In light of the prevailing situation regarding the coronavirus, many employers are asking whether they can place employees on lay-off or short-time. In this briefing we address a number of FAQs on this topic.
What is "lay-off" and what is "short-time"?
In accordance with the Redundancy Payments Acts 1967-2014,lay-off occurs where an employer is temporarily unable to provide an employee with the work for which they were employed. Short-time occurs where an employee's hours of work or pay are reduced to less than 50% of normal weekly working hours or normal weekly pay.
In both cases the employer must reasonably believe that the situation will not be permanent and must give employees notice to this effect. The legislation does not stipulate a minimum period of notice. Exceptional circumstances, such as the COVID-19 pandemic, are likely to justify a short notice period.
The employer's reasonable belief regarding the temporary nature of the period of lay-off or short-time will be construed in accordance with the circumstances prevailing when the decision is made.
A period of lay-off should not be confused with sick leave or a period of self-isolation in accordance with current HSE guidelines.
Employers should exercise care when selecting employees for lay-off or short-time, apply objective selection criteria and be mindful of not discriminating, directly or indirectly, against employees on any of the nine grounds prohibited by the Employment Equality Acts 1998-2015.
Am I legally obliged to pay my employees during a period of lay-off or short-time?
At common law an employer cannot unilaterally place an employee on unpaid lay-off or short-time working with reduced pay unless there is an express contractual right to do so. An example of an express term is a provision in the employee's individual contract of employment or in a collective agreement which applies to the employee concerned.
Alternatively, the employer might have an implied right to do so, for example, pursuant to an established custom and practice within the employing entity of laying employees off without pay in circumstances of economic downturn or other periods of financial hardship.
Furthermore, there have been first instance decisions in relation to claims under the Payment of Wages Act 1991, which found that even where there was no contractual right to impose lay-off and no evidence of custom and practice in the employment concerned, that the employer may still be permitted to lay off employees without pay. In one such case the rationale for the decision was expressed as follows: "It is a well established practice in this jurisdiction that lay-off without pay is operable where an employer can demonstrate it has been the custom and practice of the trade and/or workplace and that the custom must be reasonable, certain and notorious".
Is an employee on lay-off or short-time entitled to a statutory redundancy payment?
If an employee has been laid off or on short-time for (i) 4 or more consecutive weeks, or (ii) 6 or more weeks within a 13-week period of which not more than 3 are consecutive, the employee may notify their employer in writing of intention to claim a statutory redundancy payment assuming they satisfy the qualifying criteria, for example, having at least 2 year's continuous service. The notice must be given at the latest within 4 weeks after the lay-off or short-time has ended.
Within 7 days of the employee's notice, the employer can give counter notice contesting liability to pay a redundancy payment. This applies if it is reasonably to be expected that within 4 weeks of the employee's notice the employee will be permitted to work for at least 13 weeks without being laid off or placed on short-time for any week.
Can I require employees to take annual leave at this time? Are there other options available?
An employer can decide when employees take their annual leave provided the employer takes account of the employee's family responsibilities, opportunities for rest and recreation and consults with employees (or their trade union) at least 1 month in advance.
Employers can also facilitate requests from employees to take annual leave in order to discharge family obligations they have as a result of the current school closures. Other options that can be explored are facilitating parental leave or other unpaid leave or employees commencing maternity leave early.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.