All businesses go through ups and downs. And if yours is struggling you'll want to do everything you can to avoid making staff redundant.
One of the ways you can do this is to put your employees on short-time working. It's important you understand what it is and how to do it correctly. Failure to do so can lead to claims being made against you.
In this guide, we'll discuss what short-time working is, what rules you must follow, and if it can lead to redundancy.
What is short-time working?
Short-time working refers to a temporary situation where your business is forced to reduce normal weekly hours of work or staff pay (or both) by more than 50%.
Before choosing this option, it may be possible to manage the shortage in work through other temporary measures. Such as employees taking holiday from work, flexible working or unpaid leave.
What is the difference between a lay-off & short-time working?
As an employer, it's important to know the difference between a lay-off and short-time working arrangements.
Essential elements for lay-off:
- There is no work for the employee.
- The employer reasonably believes that the cessation in employment will be temporary.
- The employer must provide the employee with advance notice of the cessation of work.
Essential elements for short-time:
- The employee will be paid less than one-half of their normal weekly remuneration, or the employee will be working less than one-half of their normal weekly hours.
- The reduction in hours or pay is due to a shortage of work.
- The employer reasonably believes that the reduction in hours or pay will be temporary.
- The employer must provide the employee with advance notice of the shortage of work.
How long can a lay-off or short-time working last?
In theory, a period of lay-off or short-time could go on indefinitely. Employees will gain a right to claim a redundancy payment however if they submit a claim within four weeks of:
- The end of a continuous period of lay off or short time of four or more weeks; or
- The end of a period that included six weeks' lay off or short time out of thirteen weeks (where no more than three weeks were consecutive).
You should note that you are not required to proactively make an employee redundant simply because these time periods have passed.
The onus is on the employee to serve a written notice to their employer to confirm that they are claiming a redundancy payment due to the above circumstances.
Reasons for short-time working arrangements
There may be circumstances where short-time working is required, such as:
- A temporary economic downturn.
- A lack of work.
- A last resort to avoid redundancies.
What rules must you follow if you're placing employees on short-time working?
If you're choosing to place an employee on short-time working, there are some obligations that you must follow. Failure to do so can lead to claims being raised against you.
Let's discuss them in more detail:
It must be in their employment contract
There must be a short-time clause in the employment contract, or it must be custom and practice in the employer's business.
In the absence of an express contractual clause reserving the right to put employees on short time, you will need to secure express agreement from the employees involved before putting them on short time. Putting someone on short-time working without this could be a breach of contract, with a claim being raised to the Workplace Relations Commission.
You must give notice
If you're looking to reduce an employee's hours then it's vital you give them notice. You must explain to the employee your reasons behind the decision and how long you expect it to be for. However, there's no minimum period of notice that you must give.
Throughout the arrangement, you must keep the employee informed of the ongoing situation and when you expect work to return to normal levels.
You must be fair and not discriminate
You must never act unfairly or discriminate when selecting employees for short-time working. Employers must use the same selection criteria as they would for redundancy.
Under employment equality law, you must never treat someone unfairly because of the following:
- Civil status.
- Family status.
- Age.
- Disability.
- Religious belief.
- Race.
- Sexual orientation.
- Membership of the Traveller community.
Discriminating against your employees can lead to claims being raised to the Workplace Relations Commission.
You must never unlawfully deduct wages
You should never unlawfully deduct wages from employees during a lay-off or short-time working. You should only stop payments during a period of lay off if you have a clause in your employment contract specifically stating that the employee will be laid off ‘without pay’. Without such a clause, failure to pay may lead to an employee making a claim for arrears in wages.
However, you can lay-off employees without pay if you have secured their prior agreement. If the alternative is redundancy, the employees may be agreeable to unpaid lay-off.
Do employees still receive public holiday benefits during short-time working?
Yes when you lay-off employees or put them on short-time working, their employment contract remains valid. This means your employees are entitled to receive benefits for public holidays that take place in the first 13 weeks of the lay-off.
Failure to provide your employees with their entitlements is a breach of contract and may lead to claims being raised against you.
Do employees accrue annual leave if they're on short-time working?
No, anyone who is on lay-off or short-time working doesn't build up annual leave. Employees on short-time working are entitled to take any annual leave entitlement they've built up before the changes were made.
Can an employee claim redundancy whilst on short-time working?
Yes, if the employee has been on short-time working (receiving less than half wages) they can claim redundancy if the following requirements are met:
- They have been on short-time working for at least four consecutive weeks.
- They have been on short-time working for at least six weeks within the last 13 weeks.
Claiming redundancy makes the employer aware that the employee wants to be released from their contract. This can be because they feel they won't return to their former hours anytime soon.
There is a process that has to be followed if your employee chooses to take this option. Let's discuss them in more detail:
Step 1 - Employees give notice
The first stage of the process is for the employee to make you aware of their intention to take redundancy. This is done via a form RP9.
Treat any notice you get with respect and make the employee aware of when their work finishes.
Step 2 - Employer response
You may also provide the employee with a counter-notice, making it clear that work will restart within four weeks of you receiving the notice.
The response must be made within seven days of you receiving it. The response is either an acceptance or a counter-notice.
A counter-notice is when you make the employee aware of the following:
- The work will return in the next four weeks from the date of their claim.
- The work will last at least 13 weeks without a lay-off.
Can employees receive statutory redundancy pay?
They may also be entitled to a redundancy payment if they qualify. To be eligible for statutory redundancy pay the employee must have at least 104 weeks of continuous employment.
The Redundancy Payments Act 1967-2014 covers redundancy rules in Ireland.
Get expert advice on short-time working from Peninsula
Short-time working is an option you can take if you need to cut back costs in your business. But if you choose this, it’s important you get it right.
There are rules you must follow, including not deducting wages. Failure to do so can lead to claims being made against you.
Peninsula offers 24/7 HR advice which is available 365 days a year. Want to find out more? Contact us on 0818 923923 and book a free consultation with one of our HR consultants.
