Lay-offs and short-time working
Employers' rights to lay employees off or to put them on short time, and the rights of employees in such circumstances.
"Suspension of employment and short-time working by reason of the unavailability of work are of particular importance in relation to hourly-paid and piece-rate employees. For employees who are paid a remuneration calculated on a weekly or monthly basis are normally protected against short-term suspension or short-time working in that their remuneration will not generally be affected by the fact that work is not available for them."
(M R Freedland in The contract of employment, Oxford University Press 1976, p.92)
Colloquially, most people understand the term "lay-off" to mean redundancy. A lay-off can also be taken to mean "a dismissal plus the prospect of re-engagement when more work is available" (Jewell v Neptune Concrete Ltd). In this article, however, it means the suspension of a contract of employment when work is unavailable. The contract subsists but the employer neither provides the employee with work nor pays him or her under the contract. That is the "well-established legal meaning" of the term (Waine v R Oliver (Plant Hire) Ltd). It has a more restricted meaning, however, for redundancy payments purposes (see below ).
Work may be unavailable due to adverse trading conditions, the time of year (if the work is seasonal) or a shortage of materials or supplies. Other causes of lay-offs include severe weather; fire or flooding; unsafe working conditions; breakdowns of machinery; power supply failures; and industrial action. A lay-off may also be caused by a shortage of cash (Johnson v Cross) or a voluntary closure of the workplace (that is, the employer may choose not to provide the employee with work if it is not profitable to do so for some reason).
"Short-time working", throughout which the contract of employment continues, means working fewer hours or days than normal, for proportionately less pay, because of a shortage of work. The term "short time" also has a special meaning for redundancy payments purposes (see below ).
Lay-offs and short-time working are alternatives to redundancies, although neither will necessarily avoid liability to make redundancy payments (see below). Employees who are laid off or kept on short time may also be entitled to statutory guarantee payments (see below) and/or a jobseeker's allowance (see below ). Before examining those rights in detail, we will consider the nature and extent of employers' rights to lay employees off or to put them on short time.
RIGHT TO LAY OFF
A lay-off may be lawful because of an ad hoc agreement between the parties to the contract of employment. But the employer has no right unilaterally to lay the employee off in the absence of an express or implied term of the contract of employment which entitles it to do so in the circumstances (D & J McKenzie Ltd v Smith).
Rarely does a contract of employment itself contain an express term entitling the employer to lay the employee off. In practice, the source of an express right to lay off is usually a collective agreement at industry or company level, known as a guaranteed week agreement ("GWA"), which is incorporated into individual contracts of employment. A right to lay off may be implied into a contract of employment, if it is consistent with the express terms of the contract and capable of being expressed sufficiently clearly and precisely, from three different sources.
Guaranteed week agreements
A GWA guarantees employees to whom it applies a minimum wage, which is usually a percentage of their basic wage, payable for a maximum number of workless days or hours. To be eligible for the guarantee, employees must be capable of and available for work and, when work of the kind which they are employed to do is unavailable, willing to do such other work as their employer may reasonably require. They may also need to have worked for their employer for a minimum period.
The guarantee is intended to protect employees in the event of a temporary shortage of work. There is no point in a guaranteed minimum wage if it is not to be paid when there is insufficient work to enable employees to earn more on time rates: that is the one time when it is needed. Further, cogent evidence would be required to support the conclusion that employees had agreed to forgo their rights to it (Powell Duffryn Wagon Co Ltd and another v House and others).
However, an employer is commonly entitled to "suspend the guarantee" (that is, to lay employees off) when work is unavailable owing to industrial action or "circumstances outside the employer's control". That expression, if undefined, is likely to be construed as excluding lack of demand for the employer's products or services. The employer may also have the right to suspend or proportionately reduce the guarantee where employees agree to work short time.
Suspension of the guarantee may require the employer to give notice or it may be automatic. However, in Johnson v Cross the EAT held that, in the absence of an express or implied agreement, no employer has the right to lay an employee off with less than one week's notice or one week's pay in lieu of notice.
An employer also has no right to lay an employee off under a GWA unless the GWA is incorporated into the contract of employment. In Jewell, an industrial tribunal found that a GWA which gave employers party to it a right to lay off was not incorporated into a labourer's contract of employment. His employer was not a party to the GWA, and the contract did not refer to it. The contract, which provided that "rates of wages are based on the National Federation of Building Trade Employers", merely referred to the yardstick of wages paid in the industry.
Once a collectively-agreed right to lay off has been incorporated into a contract of employment, it remains part of the contract despite the employer's subsequent resignation from the employers' association which is a party to the GWA (if that is at industry level), or its subsequent withdrawal from the GWA (if that is at company level), until such time as the parties to the contract agree to vary or cancel it (Burroughs Machines Ltd v Timmoney and others).
A final point to note is that, on the application of all the parties to a GWA, the Secretary of State may make an order under s.35 of the Employment Rights Act 1996 (the ERA) excluding employees covered by the GWA from the right to statutory guarantee payments (see below ). The Secretary of State must not do so, however, unless the GWA either provides complaints procedures which include a right to independent arbitration in the event of deadlock or indicates that an employee may complain to an industrial tribunal, which would then have jurisdiction over the complaint.
There are currently 26 guarantee payments exemption orders in force, which the Secretary of State may vary or revoke on an application by all or some of the parties to the exempted GWA or of her own accord. An unexempted GWA supplements rather than replaces the entitlements (if any) of the employees concerned to statutory guarantee payments.
