How to place staff on short-time working

With the coronavirus (COVID-19) pandemic causing financial worry for many UK businesses, Andrew Willis, Head of Legal at Croner, explains how short-time working can keep staff on your workforce without having to make redundancies.

What is short-time working in the UK?

Short-time working is where an employer and an employee agree to a reduction in working hours.

The employment law for short-time working is clear; businesses have the right to ask an employee to take it, but employees don’t have to agree to the request. However, if there is an outlining in their contract of employment then staff don’t have to agree to the changes for the changes to be implemented.

The process for short-time working follows a structure of confirming with employees a reduction in wages and/or working hours. Businesses must do these as part of a legal requirements to staff. In short, employees have the right to know what a company’s plans are as they develop.

Why do employers use short-time working?

There are common reasons for short-time working, such as:

the business has less work available
the business needs to reduce the weekly pay of staff
the business wants to avoid the need for redundancies

It is therefore understandable that many businesses may want to use short-time working to help manage the financial impact of the coronavirus pandemic, as it can help avoid the need for redundancies.

Businesses can make this change permanent, but employees will need to agree to it. And if the hours do become permanent then businesses must create a separate agreement and a letter of confirmation about the amend will need be sent to the employee within a month of the update.

If the change is only temporary requirement, it’s still good business practice to confirm the amend in writing.

What is the difference between lay-offs and short-time working?

Lay-offs and short-time working, collectively referred to in the UK as ‘LOST’, are often considered the same issue as both are used to address a shortage of work. However, these are two distinct concepts, with different definitions under the Employment Rights Act 1996, and companies need to have a firm understanding of both:

In practice, a lay-off is where an employer asks an employee to stay at home and not attend work for a temporary period (at least one working day). A statutory lay-off will apply where an employee has not been paid for a week because their employer hasn’t been able to provide them with work to do.
Short-time working is when an employer requires their employee to work less than their regular contractual hours, for example three days a week instead of five.

How do you place staff on short-time working?

If you are looking to implement short-time working, you should provide a policy which explains the following:

how you’ll address a reduction in hours/pay with employees
how much pay your employees will receive
the amount of reduced working you expect
how you’ll approach employees for agreements on the reductions.
the way you’ll confirm the agreement (in writing)
an explanation if this is temporary during the coronavirus pandemic

If there is already a clause in an employee’s contracts, businesses can still create a policy for short-time employment if they wish to adjust existing rules.

If there isn’t a clause in an employee’s contracts, businesses will need to hold discussions with employees about the need to place them on short-time work, explaining that it is part of the business’ effort to avoid redundancies. If staff agree to the plans, then it’s a case of:

confirming the reduction of hours/pay with employees in writing
calculating the pay owed to full and part-time staff
providing updates to staff about when they’ll return to work

How does short-time working affect notice periods?

Short-time working and notice periods are entirely dependent on employment contracts and each employee’s position in the business. Their notice period will depend on factors such as:

if they’re full-time or part-time
their length of service with your business
what is agreed in their employment contract

How does short-time working affect holiday entitlement?

Employees ‘accrue’ their annual leave as normal during any period away from a business.

If they wish to request holiday days, then businesses can (as per normal) agree to a request as and when they make it.

How does short-time working affect pay?

There are guaranteed payments during short-time working called ‘statutory guarantee pay’ (SGP), which is the minimum you have to pay staff as a business. The payments are currently:

Full-time staff: £30 a day for 5 days in any three-month period. The maximum is £150.
Part-time staff: You’ll need to calculate this based on the number of hours they work each week.

You can also offer better SGP as part of your policies, though you are under no legal obligation to do so. It should also be noted that staff cannot claim guarantee pay for any day that they do some work.

Staff can also make a claim for statutory redundancy pay if they are eligible and have been laid-off or on short-time pay for either:

more than four weeks in a row
more than six weeks overall for during a 13-week working period

About the author

Andrew Willis is Head of Legal at Croner and assumes additional responsibility for managing Croner’s office-based telephone HR advisory teams, who specialise in Employment law, HR and Commercial Legal advice for large organisations across the UK.

Five things to consider before making staff redundant

What you need to know about holiday entitlement and pay during lockdown

Find out more

Lay-offs and short-time working (GOV.UK)

Redundancy: your rights (GOV.UK)

Employment Rights Act 1996 (Legislation)

Image: Getty Images

Publication date: 18 June 2020

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.