What is a “lay-off” and when might you need it?

You may have a loose idea of what a lay-off is. It’s the kind of term that could be mentioned in a US blue collar drama, or bandied casually around over here.

Actually, it carries a very tight definition in Irish employment law, and it is not making people redundant or dismissing them. It is one of the more complex areas of HR and carries significant risks.

So let’s take a closer look at lay-offs, how they work and when you might use them.

Irish “Lay-off” definition

Laying-off an employee or employees means asking them to stay at home because there is temporarily not enough work for them to do. You can only do this if you have an express clause in your employment contracts permitting it, or it is custom and practice in your business. 

You can also seek agreement from your staff. Without agreement, they should technically receive full pay, although you might then go on to consider redundancy.

As you can imagine, it is not something to be done lightly, and other options should be explored first. These include taking accrued holiday entitlement, finding alternative work for them or unpaid leave.

You must give as much notice as reasonably possible to staff (and keep them informed) and believe the shortage of work to be temporary. To be classified as a lay-off it must last for at least one day. There is no maximum term, but if a lay-off lasts for four weeks in a row or encompasses six weeks in a 13-week period, then your employee may be able to apply for redundancy and claim redundancy pay if they have sufficient service with you. There is a process to this that must be followed.

Consider that your employees still have to live, and being laid-off may well represent a stinging financial blow to them. They may seek alternative work to plug the gaps, if the employment contract does not forbid it, which could come with its own issues for you. State benefits may be available.

What may trigger lay-offs?

The overarching reason for lay-offs will be a temporary lack of work for employees to perform. There could be any number of reasons for this, but think events like a cyber attack on your business which takes down IT systems, a natural disaster like flooding, or problems with your supply chain.

What else to consider with lay-offs?

There are complexities of which to be mindful. These include the fact that statutory holiday entitlement and continuous service should still be accrued – they remain employed. You should also check the wording of your employee benefits agreements and salary sacrifice arrangements to see how you should manage these. 

If any public holidays fall within the first 13 weeks of lay-off these should be paid as holiday as normal.

Be sure not to discriminate when selecting staff for lay-offs and keep staff regularly updated. There is a separate legal provision called short-time working where less than half of weekly hours are worked and pay received which can interact with lay-off for some of the rules.

Doing lay-offs correctly

So as you can see, lay-offs are no trivial matter. In fact, they may be considered high-risk with the chance of tribunal claims, redundancy applications, damage to employee relations and financial hardship for those laid-off. And all at a time when you yourself are probably feeling pressure because of business conditions.

Where a business has chosen to Google a template employment contract you may be particularly at risk. At The HR Dept we tailor employment contracts for you, so you avoid this pitfall, and a host of others that could catch you out. We offer them as a one-off service, or included within our retained Advice line. Ask us if you would like a review.