The law

A lay-off is defined in section 147 of the Employment Rights Act 1996 (ERA 96) as a situation where an employee is employed under a contract for work in return for pay, but the employer does not offer work and the employee is not entitled to be paid.

Short-time work is defined as a situation where, “by reason of a diminution of the work provided for the employee” by the employer, the employee’s pay is less than half a week’s pay.

Courts usually interpret the rules giving employers the right to lay-off quite restrictively. It is important that union reps carefully examine any proposals for lay-offs or short-time working before agreeing to them. Without a pre-existing agreement permitting short-time working or lay-offs, the employer is likely to be in breach of contract by insisting on either step without consent.

Employers can only lay-off employees or place them on short-time working with their agreement. This can be either:

• in the existing employment contract (either an express term, implied through custom and practice or incorporated via a collective agreement); or

• agreed through negotiation to respond to an immediate situation (typically to reduce the likelihood of redundancies).