Working reduced hours as an alternative to redundancy
If the business you work in is going through a downturn, your employer may ask you to reduce the number of hours you work each week (called short-time working) or take whole days off (called a lay-off).
- Short-time working
- Step 1 – Get advice
- Step 2 – Check your contract
- Step 3 – Get what you’re entitled to
- Step 4 – Claim any benefits and tax credits
- What to consider when faced with reduced hours
- How long can you be put on reduced hours?
- Changes in your contract
- What if you and your employer don’t agree?
You are entitled to full pay unless your contract says you can be asked to take unpaid leave or reduced pay lay-offs.
This means your employer will reduce your working hours, or your work days each week, on reduced pay.
For example, you might be asked to work a three-day week, instead of a five-day week.
If there’s not enough work for you, your employer might ask you not to come into work, or to take unpaid leave.
A lay-off is when you’re off work for a minimum of one working day.
Step 1 – Get advice
Don’t make any snap decisions – discuss your options with your union or employee representative, if you have one. And put time aside to talk it over with your family – it’ll affect them too.
Step 2 – Check your contract
Can your employer reduce your hours, or lay you off? The short answer is only if your contract of employment allows it.
Your employer can only lay you off or require you to go on reduced hours if your contract of employment allows it. If not, your employer will have to negotiate a change to your contract. Typically, this will involve many members of staff and they or their union will have to agree to the new arrangement.
You should also check if your contract allows you to take on another paid job while you’re on reduced hours.
Step 3 – Get what you’re entitled to
Statutory guarantee pay is the legal minimum your employer must pay if you’re laid off. It is paid for a maximum of five days in any three-month period and is capped at £26 a day.
However, you may get more than this if it’s written into your contract of employment.
Step 4 – Claim any benefits and tax credits
You may be able to claim Jobseeker’s Allowance if you’re on short-time working or have been laid off.
Did you know?
A temporary fall in hours for up to four weeks should not affect your tax credits.
Lower pay could mean you get extra tax credits, but eligibility also depends on the number of hours you work.
Your tax credits are based on your income for the whole tax year. You might not currently be eligible if your income is too high.
However, if you think your income might fall later because of reduced hours or redundancy, it’s worth putting in a claim straight away even though you’ll be awarded £0 for now.
This is called making a ‘protective claim’. It means you are on the system and, if your income falls later, your award can be backdated to the date you first claimed. Otherwise a claim can only be backdated one month.
- Contact the Tax Credits Helpline on 0345 300 3900 to let them know about any changes to your income or working hours.
- Use a benefit calculator on the GOV.UK website to find out what you may be entitled to.
- Search for benefits and grants on the Turn2us website.
You’ve probably heard about Universal Credit, the new benefit which is replacing tax credits, Income-based Jobseeker’s Allowance and some other benefits.
What to consider when faced with reduced hours
Top of your list is probably going to be money. How is your household income going to be affected by reduced hours? If there are other jobs available where you live, you might be tempted to leave – even for slightly less money. But remember, leaving voluntarily could mean missing out on valuable redundancy rights.
“When they told us we were going to a three-day week, my first instinct was to tell them where they could stick their job. I mean, I’d been with the company 28 years.
“But my sensible head said “talk to the union”. They were a great help and made sure I knew my rights. It was tough and we had to cut back at home, but only working three days meant I had time to get my CV out there.
“In the end, the company didn’t survive but I got the redundancy pay I’d never have received if I’d quit. I’ve now got three interviews lined up, so things are positive.” – Alex
How long can you be put on reduced hours?
Depending on what your contract says, there is no limit to how long you can be laid off or put on short-time working for.
However, if you have been in this position for four weeks in a row (or six non-consecutive weeks in a 13-week period), you should be able to claim redundancy pay if you decide you’ve had enough.
Changes in your contract
Your employer might want to change the terms in your contract, such as a cut in pay or change to part-time working, but they can’t without your consent.
Before agreeing to a change, find out from your employer how it would affect any pay-related benefits and rights you are entitled to, such as future redundancy pay, employer’s pension contributions and sick pay.
What if you and your employer don’t agree?
Your employer can’t just bring in a change to your contract if you don’t agree. However, if they make changes and you don’t do or say anything, this may be seen as you accepting the changes.
It’s important to know your rights so speak to your trade union rep, if you have one, or contact one of the workplace advice services.