Scope of express right
An express right to lay off is likely to be construed restrictively. In Jewell, for example, the contract of employment referred to "temporary lay-off due to inclement weather or similar". The tribunal found that the words "or similar" did not give the employer the right to lay the employee off because of a lack of orders. The reason had to be something similar to inclement weather.
In Neads v CAV Ltd, a GWA incorporated into a maintenance setter's contract of employment guaranteed him earnings equivalent to his time rate for 40 hours in the event of work not being available on all or some of the five days on which he normally worked in a week. The GWA also provided that the guarantee would be automatically suspended in the event of "dislocation of production in a federated establishment as a result of an industrial dispute in that or any other federated establishment." As a result of such a dispute, the flow of production to the employee's department was affected and he was laid off for two days.
The High Court held that the GWA was intended to suspend the guarantee only where no work was available for a particular employee. It was not intended to give an employer a general right to lay off wherever it could point to some dislocation of production caused by an industrial dispute in a federated establishment. Here, the employee was fully engaged on part of his normal work for the two days on which his employer purported to lay him off. Therefore, the GWA did not apply; and the employer was not justified in laying the employee off while work was available.
In Minnevitch v Café de Paris (Londres) Ltd, a band leader's contract of employment with a restaurant contained a "no play, no pay" clause. The restaurant refused the band permission to perform on a Monday night, after the news had spread that King George V's condition was serious; and following the King's death, the restaurant was closed for the rest of the same week. The High Court held that, in the circumstances of the Monday night, it was not reasonably possible for the restaurant to allow the performance, which was of a humorous character, to be given - even if the band had been willing and able to give it.
It may also have been reasonable that the restaurant should have closed on the Tuesday night, since all theatres were closed on that night and theatregoers formed a large part of the restaurant's clientele. But the High Court found no justification or excuse for the restaurant's refusal to allow the band to perform on the following four nights. It was unlikely that there would be many diners, but the restaurant had engaged the band leader for the week and he had to pay the other members of the band whether they performed or not.
Duration of lay-off
The EAT has held that, unless a time is specified in an express term of a contract of employment entitling the employer to lay the employee off, the law implies that any lay-off is to be for not more than a reasonable time (A Dakri & Co Ltd v Tiffen and others). In that case, the contract of employment of each employee of a rag trade firm contained an express term that "if there is a shortage of work or the firm is unable to operate because of circumstances beyond its control it has the right to lay you off temporarily." Thus, if there was a shortage of work, the employer would not be in repudiatory breach of contract if it did not provide work for its employees or pay them for a reasonable time.
What is a reasonable time is a question of fact for the industrial tribunal. In the context of the rag trade and the employees' modest rates of pay, which made it unlikely that they would have savings sufficient to support them through a long period without pay, the EAT held that four weeks was the longest reasonable time for them to remain workless or payless without this being a repudiatory breach of contract on the employer's part.
In Kenneth MacRae & Co Ltd v Dawson, by contrast, a different division of the EAT held that, where an employer had an express contractual right to lay an employee off indefinitely, the employer was not normally to be regarded as in repudiatory breach of contract simply by virtue of the passage of time. If a laid-off employee thought that too long a time had elapsed, his or her remedy was to invoke the statutory procedure for claiming a redundancy payment once he or she had been laid off for the prescribed period (see below ).
Insofar as the decision in Dakri suggested that in every case that remedy could be ignored in favour of an overall test of reasonableness, the EAT in MacRae disagreed with it. Despite that, however, the EAT did not think that, on the peculiar facts of Dakri, the decision in that case was in conflict with its own decision. In Dakri, the employees had sought to invoke the procedure in question, which may have been thwarted by their employer's unreasonable attitude.
In Window Centre Ltd v Lees and Lees, yet another division of the EAT considered an express term identical or similar to the one considered in Macrae, which read:
Temporary lay-off
Where work is temporarily stopped or is not provided by the employer and a pay week during which the operative actually works is followed by a complete pay week during which, although remaining available for work, he is prevented from performing actual work, he shall be paid for that pay week his guaranteed minimum weekly earnings ... Thereafter, and while the stoppage of work continues and the operative is similarly prevented from actually working, he may be required by the employer to register as an unemployed person ...
The EAT held that the term only entitled the employer to lay the employee off for a limited period of time, and not indefinitely. Further, a lay-off lasting four months was not "temporary" within the meaning of the term.
Sources of implied right
We now turn to the three situations in which a right to lay off may be implied into a contract of employment. First, a right to lay off may be implied from a general usage or custom of a particular trade or locality that is "reasonable, certain and notorious" (Devonald v Rosser & Sons). It is for the employer to prove the existence of such a custom, and an industrial tribunal cannot draw on its own industrial knowledge (Freeman v B S Eaton Ltd).
Further, the custom becomes part of a contract of employment only if it is proved to exist at the time the contract was made (Topp v Birchwood Boat Co Ltd). Whether or not there is an implied right to lay off depends on what the expectation would have been, according to the customs of the trade or industry in which the employee is employed, as to the terms on which an employee in the employee's position was to be employed at the time his or her employment began (Waine).
