How to reduce staffing costs temporarily

legal updates

It is common practice for contracts of employment to hold a clause which allows the employer to implement periods of short term working or laying off staff.

Read our disclaimer keyboard_arrow_down

This website content is intended as a general guide to law as it applies to the motor trade. Lawgistics has taken every effort to ensure that the contents are as accurate and up to date as at the date of first publication.

The laws and opinions expressed within this website may be varied as the law develops. As such we cannot accept liability for or the consequence of, any change of law, or official guidelines since publication or any misuse of the information provided.

The opinions in this website are based upon the experience of the authors and it must be recognised that only the courts and recognised tribunals can interpret the law with authority.

Examples given within the website are based on the experience of the authors and centre upon issues that commonly give rise to disputes. Each situation in practice will be different and may comprise several points commented upon.

If you have any doubt about the correct legal position you should seek further legal advice from Lawgistics or a suitably qualified solicitor. We cannot accept liability for your failure to take professional advice where it should reasonably be sought by a prudent person.

All characters are fictitious and should not be taken as referring to any person living or dead.

Use of this website shall be considered acceptance of the terms of the disclaimer presented above.

It is common at this time of year that trade is not as frequent as businesses would like. As such, employers often have to look at ways of reducing the wage bill, without resorting to making unnecessary redundancies.

It is common practice for contracts of employment to hold a clause which allows the employer to implement periods of short term working or laying off staff, such as;

‘The Employer reserves the right to temporarily lay you off without pay or reduce your normal hours of work and to reduce your pay proportionately on giving you as much notice as it can reasonably give if, in the Employer’s opinion, it becomes necessary to do so.’ 

Lay Offs

If this provision is in place you can begin to implement it immediately. It is at the employer’s discretion whether to pay full wages during this period but this would generally defeat the point of the lay off in the first place. This said, employers must pay employees the statutory minimum guarantee payment of 5 days pay for every 3 months of lay off (see the BIS website for more information here).

Employers should be mindful when implementing a lay off period to write to the employee giving them a definitive date of when the period will end. 

Short Term Working

For each member of staff, you can reduce their hours, by no more than 50% and for no longer than 4 consecutive weeks. Further they should not be placed on short term working for more than 6 weeks in a 13 week period. You must give the employer written confirmation of the time period they will be on this new reduced hours pattern for, again with a definitive return date. 

Short term working is the most commonly utilised here, as it allows for staff to be kept ‘in the loop’ however reducing the wage bill.

For more information, ACAS have a definitive guide on their website. 

Octane FinanceFuel Your Finance

Octane Finance is the broker of choice for new and used car dealers nationwide. With our uncompromising service levels and our genuine and professional approach, you and your customers can trust us to deliver.

Dennis ChapmanIn remembrance of Dennis Chapman 1951 -2015Read More by this author

Related Legal Updates

Overview of Contemplated Employment Law Changes

We will continue to keep our members informed as more details emerge and as the timeline for these changes becomes clearer.

Changes to Sexual Harassment Law

In addition to safeguarding employees from harassment by colleagues, the duty extends to third-party harassment, such as harassment by customers.

New government… new laws

The recent announcement means an employee may be able to claim an unfair dismissal from day one. 

Extension of Redundancy Protection for Pregnancy and New Parents

Explore the strengthened redundancy protections for new parents with significant amendments to maternity, adoption, and shared parental leave rights, effective from April 2024, ensuring enhanced job security during critical family milestones.

New employment legislation effective from 6 April 2024

Enhanced employee rights, offering day-one entitlements to carer’s leave, flexible working arrangements, and extended redundancy protection for pregnant employees and those on family leave.

Wages increasing from 1 April 2024

With effect from 1 April 2024, the hourly rates of pay are…

Employment Law: Carer’s Leave

The regulations explicitly safeguard employees from any detriment or dismissal resulting from taking or seeking to take carer’s leave.

Get in touch

Complete the form to get in touch or via our details below:

Phone
01480 455500
Address

Vinpenta House
High Causeway
Whittlesey
Peterborough
PE7 1AE

By submitting this quote you agree to our Terms & Conditions and Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.