If the employee agrees to work fewer hours for a period of time and the employer does not have an existing contractual right to lay off or implement short-time working, can the employee still claim a statutory redundancy payment?

If the employee agrees to work fewer hours for a period of time and the employer does not have an existing contractual right to lay off or implement short-time working, can the employee still claim a statutory redundancy payment?

An employee may claim a statutory redundancy payment without being dismissed in one of two situations:

• where the employee is ‘laid-off’ by the employer, ie when the employer temporarily shuts down its operation because it cannot find any or enough work for the employees

• where an employee is put on short-time working—short-time working occurs where the employer requires the employee to do less than their full contractual hours and the employee receives less pay as a result

In the circumstances to which you refer, it would seem that the employer intends to implement a period of short-time working.

Where there is no existing contractual right for the employer to impose this, the express informed consent of the employee will be needed. The imposition of a period of short-term working without a contractual right to do so, or without the employee’s consent, is likely to amount to a repudiatory breach of contract.

Where the employer relies on consent to implement a period of short-time working, then it may want to ensure that the employee has all the relevant information to inform their consent, such as for how long the period of short-time working will last and details of how their pay will be affected. It may be prudent to have the details of the arrangement, and the employee’s consent, set out in writing. Further consent may be needed at a later stage if the initial period needs to be extended.

If the employee has consented to a period of short-time working, they may be entitled to a redundancy payment under the statutory scheme despite not having been dismissed or constructively dismissed, provided the provisions set out in sections 147154 of the Employment Rights Act 1996 (ERA 1996) apply and are complied with.

In summary, a statutory redundancy payment is payable where:

• there is a period of lay-off or short-time (as defined in ERA 1996, s 147)

• the period of lay-off or short-time is for the prescribed period

• the employee has given notice of their intention to claim the payment in writing, within the required time frame

• the employee terminates the contract of employment by giving the requisite notice

• the employer does not give a counter-notice, stating that there is reasonable expectation of a resumption of normal working

• the employee is not dismissed by the employer (in which case the employee may be entitled to a statutory redundancy payment anyway)

For the purposes of the statutory scheme, a week of short-time working takes place where the employee receives less than half a week’s pay (not taking into account any statutory guarantee payments to which they may be entitled) for work done, because of a diminution in the amount of work provided by their employer of the kind which the employee was employed to do (ERA 1996, s 147(2)).

In order for the scheme to trigger, the employee must have been kept on short-time working either for four consecutive weeks or for a total of six weeks (no more than three being consecutive) in any period of 13 weeks.

To receive a statutory redundancy payment, the employee should have complied with specific requirements in relation to their notice of intention to claim a statutory redundancy payment, and ultimately have resigned after giving their employer contractual notice or one week’s notice, whichever is greater.

For further information about the conditions for claiming a statutory redundancy payment where an employee has been put on short-time, see Practice Note: Redundancy payments for lay-offs and short time.

In relation to the statutory right to a guarantee payment, see Practice Note: Guarantee payments.

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