Short time working is when you reduce the hours of some or all of your employees, or pay them less than half a week’s pay.
This could be during periods of lower demand or slowdown in the amount of work available. The employee should receive full pay unless their contract allows unpaid or reduced pay.
Employers should ensure they have considered all other options before turning to short time working. For example, you could offer periods of unpaid leave, ask employees to use some of their paid holiday entitlement, offer flexible hours and encourage home working if possible.
Whatever the circumstances of considering short time working, there are several legal and practical factors employers will need to take into account.
A lay-off is when your employees are off work for at least one working day, whereas short time working generally applies to a reduction in hours, but the employee still goes into work for part of the time. Lay-offs more often result in the employee being asked to stay at home for a period of time, or take a period of unpaid leave.
Employees should be paid full pay during short-time working, unless it has been agreed otherwise or their contract allows unpaid or reduced pay.
Some employees are entitled to statutory ‘guarantee pay’ for the days they do not work, provided they:
The statutory maximum amount of guarantee pay is £30 a day for 5 days in any 3-month period, ie up to £150. If the employee earns less than £30 each day, they should receive their usual daily rate of pay. Part time workers’ entitlement will be calculated on a pro rata basis.
Guarantee pay is not available on days where the employee works for part of a day.
If the employment contract includes provision of its own guarantee pay scheme, this cannot be any less than the statutory levels. Employees cannot claim both contractual and statutory guarantee pay.
If an employer fails to pay guarantee pay, they may face a claim for unlawful deduction of wages.
You only have the right to impose short time working on your employees if there is an existing term within their contract of employment that you permits you to do so in certain specified circumstances.
You also have to state how your employees’ pay will be calculated during any period of short time working. For example, you could pay them only for the hours they work, known as unpaid short time, or enhance their short time pay in some way.
If there is no short time working provision in the relevant employees’ contracts, you should check to see if there is a national agreement in your industry that includes short time working, or a collective agreement between your particular workplace and a trade union.
If none of these apply, your options would generally be to:
Depending on how short time working is implemented and managed, there could be a number of possible effects on your business.
There are a number of risks for employers when implementing short-time working.
If you impose short time working without obtaining the consent of your employees, you could face claims in the employment tribunal for unlawful deduction of wages, breach of contract or constructive unfair dismissal.
Indeed, a notable risk of short time working or laying off employees is inadvertently giving employees the right to claim that they are redundant and owed redundancy pay by your organisation. There is no time limit on how long short time working or lay offs can last, subject to any relevant provision in the employee’s contract. However, the law states that if an employee has been laid off or been put on short time working with less than half a week’s pay for either four or more weeks in a row, or six or more weeks in a thirteen week period, then they can claim redundancy.
There are, however, strict time limits governing the employee’s claim for redundancy under this procedure. First, they have to write to you to claim redundancy within four weeks of the last day of the short time working period. The employer then has seven days either to accept the claim or serve a counter-notice stating that work is shortly to become available. The work must be available to the employee within four weeks, and last at least thirteen weeks in order for the redundancy payment not to be due to the employee.
If the employer does not serve a counter-notice, the employee must resign in order to trigger their entitlement to redundancy pay. Their resignation must be sent in within a three week period starting from seven days after they gave notice to their employer, or the date the employer withdrew its counter notice, if that was served.
If you have to go through a process to select employees for short time working, you must take care not to do so for discriminatory or unfair reasons.
You should remember that even if if your selection itself was not done for discriminatory reasons, if the effect of your selection is discriminatory then those employees could still raise a grievance or potentially a tribunal claim. For example, if you select more part timers for short time working then this could be potentially discriminatory as part-time workers are more likely to be women.
Finally, employees who find other work to make up for the time they do not work for you, may resign. This may not be helpful for you if you wish to retain the experience of your workforce and avoid recruiting when work becomes available again.
DavidsonMorris’ employment lawyers can help with all aspects of employment contract changes. Working closely with our specialist HR colleagues we provide comprehensive guidance on how to approach and implement changes to terms and conditions projects to minimise legal risk while ensuring commercial goals are achieved and employee engagement is optimised.
In response to the challenges presented by the pandemic, many businesses are being forced to reconsider their workforce needs and options. Full-time, permanent contracts may, in the current circumstances at least, no longer provide the level of flexibility employers need at this time to ensure their company’s survival. We can also advise on alternative contractual arrangements, such as using part time contracts or zero-hours contracts, or looking at lay-offs and short time working for existing workers.
For help and advice, speak to our experts.
The law states that you must have given your consent for your employer to put you on short time working. If there is already a provision in your contract of employment allowing your employer to do this then you will be deemed to have given your consent. However, if there is no such provision then your employer will have to obtain your consent, usually by varying your contract with your permission.
Yes, but only if there is a provision in the employees’ contracts of employment allowing you to do so. If there is no such provision then you will have to seek the employees’ agreement to short time working. This might be collectively or individually. You can ask for the employees’ agreement to short time working for a defined period of time, or seek to change the employees’ contracts of employment so that you can introduce short time working when you like in the future.
There is no time limit on how long short time working or lay offs can last. However, if it lasts for over a certain amount of time then an employee may be able to claim that they are redundant and therefore owed a redundancy payment by their employer. This will apply if they have been laid off or on short time working and earning less than half a week’s pay for either four weeks in a row, or six or more weeks in a thirteen week period.
Unpaid short time is where you are not paid at all by your employer for the hours that you do not work, but would usually have worked. This will result in a reduction in your usual pay. If you do not work at all for a day, you may be entitled to claim statutory guarantee pay. However, you should check your contract of employment to see if your employer is allowed to pay you less or not at all during short time working. If the contract does not say that the employer can pay you less then they must not do so.
Last updated: 4 December 2021
Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.
She is a recognised by Legal 500and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.
Anne is an active public speaker, immigration commentator, and immigration policy contributor and regularly hosts training sessions for employers and HR professionals
Anne Morris https://www.davidsonmorris.com/author/anne/ Anne Morris https://www.davidsonmorris.com/author/anne/ Anne Morris https://www.davidsonmorris.com/author/anne/ Anne Morris https://www.davidsonmorris.com/author/anne/As employer solutions lawyers, DavidsonMorris offers a complete and cost-effective capability to meet employers’ needs across UK immigration and employment law, HR and global mobility.
Led by Anne Morris, one of the UK’s preeminent immigration lawyers, and with rankings in The Legal 500 and Chambers & Partners, we’re a multi-disciplinary team helping organisations to meet their people objectives, while reducing legal risk and nurturing workforce relations.
Legal Disclaimer
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct at the time of writing, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.