I have a lay-off clause in my contract, can I claim a redundancy payment?

Last updated: 11 Dec 2020

If your contract of employment has an express clause allowing lay off or short-time working (LOSTW), the employer may invoke these clauses and they will not be in breach of contract if they cut pay or hours. These clauses have been fairly rare outside of manufacturing and construction, but are being considered now by a range of other employers.

An employee who has been ‘laid off’ by their employer under a clause in their contract that provides for lay off or short time working can seek a redundancy payment.

This right to claim a redundancy payment only applies if they are laid off or on short-time working for either:

  • 4 weeks in a row, or
  • 6 weeks in a rolling 13-week period.

To claim redundancy the employee must give the employer a ‘notice of intention to claim’ (NIC).

This NIC must be:

  • given within 4 weeks of the last day of the 4 or 6 week period of lay-off or short time,
  • in writing, and
  • state the intention to claim a redundancy by reason of lay-off or short time.

If the employer intends to resist the claim for redundancy they must serve a counter notice to the employee stating that they contest the claim. This must be issued in writing within 7 days of the NIC.

The employer can only resist the claim for redundancy on the ground that there is a reasonable expectation of:

  • work for the employee commencing within 4 weeks of the NIC, and
  • the work is expected to continue for at least 13 weeks

If, in fact, the employee is kept on lay off or short time during the four week period following the NIC the employer’s defence will automatically fail.

The employee can bring a claim to the Employment Tribunal for a redundancy payment if the employer rejects their application.

Finally to be entitled to the redundancy payment the employee must resign. This must be done by the giving the correct notice of termination. The notice period must be either one week, or any longer period that applies in the contract.

The notice must be given within:

    • 4 weeks of the NIC if the employer does not serve counter notice,
    • 3 weeks of the service of notice of withdrawal of any employer’s counter-notice, or
    • 3 weeks of an employment tribunal judgment that the employee’s claim succeeds.

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