In Devonald, the High Court recognised a custom of the tin-plate trade in South Wales entitling owners of tin-plate works to lay pieceworkers off on grounds including breakdowns of machinery, repairs and lack of water or coal. But one such owner failed to prove the existence of a custom that it could lay pieceworkers off because of a lack of remunerative orders. The Court of Appeal held that this alleged custom was neither reasonable nor certain, because it was precarious, depending entirely on the will of the employer. It left it entirely at the employer's discretion to say what was remunerative and what was not. The alleged custom was also not so well-known or universal as to be incorporated into the pieceworkers' contracts of employment.
Second, a right to lay off may also be implied into a contract of employment if it is necessary to give "efficacy" to the contract (Browning and others v Crumlin Valley Collieries Ltd). Whether or not the contract is unworkable without such a right depends on the presumed intention of both parties to the contract. In Browning, miners refused to work underground because the mine shafts were unsafe. That was not because of any negligence or breach of statutory duty on the part of the mineowners, who had to close the mine in order to carry out the necessary repairs. Mr Justice Greer held: "Were the perils of the transaction in that event to be all on one side, or must the consequences be divided between the two parties, the employers losing the advantages of continuing to have their coal gotten and being compelled to undertake expensive repairs, and the men on their part losing their wages for such time as was reasonably required to put the mine into a safe condition? The latter, I think, must be presumed to have been the intention of both parties."
The third source of an implied right to lay off is "the history of the relationship between the parties" to the contract of employment (Puttick v John Wright & Sons (Blackwall) Ltd). What they do in working the contract out cannot by itself establish a custom. It may, however, give rise to an estoppel (see Waine below) or to a variation of the contract; or it may be evidence of what the parties had in fact agreed at the time they entered into the contract (Topp).
In Puttick, the National Industrial Relations Court (NIRC) held that the history of the relationship between a casual worker and his employer bore out that they had entered into an arrangement whereby the employee in effect agreed to be laid off for such periods as no work was available. They had agreed that the employee would do such work of a particular kind as his employer provided for him, while the employer would make available to the employee such work of that particular kind as from time to time came to hand.
The employee was employed on a more or less regular basis for some 23 years. The practice over the years was that the employer's foreman notified the employee on the day before work on a job was due to start. He started work on the following morning and worked for the duration of the job. At the end of a job, if nothing was immediately available, he was laid off, usually for a few days, until the next job started. His employer always gave him work to do, and he never worked for anyone else and was seldom unemployed for more than a few weeks.
In Topp, no express term of a boat builder's contract of employment entitled his employer to lay him off, but the time came when it did just that. There had been two or three occasions during the previous eight years when it had put him on short time. The EAT held that, in order to ascertain if the contract included a right to lay off, an industrial tribunal should have asked itself whether - looking objectively and fairly at the way both parties had behaved on those previous occasions of short-time working, and perhaps how they reacted on the occasion of the lay-off - the proper interpretation was that the parties were accepting a right to lay off as a part of the contract, even though there was nothing in writing to that effect.
The EAT added that, just because the employee had accepted short-time working in the past as a fait accompli, it did not necessarily follow that, thereafter, there was a term of the contract that the employer was entitled to impose short-time working, let alone a lay-off for an indefinite period. The employee may have tacitly agreed to short-time working on the previous occasions without committing himself to accepting it on future and unspecified occasions. If it had happened on several occasions, or if anything had been said between the parties, it may have been possible to infer that the parties were agreeing a new or varied term of the contract to that effect. But, again, that did not necessarily follow, said the EAT. The term in question would also need to be identified with at least some sensible clarity.
In Waine, the EAT held that, just because an employee had accepted being laid off on a previous occasion, he was not estopped from denying that there was an implied right to lay off in his contract of employment. For such an estoppel to be sustained, the employee must have made some representation which his employer accepted and acted on; and the employer must have so altered its position in reliance on that representation that it would not be fair that the representation should be withdrawn, repudiated or not acted on. Here, there was no evidence that, when the employer decided to lay the employee off a second time, it was relying on his acquiescence in the earlier lay-off; and that would be the very minimum which would be required.
The EAT also held that an implied right to lay off could not be deduced from the way that the parties had behaved on the previous occasion. It was much more realistic to view the fact that the employee had "signed on" during the earlier lay-off, as requested by his employer, as being dictated by common sense, convenience and the good relationship between the parties.
Scope of implied right
In Jones v Harry Sherman Ltd, an industrial tribunal came to the view that a right to lay off cannot be implied into the contract of employment of an employee who is paid a fixed weekly or monthly wage or salary. According to the tribunal, a right to lay off is no more than an exception to an employer's implied duty to provide work for an employee who is paid at a daily or an hourly rate, or at piece rates, and who has no right to a guaranteed minimum wage.
The extent to which an implied duty to provide work is qualified by the implied right to lay off was considered by the Court of Appeal in Devonald. The Court implied a term into a pieceworker's contract of employment that his employer would provide him with a reasonable amount of work so long as his employment lasted. But Lord Alverstone was not prepared to say that that obligation was absolute. The evidence showed that it was subject to certain contingencies, such as breakdowns of machinery and lack of materials, although it would be no excuse for non-performance of the obligation that the employer could no longer run its works at a profit. Sir Gorell Barnes added: "I can quite understand that, having regard to a certain set of circumstances, such as breakage of machinery, it may be reasonable to hold that it was the intention of the parties that ... risks of that character, which are known to both parties, and which prevent both from doing what was contemplated, should excuse [the employer] from the obligation to maintain the continuance of the work. But that does not appear to me to apply ... where the want of continuity of work is simply due to a lack of orders at remunerative prices ... It seems to me that it is not reasonable to imply that the risk of that was in the contemplation of both parties as being taken by the [employee]."
