Having to let go of employees isn’t an easy job.
But you may have to if there isn’t enough work. Letting employees go could increase efficiency and reduce your outgoing costs.
If you fail to follow the legal process, you could face compensation payments or court hearings. This could impact your business’ reputation and productivity.
In this guide, we’ll explain what being laid off means, the cost of laying employees off and the legal process you need to follow.
What Does Lay-off Mean?
A lay-off is when there is less demand for a type of work and an employer decides to make cutbacks. Lay-off's are a temporary downturn in work, not a permanent cut back from the business.
This can occur if you need to manage your costs, or deal with any economic reasons (such as COVID-19).
If there isn’t enough work for your employees, you may need them to stay at home. If an employee is off for one working day, this is classed as lay-off.
You can only lay off an employee if their contract contains a lay-off clause. If this clause is included in an employees contract, you don't need to pay them in full.
Why Do Companies Lay Off Employees?
Choosing to lay-off employees can be a difficult process. But there are many reasons for laying off employees. For example:
- Reducing costs: your company may not be making enough profit to cover expenses.
- Avoid Redundancy: the option of making employees redundant should only be a last resort.
- Relocation: if operations are moving to a different area, some employees may need to be let go.
- Company buyout: new management with new goals may want to replace some employees.
What is the Difference Between Lay-off and Short-time Work?
Lay-off is temporary time off from work. But if you need your employees to work for part of the week but they are laid off, this is short-time working.
For short-time work, you may want to consider reduced hours instead. Your employee will continue to work for you while you can reduce some of your costs.
How to Lay-off an Employee
Sometimes, laying off employees can lead to dismissal, but they are not the same thing.
To effectively handle the lay-off meeting well, you should use some best practices:
- Be honest: express why the employee is being laid off.
- Be compassionate: show your employee understanding. Potentially provide outplacement services to reduce the impact.
- Be quick: a lay-off meeting should be kept short with the above suggestions kept in mind.
You should also not express any signs of disappointment or anger in the meetings. Nor should you make any promises of any kind.
What is Lay-off Pay?
This is the pay that employees receive when they have been laid off. An employee is only paid in full if there is a clause in their contract.
But if there isn’t any work for your employees to do, they will be eligible for guarantee pay. This is a legal right an employer must pay.
Guarantee pay is £30 a day for 5 days in a 3 month period. The maximum an employee can receive is £150.
To be eligible, they must:
- Be classed as an employee.
- Be employed continuously for at least one month.
- Be available to work.
- Not refuse any alternative work.
- Not be laid off due to an industrial action.
Alternatives to Laying Employees Off Work
Lay-offs are often stressful and can affect a company’s image. If you are struggling to lay-off employees, there are alternatives.
A few examples of alternatives are:
- Freeze hiring.
- Remove bonuses.
- Eliminate unnecessary travel.
- Offer more unpaid time off.
Get Expert Advice on Laying Off Employees with BrightHR
Although laying off an employee might be difficult, it could be a crucial factor for your business.
You should always stick to the legal process or else you may face compensation payments or costly court hearings. This could effect your brand image and productivity in the workplace.
BrightHR can help you manage who to lay-off. If you need any assistance on lay-offs, don’t hesitate to get in touch with one of our experts.
Book in a free demo today to see how easy it is. Give us a call on [0800 783 2806](tel:0800 783 2806)
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