Lay-Off Clauses – Post Covid-19 Restrictions Advice

Lay-Off Clauses – Post Covid-19 Restrictions Advice

Following the government’s easing of all Covid-19 restrictions, employers will now be bringing employees back into the workplace and will be starting to feel that normal service can be resumed. The removal of furlough though has taken away a valuable pipeline of support for businesses.

Despite the return to normality, it is now more important than ever that employers take steps to ensure that they are protected moving forward, should there be any further negative effects of the Covid-19 pandemic. 

With the removal of the furlough scheme, one of the most important considerations will be how to protect your business if it needs to close temporarily because of Covid. This could be because a significant percentage of staff need to isolate because a supplier has been affected by Covid, or for another reason entirely. 

With furlough gone, and no other protections in place, this could leave employers with the prospect of having to continue to pay their employees despite there being no work for them to do. At a time where recovery is the focus, this could be crippling.

The best way to plan for this is with the use of a lay-off/short-time working contractual clause. When included in an employee’s contract of employment, this clause will allow you, at very short notice, to send employees home to cope with a downturn.  However, this must only be a short-term option as employees have the right to claim redundancy when placed on lay-off/short time too long or too frequently.

During a lay-off, employees are entitled to statutory guarantee pay, which is currently £30 per day for five days in any 13-week period. This is normally paid for the first five days off work and is payable by the employer. 

Additionally, under the short time working element of the clause, you would be able to reduce an employee’s hours of work on a temporary basis to account for a downturn in work. 

The inclusion of this clause can give employers significant flexibility in responding to the continued effects of the Covid-19 pandemic in the coming months without risking a substantial and possibly fatal financial hit. 

Although this clause can provide crucial protection for employers, it can only do so if it is drafted correctly.

Employers also need to be mindful that it is not necessarily a simple and straightforward process to implement this clause into existing contracts of employment, meaning it is highly important to get the procedure right. 

If you don’t have them in your contract, and you would like them into your contract, you will need to follow a full contract variation procedure which will include a detailed consultation process with staff. HR Managers and HR Consultants should be careful and mindful that getting this process wrong can lead to substantial unfair dismissal claims.  Also, if you are changing the contracts of 20 or more staff there are special collective consultation procedures to follow.  Getting this wrong can result in protective awards of up to 13 weeks’ pay per employee.

With the above in mind, we would highly recommend having trusted advisers in your corner to help you. Wilford Smith’s business-focused services specialise in Employment Law, Commercial Law, Company Law, Commercial Conveyancing and Regulatory and Criminal Investigations. 

We can be your trusted adviser in all areas.


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