How To Lay Someone Off Due To Lack Of Work

As an employer, you can lay someone off if you don’t have enough work for them. Lay-offs can be a convenient alternative to permanent redundancies if you expect the downturn in business to be temporary. However, you must ensure you are legally permitted to impose a lay-off and follow the correct procedure. If you don’t, you may face legal proceedings. Here, our expert HR specialists discuss how to lay someone off due to lack of work in a legally compliant way.

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What Is Laying Someone Off?

Lay-offs involve sending employees home temporarily because you currently don’t have enough work for them. You might use it as an alternative to having to make redundancies only to recruit when business picks up.

When you can lay someone off due to lack of work

You can only lay off employees when one of the following certain circumstances apply:

You are expressly permitted to do so by the employee’s employment contract
Lay-offs have been customary in your workplace for a long time, and you have evidence to prove it
There is a national agreement allowing lay-offs in your industry
There is an agreement between you and a trade union that permits lay-offs
The employee agrees to you changing the terms of their employment contract to allow lay-offs

If you lay an employee off when you don’t have the right to do so, the employee may be able to bring legal proceedings against you. For example, they might be able to claim that your actions amounted to a ‘repudiatory’ breach of contract which gives them the right to resign and claim damages for constructive dismissal. They may also be able to claim for unlawful deduction from wages.

What You Should Pay Your Employees During Lay-Offs

Your employees are entitled to full pay during the period for which they are laid-off, unless they agree otherwise, or their contract expressly states they won’t receive their normal salary.

You must pay your employees a legal minimum for the days they don’t work if they meet certain criteria. This is known as ‘statutory guarantee pay’. The criteria they must fulfil are:

They have been continuously employed by you for at least one month
They make sure they’re available to work when required
They don’t refuse reasonable alternative work
The lay-off wasn’t a result of industrial action

The maximum statutory guarantee pay is £38 a day for 5 days in a three-month period. If the employee earns less than £38, they’re entitled to their usual rate. Part-time workers are entitled to statutory guarantee pay in proportion to their hours.

You are at liberty to offer enhanced guarantee pay in an employee’s contract of employment of you wish. If you have done so, you must pay them in accordance with their contractual entitlement.

If you fail to pay an employee the guarantee pay that they’re entitled to either under statute or their contract, you may face a tribunal claim.

How Long Can You Lay Someone Off For Due To Lack Of Work

There are no limits on how long you can lay someone off for due to lack of work. However, employees with at least two years’ service are entitled to apply for redundancy and claim redundancy pay if:

They’ve been laid off for a period of four consecutive weeks or more, or
They’ve been laid off for six or more weeks in a 13-week period

Employees wishing to claim redundancy for prolonged lay-offs must write to you with notice of their intention to do so within four weeks of the last day of their lay-off. You then have seven days to accept their position or give them a written counter-notice. You can only give a counter-notice if you expect that work will be available within four weeks and will last for at least thirteen weeks. If it subsequently transpires that this isn’t the case, you can withdraw your counter-notice, at which point the employee can then hand in their notice and claim redundancy pay, provided they do so within three weeks.

How We Can Help

At GAP HR, we specialise in providing HR support to small businesses, specifically those that are owner managed. With decades of experience in all aspects of employment law and HR practice, we have a proven track record of keeping our clients legally compliant.

All initial enquiries are free and without obligation. We don’t operate multiple year policies since we want you to stay with us because of the value we add to your business, and we are proud to consistently receive positive feedback from our valued clients praising our ‘brilliant’ support and ‘clear direction’.