Temporary Lay Off or Redundancy?

The recent news that Toyota are to suspend production for set periods in various plants (including Derby) has no doubt shaken the workforce engaged at those premises at a time when most people are already suffering financially as a result of the recession. The decision has been made because of the direct effect of supply difficulties as a result of the earthquake disruption in Japan.

This is certainly not the first time an act of nature has affected business provision and services in England (remember the infamous Ash cloud?), however it is interesting to see how employers deal with such interruptions. A genuine reduction in work is a fair reason to make redundancies, however to terminate employment permanently would be unreasonable where the employer considers that reduction will be temporary.

One option available to employers where there is an unexpected downturn in work, includes temporary lay off, where the employees would be required not to attend work for a certain period of time but their continuous service remains in tact. This measure can only be used where there is a provision in the contract of employment allowing the employer to lay off and the employees may be entitled to a daily Statutory Guarantee Payment for up to 5 days in any 3 month period. If there is no contractual provision permitting an employer to lay off, arrangements may be agreed with the affected employees. This may be possible where employees recognise that the problems encountered by their employer is beyond its control and where relations between the parties are, in any event, good.

Temporary lay off is not the only option for employers

Other possibilities would depend on what the particular contracts of employment provide for, however another option would be requesting the workforce to take holiday during any periods of shut down to protect their income during that period and providing them with an unpaid day in lieu later in the year.

Toyota is understood to be in talks with its employees but it is likely staff will bank the hours they are off, and work them later in the year. The importance of consultation in this type of situation cannot be overstated.

For more employment law advice regarding lay off, redundancy or unfair dismissal or to comment on this article please email Melanie Morton one of our employment law specialists.