Laying Off Workers

For some industries, such as car manufacturing, the need to lay off staff on a temporary basis to deal with a downturn in production is a useful and necessary tool. However, employers cannot simply suspend an employee’s employment on a whim. To do so they would need to have an express agreement with the employee, which would be incorporated into the contract of employment. Suspending the employment relationship without this right could lead to claims for breach of contract.

In the case of Craig v Lindfield & Son, the Employment Appeal Tribunal was asked to consider the issue of temporary lay-offs and whether an employer needed to act “reasonably” when exercising this right. Mr Craig’s contract stated that he could be laid off or required to work short-time in circumstances where there was a drop in work. In 2014, following a downturn in business Mr Craig was indeed laid off and received a statutory guarantee payment. His employer assured him and his colleagues that it remained hopeful work would pick up soon.

After 5 weeks, Mr Craig resigned and brought a claim for constructive unfair dismissal and a redundancy payment.

On the facts of this case, both the Employment Tribunal and the Employment Appeal Tribunal (EAT) held that the employer had not breached Mr Craig’s employment contract and that his claim therefore failed. The EAT stated that although a contract of employment is principally an agreement to provide work in return for wages, where the parties agree that wages do not need to be paid in certain circumstances, it will not be a breach of contract if the employer exercises that right. Furthermore, certain protections were enshrined in law which meant that there was no requirement for the period of any lay to be reasonable.

Although Mr Craig’s claim failed in this case, the outcome could have been very different if the tribunals had concluded that the employer had not acted in good faith and had put profit before the welfare of its employees.

If you would like to discuss the above case or the regulations governing the lay-off of workers during a down turn in business please contact Debbie Sadler on 011 955 9607 or at d.sadler@hewetts.co.uk.

Published on 03/03/2016