In Browning, the employees relied on the Court of Appeal's decision in Devonald in support of their argument that it was impossible to imply a right to lay off into their contracts of employment. But Greer J said: "... in [Devonald ] the [employer's] failure to provide work for the [employee] so as to enable him to earn his piecework pay was due to the employer deciding that owing to bad trade it would pay him better to close down. It was not due to a cause over which he had no control, it was neither illegal nor impossible for him to continue to find work for the [employee], and the Court expressly left open the question whether the [employee] could have succeeded if the stoppage had been due to such a cause, indicating, I think, that they inclined to the opinion that he could not".
Arguably, therefore, a right to lay off may be implied where the unavailability of work is due to circumstances beyond the employer's control. According to the High Court in Neads, however, the decision in Browning rests on the term which was implied in the circumstances of that case and does not throw any doubt on the principle established in Devonald - that there is no general right to lay off at common law, but such a right exists only in very limited circumstances.
Remedies for wrongful lay-offs
An employee who has been "wrongfully" laid off (that is, in repudiatory breach of contract) can bring an action against his or her employer in a civil court claiming damages for breach of contract, or complain to an industrial tribunal that the employer has made an unlawful "deduction" from his or her wages contrary to s.13 of the ERA. If the employee was willing and able to work, the court or tribunal should award him or her the amount of the wages that he or she would have received during the lay-off (or the average amount of his or her earnings for some time before the lay-off).
Alternatively, the employee can resign, with or without giving notice, and complain to an industrial tribunal that he or she was wrongfully and/or unfairly (constructively) dismissed. He or she may also apply to the tribunal for a redundancy payment. By resigning, the employee would have "accepted the repudiation"; and he or she should be treated as having been constructively dismissed if he or she did not delay too long before resigning (otherwise, he or she may be taken to have "waived the breach"), and provided that he or she resigned because of the breach and not for some other reason (see, for example, Freeman). The dismissal will be wrongful but not necessarily unfair; and the employee will be entitled to a redundancy payment if he or she was dismissed by reason of redundancy.
The employee does not accept the repudiation by simply applying to an industrial tribunal for a redundancy payment, because that may be consistent with the contract of employment still subsisting albeit suspended. There must be some positive act on the employee's part which indicates to the employer that he or she is terminating the contract. (Irving v Don Clark (Decorators) Ltd). For example, a request for a P45 would probably suffice.
SHORT-TIME WORKING
In Devonald, Lord Alverstone suggested that "the question how the works are to be carried on, whether they are going to work short or full time ... is a matter which rests entirely in the hands of the [employer]." The employees "have absolutely nothing to say to it", he added. However, in Miller v Hamworthy Engineering Ltd, the Court of Appeal has since held that an employer had no right to impose short-time working on a salaried employee, who was at all material times willing and able to perform his contractual duties, in the absence of "some express contractual arrangement", "some agreed variation of the contractual terms" or "any settled custom of the industry forming part of the employee's conditions of service" which entitled the employer to do so.
Therefore, the employee was entitled to recover the net difference between the amount of the salary that he would have received had he worked full time during the period of short-time working and the amount that he in fact received during that period. Alternatively, he could have resigned and claimed a constructive dismissal (see above). If his employer had been entitled to put him on short time, and it had summarily dismissed him for refusing to work short time, then the dismissal would not have been wrongful (Hanson and others v Wood (Abington Process Engravers)).
In Spelman v George Garnham, a bookbinder who worked a 36-hour week was off sick for a few months. While she was away, her employer wrote to tell her that, on her return, it could offer her no more than 17.5 hours' work a week. It was open to her, on receipt of that letter, to treat it as a repudiatory breach of her contract of employment entitling her to resign and claim a constructive dismissal. But she did not do that. Instead, she went back to work and worked 17.5 hours a week for the next nine months. The High Court held that she was never put on short time because she had accepted an offer of a new contract, involving fewer hours' work per week, under which she was working full time.
In Friend v PMA Holdings Ltd, by contrast, the EAT held that an agreement between upholsterers and their employer to shorten their normal working hours was not supplanted and replaced by a de facto arrangement under which their hours of work varied according to the amount of work available. That arrangement was adopted as a temporary expedient in an emergency. Although it had been allowed to drift on for seven months, that fact alone was a wholly insufficient basis, in the circumstances of this case, on which to infer that the parties were to be taken to have made some new agreement about their contractual position.
GUARANTEE PAYMENTS
Section 28 of the ERA gives an employee the right to a guarantee payment ("GP") from his or her employer in respect of a "workless day" (see below). There are a number of exclusions from this right (see the box at right), and also circumstances in which an employee may lose the right (see below). The amount of a GP payable to an employee in respect of any workless day cannot exceed £14.50 (s.31(1)); and an employee is not entitled to GPs in respect of more than a specified number of days in any three-month period (s.31(2)), whether or not he or she worked on the other days during that period (Jones v Squire's Garage & Road Transport Ltd). (The daily limit is due to rise to £15.35 with effect from 1 April 1998.)
