Lay-off period: For how long can employees be laid off?
Published 1 March 2016
In this case, the EAT considered whether a reasonableness term could be implied into a provision in an employment contract that allowed lay-off and short-time working.
An employer exercised a contractual right to lay-off some of its staff because of a down turn in work. One employee resigned after being laid off for around five weeks without pay, and claimed he had been constructively dismissed because the period of lay-off had gone on for an unreasonable period. To succeed, he would have had to show there was an implied term in his contract that a period of lay-off has to be reasonable. The EAT held that there is no implied term as to the period for which it is reasonable to implement lay-off and short-time working. There had therefore been no repudiatory breach of contract, and so no constructive dismissal.
What does this mean for employers?
It's fairly unusual these days for employers to lay-off their employees. As a reminder: an employer may lay-off employees, without pay, during a short-term, temporary downturn in work if it has a contractual right to do so. Without a contractual right, the employee can resign and claim constructive dismissal. The employee will in some circumstances become entitled to claim a statutory redundancy payment. There is no maximum prescribed period for which an employee can be laid off, and this case confirms that there is no implied term that a period of lay-off must be reasonable.
Employers should note that keeping an employee laid off with no reasonable prospect of there ever being an upturn in work would be likely to be a breach of contract, as it would effectively deny the employee a redundancy payment.
Craig v Bob Lindfield & Son Ltd UKEAT/0220/15, 20 November 2015