RENEWING CONTRACTS

“We have reserved the right in our contract of employment to lay-off an employee or put them on short-time working."

How much notice are we required to give the employee before we implement the lay-off or short-time working arrangement?”

There is no statutory right to lay-off employee or keep them on short-time working. An employer can impose a lay-off or short-time working arrangement generally only if there is a contractual right to do so or the employee has consented to it.

When it comes to what notice an employer is required to give to implement a contractual right to lay-off an employee or put them on short-time working, there is no legal requirement for there to be notice of any specific length. However, any contractual right to implement a lay-off or short-time working should be exercised in accordance with the implied term of trust and confidence. A serious breach of the term of trust and confidence where, in the manner it implements the lay-off or short-time working, the employer behaves in a way ‘which is calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee’, may give rise to a claim of constructive dismissal.

What would be considered reasonable behaviour on the part of the employer in this context is likely to depend on the specific circumstances. In the normal course, it may be reasonable, for example, to:-

  • meet with the affected employee(s) to explain the circumstances, and the proposal to implement a lay-off or period of short time working
  • provide information about when it will take effect, and for how long it is expected to last
  • give the employee(s) an opportunity to ask questions, raise concerns or make alternative proposals
  • explain what arrangements are proposed in relation to pay (bearing in mind any contractual entitlements in this regard), and if relevant, the process for claiming a guarantee payment.
  • give the employee(s) as much notice of the arrangement as possible
  • follow up in writing, confirming the outcome of the meeting
In Conclusion

Any conduct on the part of the employer to implement a lay-off or period of short-time working without warning or consultation will be scrutinised by an Employment Tribunal in the context of its overriding obligation to behave reasonably and sensibly, notwithstanding the existence of any express contractual right.

Source: Motor Industry Legal Services (MILS)