The specified number of days referred to above is: either the number of days on which the employee normally works in a "week" (within the meaning of s.235(1)), subject to a limit of five (s.31(3)); or, where that number varies from week to week, (a) the average number of such days, not exceeding five, over the preceding 12 weeks or (b) a fair representation of that number, again not exceeding five, having regard to the employee's expectations from the contract of employment and the work patterns of fellow employees in comparable jobs (s.31(4) and (5)).
A right to a GP does not affect an employee's right (if any) to contractual remuneration, such as the minimum wage payable under a GWA in respect of which no exemption order has been made under s.35. However, any contractual remuneration paid, or treated as paid, to the employee for a workless day offsets any GP payable to him or her in respect of that day, and vice versa (s.32). Further, workless days for which the employee is paid contractual remuneration must be taken into account when calculating the maximum number of days in respect of which he or she is entitled to GPs (Cartwright v G Clancey Ltd).
In Cartwright, there were nine workless days in a three-month period. The employee was paid contractual remuneration in excess of the then maximum amount of a GP in respect of the first five of those days but received no payments for the following four days. The EAT held that his entitlement to GPs in respect of those five days was discharged by the payments of contractual remuneration, and that he was not entitled to any further GPs.
Calculation of GPs
The amount of a GP payable to an employee for any workless day is, subject to the limit of £14.50 (£15.35 from 1 April 1998), the number of "normal working hours" (see below) on that day multiplied by the "guaranteed hourly rate" (s.30(1)). That rate is the amount of one "week's pay" divided by: either the number of normal working hours in a "week" (within the meaning of s.235(1)) (s.30(2)); or, if those hours vary from week to week, (a) the average number of such hours over the preceding 12 weeks or (b) a fair representation of that number having regard to the employee's expectations from the contract of employment and the work patterns of fellow employees in comparable jobs (s.30(3) and (4)).
Normal working hours
An employee's normal working hours (if any) must be stated in his or her written statement of particulars of employment (s.1(4)(c)). In the case of an employee who is entitled to overtime when employed for more than a fixed number of hours in a week or other period, they are that fixed number of hours. However, where the employee is bound to work overtime and his or her employer is obliged to provide it, the normal working hours are the overtime hours if they exceed the number of hours without overtime (s.234).
An employee will have no normal working hours on a workless day if his or her hours vary from day to day, as in the case of an employee like a pieceworker who is paid only for work done (Lenton and others v A E Lenton Ltd). But an employee may have normal working hours on a workless day even though they vary from week to week or over a longer period, as in the case of a rotating shiftworker who may put in longer hours on, say, a night shift than on a day shift (Miller and others v Harry Thornton (Lollies) Ltd).
Workless day
A day is "workless" if during any part of it the employee would "normally be required to work" according to his or her contract of employment (see below), but throughout it he or she is "not provided with work" by his or her employer (see below) because of:
The day itself must be a period of 24 hours from midnight to midnight (s.28(4)). Where a night shift extends over midnight, or would normally do so, the shift will be treated as falling wholly on the day when it began if more hours are, or would normally be expected to be, worked on that day than on the following day. Otherwise, the shift will be treated as falling wholly on the following day (s.28(5)).
The employer's business may require less work of the employee's kind because of, for example, a slump. Examples of other occurrences "affecting the normal working of the employer's business" include natural disasters, power supply failures (North and others v Pavleigh Ltd) and bad weather (Robinson v Claxton and Garland (Teesside) Ltd). But the employee's temporary absence from work, due to illness or some other reason, is not such an occurrence if the employer's business has people to stand in for those who are so absent (Honegan v Vauxhall Motors Ltd).
An employer's closure of a workplace in order to observe a Jewish holiday has also been found not to be an occurrence "affecting the normal working of the employer's business" (North). On the other hand, in Newbrooks and Sweet v Saigal, another industrial tribunal found that an employer who wanted fewer employees whom he supervised to be at work while he was in hospital laid two of them off because of such an occurrence. Industrial action not involving any employee of an employee's employer or of an "associated employer" (within the meaning of s.231) is also an occurrence "affecting the normal working of the employer's business" (Miller v Harry Thornton).
However, an employee is not entitled to a GP in respect of a day for which the failure to provide him or her with work occurs in consequence of a strike, lock-out or other industrial action (whether that is in breach of contract or not) which does involve any employee of his or her employer or of an associated employer (s.29(3)). Such industrial action need not involve the employee personally. Nor does it have to be the sole cause of the employer's failure to provide the employee with work: it is sufficient that the lay-off is an immediate consequence of the industrial action (Thomson v Priest (Lindley) Ltd).
Normal working day
A day during any part of which an employee would "normally" be required to work in accordance with his or her contract of employment is one on which the contract "contemplated" that he or she would be required to work (North). The day must be one on which, in normal circumstances (that is, excluding anything unforeseeable), the employer can require the employee to attend for work and the employee can insist on being provided with work when it is available (York and Reynolds v Colledge Hosiery Co Ltd). It follows that an employee is not entitled to a GP:
Similarly, an employee who works part time is not entitled to a GP in respect of a day on which he or she would not normally have worked under his or her contract of employment.
Where an employee's working week has unilaterally been reduced by his or her employer, and the employee accepts short-time working as a fait accompli, he or she will not be entitled to a GP for a day on which he or she is no longer normally required to work (Daley and others v Strathclyde Regional Council ). However, if an employee's contract was varied (or a new contract was entered into) in connection with a period of short-time working, the calculation of the amount of any GP payable to him or her will use the number of his or her weekly normal working hours under the original contract (s.30(5)); and the limit on his or her entitlement to GPs will be based on the number of his or her normal working days in a week under that contract (s.31(6)).
