Making staff redundant

Last updated: 8 December 2017

Lay-offs and short-time working

You can lay off an employee (ask them to stay at home or take unpaid leave) when you temporarily can't give them paid work - as long as the employment contract allows this.

Short-time working is when an employee has no paid hours for a number of working days in a week. This is because:

  • they're working a reduced number of paid hours
  • their pay is less than half a week's pay

Laying off staff or short-time working can help avoid redundancies - but you have to agree this with staff first.

This could be in:

  • their employment contract
  • 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're in the employee's employment contract.

You can find more information about collective agreements on GOV.UK

You may also be able to lay off an employee or put them on short-time working:

  • where you have clear evidence showing it's been widely accepted 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 laid off or put on short-time working (this won't automatically give you the power to do this without their consent in the future)

Statutory guarantee payments

Employees are entitled to these if you don't provide them with a full day's work during the time they'd normally be required to work.

The maximum payment is £24.20 a day for 5 days in any 3 months (ie £121). If employees usually earn less than £24.20 a day, they'll get their usual daily rate. For part-time workers, the rate is worked out proportionally.

Employees can claim a redundancy payment from you if the lay-off or short-time working runs for:

  • 4 consecutive weeks or longer
  • a series of 6 or more weeks with not more than 3 consecutive weeks - in a 13-week period

They must give you written notice in advance that they want to make a claim.

If they'll return to normal working hours within 4 weeks, you don't have to pay.

If you don't give guarantee pay to someone who's entitled to it, they could take you to an employment tribunal.

Wrongful lay-offs or short-time working

You'll be in breach of contract if you lay off an employee or put them on short-time working without pay if there's no contractual agreement.

The employee may:

  • accept the breach of contract and claim a guarantee payment
  • sue for damages for breach of contract in a civil court or at an employment tribunal
  • claim unlawful deduction of wages at an employment tribunal
  • claim unfair dismissal at an employment tribunal

There's more advice on lay-offs and short-time working on the Acas (Advisory, Conciliation and Arbitration Service) website.

Making staff redundant
Lay-offs and short-time working