Q&As

For an employee to receive no pay during a lay-off, must the contract specifically state they do not receive pay during a lay-off? Or would a clause only stating the employee can be laid off be sufficient enough for the employee not to be paid during a lay-off?

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Published by a LexisNexis Employment expert
Published on: 25 June 2025

A 'lay-off' occurs when the employer temporarily shuts down some or all of its operation because it cannot find any or enough work for its employees.

In such circumstances, the employer may purport to suspend the contract of employment, rather than terminate it. However, the employer has no unilateral right to suspend the contract (Neads v CAV Ltd, Peter Pain J). There must be a permissive term in the contract, express or implied, before the employer may lawfully suspend the contract (Hanley v Pease & Partners Ltd, Div Ct; Marshall v English Electric Co Ltdtc).

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