Provision of work
A GP is not payable in respect of a day during which an employee is provided with some work, even if that work is provided outside normal working hours. Nor is an employee "not provided with work" by his or her employer if, for example, bad weather prevents the employee from getting into work but does not cause his or her workplace to close; or if work is provided but the employee is off sick (Honegan).
Loss of right
The fact that an employee has "signed on" is not of itself sufficient to disentitle him or her to a GP (Robinson). However, an employee is not entitled to a GP in respect of a workless day if he or she unreasonably refused his or her employer's offer of suitable alternative work for that day (s.29(4)). That offer must be made before the workless day: it cannot be made on that day (Newbrooks). But the alternative work must be work to be done on the workless day: it cannot be done on any other day (North).
The meanings of the words "suitable" and "unreasonably" are questions of fact for the industrial tribunal. They probably have the same kind of meanings as they do in s.141 of the ERA, under which employees lose their right to a redundancy payment if they unreasonably refuse an offer of suitable alternative employment under a new or renewed contract. However, bearing in mind that the GP provisions contemplate a temporary lay-off as opposed to a redundancy, an employee can probably be required under s.29(4) to work in a number of jobs which from a more long-term point of view would be regarded as distinctly unsuitable (Duckenfield v G W Thornton Ltd). Further, s.29(4) provides that the alternative work may be suitable even though it is outside the contract of employment.
An employee is also not entitled to a GP for a workless day if he or she does not comply with reasonable requirements imposed by his or her employer with a view to ensuring that his or her services are available (s.29(5)). The assessment of the reasonableness or otherwise of any such requirements involves a consideration of the evidence concerning the employer's state of mind at the material time. Some guidance may also be found in the evidence about the information communicated by the employer to the employee (Meadows v Faithful Overalls Ltd).
In Meadows, the temperature in a factory was too low for working because the heating system had run out of oil. The factory manager expected a delivery of oil shortly, and he asked the workforce to wait in the canteen. But the tanker did not arrive at the expected time, and so the workers went home. At that time, however, the manager reasonably believed that the tanker was on its way. It was, therefore, reasonable of him to require the workers to hang on until the tanker arrived. That was also the best way to ensure that their services would be available once the factory was warm enough for working.
Complaints to tribunals
An employee may complain to an industrial tribunal that his or her employer has failed to pay the whole or any part of a GP to which he or she is entitled (s.34(1)). But the tribunal cannot hear the complaint unless it was presented within three months from the day for which the GP is claimed or, if that was not reasonably practicable, within such further period as the tribunal considers reasonable (s.34(2)).
Where the tribunal upholds the complaint, it must order the employer to pay the employee the amount due (s.34(3)). The Employment Protection (Recoupment of Jobseeker's Allowance and Income Support) Regulations 19961 provide for the recoupment out of that amount of any jobseeker's allowance paid to the employee before the end of the tribunal proceedings. The employer must pay the recoupable amount to the DSS before paying any balance to the employee.
Laid-off workers and employees or self-employed people working less than 16 hours a week on average are entitled to a contribution-based jobseeker's allowance ("JSA") for up to 26 weeks (excluding the first three "waiting" days) if they satisfy the "contribution conditions" (see s.2 of the Jobseekers Act 1995), if they have entered into a "jobseeker's agreement" which remains in force (see ss.9-11 of the Jobseekers Act 1995 and regs. 31-39 of the Jobseeker's Allowance Regulations 19962) and if, during the period of their claim, they are:
Workers who have been suspended without pay because of "temporary adverse industrial conditions", or whose hours of work have been reduced for the same reason, will be treated as "available for employment" if during the first 13 weeks of their claim they are:
Those workers will be treated as "actively seeking employment" if during the first 13 weeks of their claim they are available for casual employment for at least three days a week, and take reasonable steps to find such employment (see regs. 4, 17 and 21 of the Jobseeker's Allowance Regulations 1996).
A JSA is paid at a weekly rate which depends on the claimant's age. The rates payable to claimants aged under 18, between 18 and 24, and 25 or over are (with effect from 6 April 1998), respectively, £30.30, £39.85 and £50.35 per week. Claimants who earn more than that amount plus £4.99 in a week from working short time and/or doing casual work will not be entitled to a JSA for that week. Otherwise, £5 of their weekly earnings (including GPs and payments made under a GWA) will be disregarded but the remainder will reduce the amount of the JSA they receive pound for pound.
Claimants will also not be entitled to a JSA for any week which includes a day when they are not working because of a stoppage of work due to a trade dispute at the premises or place at which they are employed, unless they prove that they are not directly interested in the dispute (s.14 of the Jobseekers Act 1995).
REDUNDANCY PAYMENTS
An employee who was wrongfully laid off or put on short time and then resigned, with or without giving notice, is entitled to a redundancy payment under s.135(1)(a) of the ERA if he or she was constructively dismissed by reason of redundancy, unless excluded from that right. The lay-off or short-time working may have been due to a strike (see, for example, R H & D T Edwards Ltd v Evans and Walters), but must not have been caused by a lock-out unless the employee gave notice of his or her resignation (s.136(2)).
