidance is published.
Contractual clauses expressly permitting lay-off or short-time working are relatively rare in practice.
Employers that impose a lay-off or short-time working without contractual authority to do so could potentially face claims for unlawful deductions from wages, breach of contract, or even constructive unfair dismissal.
If an employee is already on sick leave when lay off/short-time working begins, whether because they are self-isolating or for another reason, then they cannot be on put on lay off or short time working at the same time.
Employees will understandably be concerned about any temporary closure decision; good communications, which explain the reasons for the business closure and commit to keeping staff updated on a regular basis will therefore be key to reducing anxiety and maintaining good employee relations.