| Acas

1 . How they work

Sometimes an employer might not have enough work or might need to temporarily shut down because of an emergency, like a fire or flood.

If this happens, they might be able to consider:

lay-offs – sending people home temporarily
short-time working – reducing people's working hours

They would only need to do this for those with the legal status of employee.

Someone is not likely to be an employee if they're:

an agency worker
a casual worker
on a zero-hours contract

Anyone with the legal status of worker does not usually have the right to guaranteed hours. So their employer could ask them not to work without needing to lay them off or put them on short-time working.

Lay-offs and short-time working may help avoid redundancies. But they should be a last resort for employers.

Employers should consider other options first, for example, agreeing with employees to:

take holiday
work from home
work more flexibly
take unpaid leave

When an employee can be laid off or put on short-time working

By law, employers can lay off employees without pay or put them on short-time working if it's either:

included in the employee's employment contract
custom and practice in their organisation, with clear evidence
a national agreement for the industry
an agreement between the employer and a trade union
agreed by the employer and employee to change the terms in the employment contract

Changing the terms in an employment contract

An employee can agree with their employer to change the terms of their contract to include lay-offs or short-time working.

If it's a permanent change to the contract, the employer must confirm in writing what's been agreed within 1 month of the change. For example, in a letter or email.

If it's a temporary change to the contract, it's also a good idea for the employer to confirm what's been agreed in writing.

Find out more about changes to employment contracts

Pay during lay-offs and short-time working

Employees should get full pay during lay-offs or short-time working, unless:

it's agreed otherwise
their contract allows reduced pay or for them not to be paid

Guarantee pay

If an employee is laid off or put on short-time working, there might be days when they do not do any work at all. They are entitled to some pay on these days. This is called 'statutory guarantee pay' and is the legal minimum an employer must pay.

Guarantee pay can only be claimed for days the employee would normally be required to work.

Employers might offer a better guarantee pay scheme. Employees should check their contract.

Statutory guarantee pay

The maximum statutory guarantee pay is £39 per day for 5 days in any 3-month period.

The maximum an employee is entitled to is £195.

Employees who usually earn less than £39 per day will get their usual daily rate.

If employees work part time, their entitlement is worked out in proportion to their part-time hours.

For example, an employee works 2 days per week. They can claim guarantee pay for a maximum of 2 days in any 3-month period.

Eligibility

To be eligible for guarantee pay, employees must:

have been employed continuously with the same employer for at least 1 month
reasonably make sure they're available to work
not refuse any reasonable alternative work
not have been laid off because of industrial action

Time limits

There's no limit for how long an employee can be laid off or put on short-time working.

How long lay-offs or short-time working last will depend on what's been agreed in the employee's employment contract.

Holiday entitlement

Employees continue to 'accrue' holiday during lay-offs and short-time working. This means they can build up holiday in the usual way.

This is unless they are an irregular hours worker or part-year worker.

Benefits during lay-offs and short-time working

While employees are laid off or put on short-time working, they might be eligible for:

Universal Credit
New Style Jobseeker's Allowance

What they're entitled to will depend on their overall income and working hours.

Find out more about:

Other work

The employee's contract might allow them to do other work while laid off or put on short-time working.

If they can, employees should:

agree the work with their employer
make sure they're not working for a competitor
make sure they can return to their original job once the lay-off or short-time working ends

Avoiding discrimination

Employers must select employees for lay-offs or short-time working in a fair way. They must not treat employees differently because of their age, disability or any other protected characteristic.

Find out more about discrimination

2. Applying for redundancy pay

In certain situations, employers might be able to lay people off or put them on short-time working. They can only do this for those with the legal status of employee.

Someone is not likely to be an employee if they're:

an agency worker
a casual worker
on a zero-hours contract

Employees who have been laid off or put on short-time working might be able to apply to claim redundancy pay. This would also end their employment.

Applying for redundancy pay in this situation is called a notice of intention to claim redundancy payment. This is sometimes called NIC.

They can do this if they've been paid less than half a week's pay for:

4 or more weeks in a row
6 or more weeks in a 13-week period – if no more than 3 of these weeks are consecutive

To claim redundancy pay, an employee must have worked continuously for their employer for 2 years or more.

How to apply

Employees must apply for this in writing, for example in a letter or an email. The letter or email must say that:

they want to claim redundancy pay
this is because they have been laid off or on short-time working for 4 or more weeks in a row, or 6 or more weeks in a 13-week period

They must apply within 4 weeks of the end of the relevant period when they were laid off or on short-time working.

Example of making a claim based on 4 weeks in a row

An employee is laid off for 4 weeks in a row. Their employer brings them back to work for a week, before laying them off for another week.

The employee decides to claim redundancy pay because they were laid off for 4 weeks in a row.

They must apply for this within 4 weeks of the end of the original 4-week period they were laid off for. That's because this is the end of the relevant period that made them eligible for redundancy pay.

Example of making a claim based on 6 weeks in a 13-week period

An employee is laid off for 3 weeks. Their employer brings them back to work for 6 weeks, before laying them off for another 3 weeks. The employer then brings them back to work for another week.

The employee decides to claim redundancy pay. This is because they were laid off for 6 weeks in a 13-week period.

They must apply for this within 4 weeks of the last day of the 6-week period they were laid off for.

How the employer can respond

After an employee applies to claim redundancy pay, their employer has 7 days to respond. They can either:

accept the request
decline the request by giving 'counter notice' in writing, for example in a letter or email

Employers can only give counter notice if they expect to be able to offer at least 13 weeks' consecutive work to the employee within 4 weeks.

If the employer does not respond within 7 days, this counts as accepting the employee's request.

Employers can withdraw counter notice later. They must do this in writing.

Resigning

If the employer accepts the request or doesn't respond in time, the employee must resign to get their redundancy pay. They still need to work their resignation notice period.

It's a good idea to do this in writing, for example in a letter or an email. They must do this within 3 weeks, starting from:

7 days after they gave notice to their employer – if they did not get a counter notice
the date their employer withdrew their counter notice

Use our resignation letter template

Contact the Acas helpline

If you have any questions about lay-offs and short-time working, you can contact the Acas helpline.