Alternatively, an employee is entitled to a redundancy payment under s.135(1)(b), unless excluded from that right (see the box opposite), if he or she was lawfully laid off or put on short time for the prescribed period and complied with the requirements of ss.148 and 150. Those provisions, which have been described by the EAT as "labyrinthine", "tortuous" and "fraught with pitfalls" (MacRae), require the employee:
If the employee has complied with those requirements, which must be strictly observed (Vennard v Deal), he or she will not be disentitled to a redundancy payment simply because the employer subsequently told him or her that he or she could resume normal working in his or her current job (Reid v Arthur Young & Son).
Loss of right
However, an employee is not entitled to a redundancy payment in pursuance of his or her notice of intention to claim if he or she is dismissed by the employer after the service of that notice, although he or she may then have the right to a redundancy payment in respect of the dismissal (s.151).
Where the employer gives a counter-notice within seven days after the service of the notice of intention to claim, but withdraws it by giving a subsequent written notice, the employee is not entitled to a redundancy payment in pursuance of his or her notice of intention to claim unless he or she resigns, by giving a week's notice or such longer notice as the contract of employment may require, no later than three weeks after the service of the notice of withdrawal (s.150(3)(b)).
Where the employer gives a counter-notice within the same seven-day period, and does not withdraw it, the employee is not entitled to a redundancy payment in pursuance of his or her notice of intention to claim:
There could be no such reasonable expectation if the employee had remained laid off and/or kept on short time for the whole of those four weeks (s.152(2)).
Meaning of "lay-off"
Employees will be taken to be "laid off" for any "week" (within the meaning of s.235(1)) if their contractual remuneration depends on their being provided by their employer with work of the kind which they are employed to do, but they are not entitled to any contractual remuneration for that week because their employer does not provide such work for them (s.147(1)).
In other words, employees (whether they are pieceworkers or timeworkers) will be treated as laid off if, because they have no work, they have no right to any contractual remuneration (Hulse). The statutory definition of "lay-off" therefore excludes employees who, despite the absence of work, are entitled to the minimum wage under a GWA incorporated into their contracts of employment, whether that is paid or not (Powell). The fact that they are entitled to a GP or JSA is, however, irrelevant.
Meaning of "short time"
Employees will be taken to be kept on "short time" for any week if, because of a reduction in the amount of work provided by their employer (being work of a kind which they are employed to do), their contractual remuneration for that week is less than half a week's pay (s.147(2)).
The amount of a "week's pay" is calculated in accordance with ss.221-224, s.226(4) and ss.227-229. Work within the contract is "provided" if it is offered, whether or not a rate of pay was agreed, and an employee is not kept on short time for any week in which his or her pay is more than halved because he or she refused to take on more work within the contract (Spinpress Ltd v Turner).
Notice of intention to claim
A notice of intention to claim must be in writing and indicate, "in whatever terms" (see, for example, Beale v Variety Floors Group), the employee's intention to claim a redundancy payment in respect of his or her statutory lay-off and/or short time (s.148(1)(a)). A written notice that does not specifically state that the intended claim is in respect of such is, however, sufficient (Homson v FMS (Farm Products) Ltd). Where an employee has given a defective notice of intention to claim, he or she can give another, valid one provided that he or she does so within the time allowed for that (Mitchell v Castle Contracts (Portsmouth) Computer Flooring).
Counter-notice
A counter-notice must be in writing and indicate that the employer will contest any liability to make the employee a redundancy payment in pursuance of his or her notice of intention to claim (s.149). Provided that it indicates clearly that there will be such a contest, it does not also have to contain particulars of any work that is available to the employee. However, where a document is said to be a counter-notice because it contained an offer of work, an industrial tribunal may find that the offer was not sufficiently certain, detailed or genuine to amount to a counter-notice. In other words, the tribunal may find that it did not indicate that the employer would resist the employee's claim (Fabar Construction Ltd v Race and Sutherland). A letter which asserts that the addressee is not an employee is also not a counter-notice, since it does not purport to come from an employer (Beale).
Notice of resignation
A notice of resignation must be a full seven days' notice (Homson) or such longer notice as the contract of employment may require the employee to give. But it does not have to be in writing (Fabar): an oral notice will suffice (s.179(3)). Further, no particular terms of art are required (Walmsley v C & R Ferguson Ltd). In Fabar, an employee's oral offer to give his employer a week's notice, coupled with a request for his P45, was held in effect to be the giving of a week's notice of resignation.
In Walmsley, an employee wrote to his employer saying: "If you do not wish to [re-employ me or make me redundant], then I am left with no option but to resign ... I look forward to hearing from you within seven days." The Court of Session held that those words were capable of being read as meaning that the employee would resign at the end of the seven-day period unless, within that period, his employer offered to re-employ him or make him redundant. In other words, his resignation would take effect in the event of there being no reply from his employer within seven days. Since there was no reply within that period, the employer had had one week's notice that the employee was intending to resign.
Methods of giving notices
A notice of intention to claim, or a written notice of resignation, will be treated as having been "given" by the employee if it was delivered to the employer or posted to the employer at the employee's workplace. Alternatively, if other arrangements have been made by the employer, such notices may be delivered to the person designated by the employer, left for that person at the designated place or posted to him or her at the designated address (s.179(2)).
A counter-notice will be treated as having been "given" by the employer if it was delivered to the employee, left at his or her usual or last-known address, or posted to that address (s.179(1)). A finding that a counter-notice was posted there would, therefore, be a finding that the counter-notice was in fact given by the employer (Fabar).
