Many employers insert a provision into their employees’ contracts to be able to lay off employees if business needs require it. When times get tough and demand reduces, the power can then be exercised and the employee laid off, hopefully in the short term, until business picks up again. Such clauses are also useful in situations such as we saw in York and Cumbria over the festive period when businesses had to shut down for a temporary period due to flooding, yet didn’t want to make its employees redundant as they hoped to be back up and running shortly. But can an employee argue the length of the lay off is unreasonable and claim constructive dismissal?
The question was raised in Craig v Bob Lindfield & Sons where the employee had such a clause in his contract which the employer exercised. The clause didn’t have a time frame on it and after 4 weeks of being laid off Mr Craig resigned and claimed that he had been constructively dismissed because the lay off had gone on for longer than was reasonable. The initial Tribunal concluded that there was no implied term that dictated how long was a reasonable lay off period. They concluded that 4 weeks was not unreasonable in the circumstances and that he had not therefore been constructively dismissed.
Mr Craig appealed the decision but the EAT agreed with the Tribunal. The contract expressly set out that on occasions there may be circumstances in which the employee was not expected to work and would not be paid. As such there couldn’t be a breach of contract if such circumstances arose. S148 of The Employment Rights Act 1996 provides for a period of lay off or short time working during which there is no entitlement to claim a redundancy payment. Thereafter, the law allows an employee to serve a notice claiming a payment, if they so wish. It was therefore open to Mr Craig to exercise this right if he wished. He didn’t.
There is therefore no definition of what would amount to an unreasonable period of time to lay an employee off for, over which an employee could claim constructive dismissal. That doesn’t mean to say that there can never be a valid claim for constructive dismissal, for example if the employer breached trust and confidence by keeping employees on lay off in order to maximize profits, rather than for legitimate purposes, but that wouldn’t be the case in most situations. The case will no doubt cause a sigh of relief from employers already facing a difficult situation.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.