Reasonable lay off
Labour & European Law Review Weekly Issue 462 23 March 2016
Section 148 of the Employment Rights Act says that after a four-week layoff employees can issue a notice claiming a redundancy payment from their employer. In Craig v Bob Lindfield & Son Ltd, the Employment Appeal Tribunal (EAT) held that it could not imply a contract term stipulating the length of time which might be reasonable in relation to lay off periods and short-term working.
Mr Craig’s contract allowed his employer to lay off staff or require them to work short-time when there was a drop in work. In the summer of 2014, Mr Craig was told he would be laid off with effect from 21 July with no pay other than a statutory guarantee payment.
Five weeks later, on 22 August, Mr Craig e-mailed his employer to inform him that he had a new job which he would be starting on 1 September. As he had been laid off for more than four weeks, he claimed he was entitled to a statutory redundancy payment. After Mr Lindfield made clear that he had no intention of making his job redundant, Mr Craig lodged a claim for constructive dismissal arguing that the lay off period was unreasonable.
The tribunal held that a contractual right to lay off was not subject to a test of reasonableness but that even if it was, the employer in this case had not exceeded what it referred to as “the reasonable period of time” under which they could lay off employees.
As the employer had kept in touch with Mr Craig throughout the entire four and a half week lay-off period and as this was not the first time he had been laid off, the tribunal concluded that the employer was not guilty of a repudiatory breach of contract. Mr Craig’s resignation on 22 August did not therefore amount to constructive unfair dismissal.
The EAT dismissed the appeal, holding that it could not imply a contract term stipulating the length of time which might be reasonable in relation to lay off periods and short-term working.
Accepting that a drop off in work would result in a reduction in the needs of a business for work of a particular kind or in a particular place (the statutory definition of redundancy), employees were entitled to a redundancy payment if they were dismissed in those circumstances. Otherwise, their only other option was to resign and claim constructive unfair dismissal.
Parliament had therefore introduced a scheme to balance the rights and interests of employers and employees in circumstances where both parties were adversely affected by a downturn in business that was expected to be short-lived. That scheme provided for a four-week period during which there would be no entitlement to claim a redundancy payment. However, once that time had passed the employee had the right to enter a notice claiming a payment. Those provisions left little room for an implied term to operate.
That did not mean that employees could never bring a viable constructive dismissal claim if for instance an employer had acted in such a way as to damage or seriously destroy the relationship of trust and confidence with their employee. However, no such facts arose in this case and the EAT therefore dismissed the appeal.