Service of notices
Any notice which is left for a person at a place referred to above will be presumed, unless proved otherwise, to have been received by that person on the day it was left there (s.179(4)). Any notice which is posted is deemed (by s.7 of the Interpretation Act 1978), unless proved otherwise, to have been served on either the second working day after posting (if sent by first class mail) or the fourth working day after posting (if sent by second class mail).
In Mitchell, an industrial tribunal found that an employee's notice of intention to claim, posted on 3 October 1992, could not have been received by his employer before 5 October; and that the employer's counter-notice, posted on 12 October, could not have been received by the employee until 13 October at the earliest. The tribunal concluded, therefore, that the counter-notice was out of time (that is, it was given more than seven days after the service of the notice of intention to claim). The employee appealed to the EAT.
The employee argued that he was required to "serve" his notice of intention to claim - and, therefore, it was correct to start the computation of the time for service from the date when that notice would have been received by the employer - but that the employer was required to "give" a counter-notice, and the date when it did so was the date when it actually posted the letter. But the EAT dismissed the appeal on the ground that there was no distinction, or no significant distinction, between the service of notice and the giving of notice, which was a question of fact for the industrial tribunal.
1 SI 1996/2349.
2 SI 1996/207.
Lay-offs and short-time working: main points to note
Exclusions from right to guarantee payments
An employee is not entitled to a statutory guarantee payment ("GP") if he or she:
Neither Crown servants nor parliamentary staff are excluded (ss.191(2), 194(2) and 195(2)).
Exclusions from right to redundancy payment
An employee is not entitled to a redundancy payment by reason of being lawfully laid off and/or kept on short time for the prescribed period (see p.8) if he or she:
Police officers are not excluded (s.200(1)).
CASE LIST
Allinson v Drew Simmons Engineering Ltd [1985] ICR 488
Beale v Variety Floors Group 7.2.96 EAT 863/95
Browning and others v Crumlin Valley Collieries Ltd [1926] 1 KB 522
Burroughs Machines Ltd v Timmoney and others [1977] IRLR 404
Cartwright v G Clancey Ltd [1983] IRLR 355
Dakri (A) & Co Ltd v Tiffen and others [1981] IRLR 57
Daley and others v Strathclyde Regional Council [1977] IRLR 414
Devonald v Rosser & Sons [1906] 2 KB 728
Duckenfield v G W Thornton Ltd 12.8.77 case no.10487/77
Edwards (R H & D T) Ltd v Evans and Walters 16.7.85 EAT 780/84
Fabar Construction Ltd v Race and Sutherland [1979] IRLR 232
Freeman v B S Eaton Ltd 25.1.83 EAT 416/82
Friend v PMA Holdings Ltd [1976] ICR 330
Hanson and others v Wood (Abington Process Engravers) (1968) 3 ITR 46
Homson v FMS (Farm Products) Ltd (1967) 2 ITR 326
Honegan v Vauxhall Motors Ltd 5.4.82 EAT 110/82
Hulse v Harry Perry [1975] IRLR 181
Irving v Don Clark (Decorators) Ltd 19.2.96 (S)EAT 974/95
Jewell v Neptune Concrete Ltd [1975] IRLR 147
Johnson v Cross [1977] ICR 872
Jones v Harry Sherman Ltd (1969) 4 ITR 63
Jones v Squire's Garage & Road Transport Ltd 29.7.94 EAT 752/92
Lenton and others v A E Lenton Ltd 17.6.77 case nos.11073/77 and others
McKenzie (D & J) Ltd v Smith [1976] IRLR 345
MacRae (Kenneth) & Co Ltd v Dawson [1984] IRLR 5
Meadows v Faithful Overalls Ltd [1977] IPLR 330
Miller v Hamworthy Engineering Ltd [1986] IRLR 461
Miller and others v Harry Thornton (Lollies) Ltd [1978] IRLR 430
Minnevitch v Café de Paris (Londres) Ltd [1936] 1 All ER 884
Mitchell v Castle Contracts (Portsmouth) Computer Flooring 28.11.94 EAT 783/93
Neads v CAV Ltd [1983] IRLR 360
Neame (Christopher) Ltd v White and others 31.3.80 EAT 461/79
Neepsend Steel & Tool Corporation Ltd v Vaughan [1972] ICR 278
Newbrooks and Sweet v Saigal 1.12.77 case nos.29694/77 and 29695/77
North and others v Pavleigh Ltd [1977] IRLR 461
Powell Duffryn Wagon Co Ltd and another v House and others [1974] ICR 123
Puttick v John Wright & Sons (Blackwall) Ltd [1972] ICR 457
Reid v Arthur Young & Son 10.3.83 (S)EAT 714/82
Robinson v Claxton and Garland (Teesside) Ltd [1977] IRLR 159
Spelman v George Garnham (1968) 3 ITR 370
Spinpress Ltd v Turner [1986] ICR 433
Thomson v Priest (Lindley) Ltd [1978] IRLR 99
Topp v Birchwood Boat Co Ltd 18.6.96 EAT 626/94
Vennard v Deal (1969) 4 ITR 315
Waine v R Oliver (Plant Hire) Ltd [1977] IRLR 434
Walmsley v C & R Ferguson Ltd [1989] IRLR 112
Window Centre Ltd v Lees and Lees 14.4.86 (S)EAT 742/85
York and Reynolds v Colledge Hosiery Co Ltd [1978] IRLR 53
