Short Time Working (Employer Guidance)

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.

Can you impose short time working on your employees?

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:

• Seek to make a temporary or permanent change to affected employees’ contracts. Meet with the relevant employees (and/or their representatives) and explain why short time working is necessary and why you want to change their contracts to include this provision. Explain the implications of not agreeing to the change in contract terms or to short time working, for example, if compulsory redundancies would result.
• Rely on ‘custom and practice’. If your organisation has implemented short time working in the past with the implicit or explicit consent of your employees, then you could seek to argue that, by custom and practice, it is an established part of the terms and conditions of employment at your firm. In reality, this can be a difficult justification to prove should the employee bring a legal complaint, meaning it is usually better to formalise the arrangement by obtaining your employees’ agreement and inserting the correct provisions into employment contracts if possible.

What does short time working mean for the employer and workers?

Depending on how short time working is implemented and managed, there could be a number of possible effects on your business.

Effects on the employer

• There will be an increase in administration in making the change to short-time working. If a change to employee contracts has to be negotiated in order for the employer to have the contractual right to impose short time working, this will impose considerable extra work on Human Resources and management.
• Morale in the organisation may be negatively affected if the process is not handled carefully.
• Businesses may gain some much-needed ‘breathing space’ during an economic downturn.

Effects on workers

• Pensions – in a contribution-based scheme, the amount of contribution the employee makes will reduce, so the overall pension pot will not grow as quickly as it would have done. In a final-salary scheme, the overall value of the pension benefit could go down, as the level of the salary earned by the employee during short time working will be less.
• Tax – as the employee will earn less during short time working, they may pay less tax and be entitled to claim a refund from HMRC.
• Holiday – workers continue to accrue holiday during short time working
• Pay – this is the most obvious negative effect for employees. As long as they meet the eligibility requirements, your employees will be entitled to statutory guarantee pay of £30 per day for up to five days in any three month period. Therefore, a maximum of £150. For part time employees, this will be pro rata. In addition, they must make sure they are reasonably available for work, and have not refused an offer or reasonable alternative work from you.
• Statutory guarantee pay is the legal minimum that can be paid by employers. Of course, your organisation may choose to have its own guarantee pay scheme, in which case the employee is not entitled to the statutory payments on top.
• Benefits – employees may be able to claim Universal Credit or Working Tax Credit, or receive a higher level of this.Ÿ
• Seeking other work – employees should check their contracts of employment to see if they are allowed to undertake work for other employers during a period of short time working. It is considered reasonable for employers to allow this. However, employees must make sure that they are able to return to work for the original employer when needed, otherwise they may reasonably be treated by the employer as having resigned from their job.

Legal risks for employers of adopting short time working

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.

Need assistance?

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.

Short time working FAQs

Last updated: 4 December 2021