Following the pandemic, lots of employers revised their employment contracts and employee handbooks. To make it convenient for our clients, we have drafted important policies which we now offer on our website.
In this article, we talk about why it’s crucial to revise your contracts and policies in uncertain times. With the rate of inflation, we are all going to feel the squeeze this winter. With the cost of electricity and gas skyrocketing, many industries will need to make tough decisions to ensure their business survives.
This includes lay-offs and short-time work, which is why it’s more important to revise your employment contracts and ensure shortage of work clauses are included.
Does your employment contract allow lay offs and short-time working?
When business is going slow, and there is no work for your employees, it’s important to communicate to your staff and consider options that won’t be as harmful to either party. In such cases, you can offer unpaid leave, a holiday, hybrid working, working from home, or working with flexible hours.
As a last resort, and to avoid redundancy, an employer may either lay staff off (send them home temporarily) or consider short-time working, in which case the employees work reduced hours.
However, as an employer, you must ensure your employment contract includes this shortage of work clause; otherwise, it will be a breach of contract. Therefore, the correct procedure must be followed, and the safest way to rely on a shortage of work for a reason to temporarily or permanently lay off employees is to ensure it’s in their employment contract.
In what cases can you lay off employees or put them on short-time working
There are certain situations where an employer can lay off employees without breaching a contract:
- If it’s included in the employee’s employment contract
- If the employer and employee agree to make changes to the terms in the employment contract
- If it has been a common practice in the workplace
- If it is a national agreement for the industry
- Or if it is an agreement between the workplace and a trade union
Lay-off clause
Before you lay-off employees, you must first ensure a lay-off clause is included in your employment contracts. This clause covers anything from downturns in manufacturing to impacts from natural disasters like floods, earthquakes, fire and pandemic.
Simply put, having a lay-off clause means that you don’t have to offer work for a certain period and that you don’t have to pay employees during the lay-off time.
However, the employee may be entitled to a small “statutory guarantee payment” of up to £31 per day for five days in any 3-month period.
The employee may also be entitled to claim benefits like Universal Credit or Working Tax Credits. Another option is to allow them to use their holiday pay.
Deductions from salary clause
This is an important clause every employer needs to include in their employment contracts. Having this clause lets you make deductions from the employee’s salary for necessary reasons. For instance, you can make deductions in salary to cover the cost of lost or damaged company property.
Final thoughts
Even small businesses may need to lay off employees at some point. So whether you are restructuring, cutting costs or want to promote growth and development, you need to be prepared for this case scenario.
Therefore, you need to ensure your employment contracts and clauses are worded in a way to protect your business interests. For this reason, it’s best to hire a specialist to ensure your employment contracts are indisputable. Don’t hesitate to contact us if you need our legal advice and expertise on the matter.