Economists have warned[i] the coronavirus outbreak could cost more than a million people their jobs, as businesses try to deal with the impact of travel restrictions, self-isolation and cancelled events.

As employers seek to mitigate the impact of coronavirus on their business by laying off staff or reducing their hours, while seeking whatever help is available from the Government.

Employers may want to lay people off or reduce their working hours temporarily as a first step to protecting their business without making people redundant, but they need to be aware of the law.

There’s no statutory right to lay people off – to do this you need a contractual right. However, most employers are unlikely to have a clause in their employment contracts allowing them to do this, so they’re going to need their employees’ agreement.

If an employer imposes a lay-off or short-time working unilaterally where there is no express or implied contractual right to do so, this will amount to a fundamental breach of contract. In these circumstances, the employee could pursue a claim for an unlawful deduction from wages, breach of contract or constructive dismissal.

Employers should present their proposal to affected staff and explain why they consider a lay-off or short-time working is necessary, with a view to seeking their consent. If employees understand that the lay-off or short-time working may help the organisation buy some time and avoid having to make redundancies, they are much more likely to be amenable to the proposal. To avoid any doubt, it is always advisable to obtain employees’ consent in writing.

While lay-offs and short-time working can provide a temporary solution for businesses, if their position does not improve there may still come a point when it’s necessary to consider redundancies. Employers also need to be aware that, under some complex rules, keeping employees laid off or on short-time working for a specified period of time – four or more consecutive weeks, or six weeks or more in a 13-week period – may result in claims for statutory redundancy payments.