An alternative to redundancy?

Last updated: Mar 18th, 2009
Feature

Employees are increasingly being offered short-time working as an alternative to redundancy – but what is this arrangement and what do you need to know before you accept?

Companies across the UK have seen the amount of work coming their way dry up as a result of the recession, with many finding they simply do not have enough business to employ some or even all of their staff.

In many cases this may lead to redundancies – but, as an alternative, your employer may offer you the opportunity to reduce the number of days you work per week or the number of hours you work in a day. This is known as short-time working.

According to the Advisory, Conciliation and Arbitration Service (Acas), an independent body working to improve relations between employers and employees, you cannot be forced to take short-time working. In most cases, you will have agreed to take short-time working as an alternative to redundancy.

You might also find yourself “laid-off” – or told to stay at home rather than come into work for at least one complete working day. This could happen if, over a temporary period of time, your employer does not have enough work for you.

What is short-time working?

Short-time working is defined as when any week is less than half a week’s pay. So, unless your hours have been cut by 50% per week, you are technically only reducing your working hours.

Unless it is stated in your contract, your employer cannot force you to take short-time working. However, according to Acas, your employer might have an ‘implied right’ to force you to cut your working hours if it can show that this right has been established over a long period by custom or practice. For example, your contract might refer to industry-wide agreements that allow for lay-offs and short-time working.

Even if short-time working is not in your contract, you can still agree to go down this route as an alternative to redundancy.

Questions to ask

Before you accept short-time working, make sure you fully understand how your employer intends to proceed. You need to ask whether short-time working will continue for an agreed period of time or indefinitely. You should also find out whether your contract permits you to take on another paid job.

Agreeing to reduce your working hours could also impact the amount of redundancy pay you receive should you lose your job down the line, as this won’t necessarily be calculated as if you were working full-time.

Finally, find out how short-time working will impact the contributions your employer makes into your pension plan.

Pay

If you agree to short-time working, then your pay will be reduced accordingly. However, you may find your contract may include an entitlement to a statutory guarantee payment from your employer.

The maximum guarantee payment is currently £20.40 per day and is usually limited to five days in any three-month period.

If your working hours are less than 16 per week as a result of short-time working, then you could be entitled to claim Jobseeker's Allowance. Contact your local Jobcentre to see if you qualify.

In addition, depending on your employment contract, you may also be allowed to seek work elsewhere in order to boost your income.

Short-time working could impact the benefits you are entitled to receive. On the other hand, you may find that working fewer hours means you are entitled to additional tax credits. Contact Revenue and Customs (0845 300 3900).

However, if as a result of short-time working, your working week is less than 30 hours you may no longer be able to claim working tax credits. Again, contact Revenue and Customs to find out more.

Complaining and applying for redundancy

If you feel your employer is being unreasonable about laying you off, you do have some rights for redress. For example, you may feel people are being laid off indefinitely to avoid having to pay them statutory redundancy pay. Or you may feel you are being unfairly singled out.

If you find yourself in this situation, then DirectGov suggests you consider resigning and claiming constructive dismissal.

If you have been laid-off or put on short-time working for more than four weeks in a row, or for more than six weeks within a 13-week period (three of which must be consecutive), then you could apply for redundancy.

However, you should not consider going down this route without first taking advice, as there are several important steps that need to be taken if you are to successfully get statutory redundancy pay.

You can find out more about this process from Acas (08457 474747) or The Labour Relations Agency (028 9032 1442) if you live in Northern Ireland, as well as from your trade union. Citizens Advice also provides free and impartial advice.