Lay-Off and Short-Time Working in Response to Covid-19 – What Employers Need to Consider
We consider the Irish position on lay-off and short-time in the context of the current Covid-19 (Coronavirus) outbreak

 

In our recent article here we outlined the key employment law concerns arising in connection with the ever-evolving outbreak of Covid-19. The government is encouraging employers to be flexible in terms of employee working arrangements. Many employees are already working from home. However, following the shut-down of schools and childcare facilities and government encouragement of closure of pubs and bars in an effort to delay the Covid-19 outbreak, 140,000 employees in Ireland were laid off by St Patrick's Day. It seems likely that this number will increase as Irish employers take extra precautions and as some can no longer maintain business as usual. In these unprecedented times, many employers may need to consider temporary lay-off or short-time working options.

Lay-Off and Short-Time

Under the Redundancy Payments Acts 1967 to 2014 a lay-off situation arises if an employer is unable to provide work to an employee for which they are employed to do. A short-time situation arises if an employee's weekly pay or hours is less than 50% of their normal weekly pay or hours due to a reduction in the amount of work to be done for which they are employed to do. 

  • Temporary - The employer must believe that the lay-off or short-time working arrangement will not be permanent. This belief must be honest and reasonable.
  • Notice – The employer must notify the employee in writing (generally by way of the statutory Form RP9) before the cessation of/reduction in work. While there is no minimum notice period provided for under legislation, an employer must provide notice which is reasonable in the circumstances. While we are of the view that a short notice period may be permitted in exceptional circumstances such as in the case of Covid-19, this remains to be seen in practice. 
  • Rationale - Employers should explain to employees the reason for the lay-off or short-time working and keep employees regularly informed of the situation during the lay-off/short-time.
  • Pay? - Employers must have a contractual right or an implied right through custom and practice to lay-off employees without pay. To rely on an apparent custom, the employer will need to demonstrate that such a practice was reasonable and within the knowledge of the employees. Alternatively, employees could agree to be laid-off without pay. Such a provision may also be provided in any relevant collective agreement. An employer is generally not required to pay employees on lay-off in exceptional circumstances. In our view, the Covid-19 pandemic may constitute such circumstances (although this remains to be seen in practice).
  • Potential claims - Failure to notify an employee of the lay-off or short-time working may result in employee claims including a claim for a statutory redundancy payment or a claim for non-payment of wages. When selecting employees for lay off or short-time working, the criteria should be reasonable, non-discriminatory and applied in a fair and consistent manner.

Employee Claim for Redundancy

If a lay-off or a short-time situation continues for four plus consecutive weeks (or for six weeks in the last 13 weeks of which not more than three are consecutive), employees may provide their employer with written notice of an intention to claim redundancy under the Redundancy Payments Acts 1967 to 2014 (the Notice to Claim). Here an employee may be entitled to a statutory redundancy payment but will not be entitled to notice or pay in lieu of notice.

If an employer receives a Notice to Claim, it can issue a counter-notice within calendar seven days of receipt of the Notice to Claim. To do so, the employer must reasonably expect full employment to recommence within four weeks from receipt of the employee notice and that the employee will not be subject to lay-off or short-time for 13 weeks once work recommences. 

Income Supports

The Department of Employment Affairs and Social Protection (the Department) is setting up a rebate scheme for employers who continue to pay employees who would otherwise be laid off because the employer's business has had to cease trading due to HSE advice on 'social distancing'. The Department will reimburse employers €203 per week for each employee. It should be noted that the Minister for Employment Affairs and Social Protection has indicated that it will be a "number of weeks" before employers can be reimbursed in these circumstances.

Alternatively, an employee who has been laid off may be entitled to the new COVID-19 Pandemic Unemployment Payment which is available for a six-week period or can apply for a Jobseeker's Payment. 

An employee who is on short-time may also avail of the COVID-19 Pandemic Unemployment Payment or Short Time Work Support. Supplementary Welfare Allowance is also available to employees on either lay-off and short-time. 

Employees who contract Covid-19 or are medically required to self-isolate in accordance with HSE guidelines may avail of enhanced Illness Benefit for Covid-19 related absences. €305 is paid per week under the enhanced scheme, instead of €203 which is paid under standard Illness Benefit. An employee must be confined to their home or a medical facility to be eligible for the enhanced Illness Benefit.

Practical Steps for Employers

In anticipation of the need to trigger a lay-off or short-time working arrangement, prudent employers are advised to review their contracts of employment and applicable policies to clarify whether these options are provided for, and, in particular, whether it is made clear that any lay-off period will be unpaid. Where lay-off and short-time are not provided for within existing contractual or policy documentation, an employer may seek to rely on the unprecedented nature of the pandemic to justify such measures by way of exceptional circumstances. These are, however, unchartered territories, and an employer's ability to potentially rely on such a situation has yet to be tested in practice.
As the options of lay-off and short-time are intended to be temporary measures, it is vital that the employer stays in touch with affected staff to keep them updated of the evolving situation. 

It is also important to be mindful that, although staff are laid off or working reduced hours, their employment has not been terminated. Termination in such circumstances will likely be as a result of a genuine redundancy situation, which may depending on the number of employees involved, trigger a collective redundancy process in respect of which employment law advice should be sought.

If you have any specific queries in relation to the Covid-19 virus, please get in touch with your regular William Fry contact.

 

Contributed by: Sorcha Lyons & Richard Smith

Key Contacts

Ailbhe Dennehy Partner

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