Does the Period of Time an Employee is Laid Off Have to be Reasonable?

Background

An employer can only lay off an employee (ie, stop providing that employee with work, whilst still keeping them employed) where there is a contractual right to do so. The contractual provision should clearly state that their salary will reduce or cease during that period.

Laid off employees are entitled to claim a statutory redundancy payment, where they are laid off for at least four consecutive weeks or a total of six weeks in any 13 week period, and where no more than three weeks are consecutive.

The Facts

In the case of Craig v Bob Linfield & Son Ltd, Bob Lindfield & Son Ltd (BLS), a design and technology company, had a contractual right to lay off staff or put them on short time working when there was a reduction in work.

On 21 July 2014, the claimant, Mr Craig, a computer aided designer, was laid off due to a downturn in business at BLS. Mr Craig was off work for nearly five weeks before he contacted his employer to request a statutory redundancy payment.

The following course of events followed:

• Mr Lindfield, the owner of BLS, replied saying that he hoped work would pick up.
• Mr Craig, not satisfied with this position, responded by saying that if he did not receive a statutory redundancy payment, he would have no choice but to resign and bring a claim for constructive dismissal.
• Mr Lindfield replied further to state that Mr Craig would not receive a redundancy payment as BLS still had the need for a computer-aided designer.
• Mr Craig brought a claim for constructive dismissal on the basis that his lay off period was unreasonable.

The EAT found that there was no implied term of reasonableness in respect of the period of any lay off and even if there was, the period was not unreasonable in these circumstances. Mr Craig had, therefore, not been constructively dismissed as there was no repudiatory breach of his contract of employment.

Mr Craig appealed and the EAT dismissed the appeal.

Best Practice

In light of this case, employers in certain industries may wish to review their contracts of employment and consider whether a clause covering lay off periods would be desirable. Periods of lay off can be beneficial for both employers and employees in preventing large scale redundancies.

Where employers do have a contractual right of lay off, the right should only be exercised if there has been a genuine reduction in work and, even then, the period of lay off should be kept under review to ensure that there is a reasonable prospect of there being more work in the near future. It is also important that the employer keeps in contact with the laid off employees and provides regular updates.

For more information, please contact Charlotte Williams in our Employment Law team on 0117 314 5219.