Since the arrival of Covid-19 in Ireland in late February, employers across the country have faced unprecedented challenges in order to keep their businesses afloat. One key challenge for employers has been to retain staff and keep as many of their employees on the books as possible. Many employers have had to make the difficult decision to place their employees on lay-off or short-time, in order to avoid redundancies.
A lay-off scenario arises where the employer is temporarily unable to provide work to an employee, who is then “laid-off”, but remains an employee. A short-time working scenario arises where the employer reduces an employee’s hours or remuneration to less than 50% of their normal hours or remuneration. In both cases, it must be reasonable for the employer to believe that the circumstances are only temporary.
As the end of the year approaches, it is an appropriate time for employers to consider some of the practicalities of lay-off and short-time working, including the employees’ right to:-
- recover reduced or lost income;
- annual leave and public holidays; and
- trigger a redundancy payment.
Recover Lost Pay During Short-Time Working or Lay Off
Generally, an employee can only be laid-off without pay where there is a provision in the contract of employment allowing the employer to do so, or where there is an established custom and practice within the employer’s business of laying-off employees without pay. However, even where there is no contractual provision, or established custom and practice, employees can be laid-off without pay in exceptional circumstances. There are claims before the Workplace Relations Commission, seeking recovery of pay being cut off or reduced during lay off/short-time working.
We will have to await the decisions of the Workplace Relations Commission on these particular claims brought for non-payment of wages during this period.
An employee’s entitlement to annual leave is based on the number of hours worked in a leave year. Employees do not accrue annual leave while on lay-off.
Employers need to calculate the number of hours an employee has worked during the year, whilst not on periods of lay-off. If an employee has worked at least 1,365 hours in the leave year, the employee will be entitled to the maximum statutory amount of four weeks’ annual leave. Employees on short-time working arrangements will only accrue their annual leave entitlement based on the number of hours they actually worked during the leave year.
As employees on lay-off or short-time working retain their “employee” status during the relevant period, they are entitled to benefit from public holidays. To be eligible, the relevant public holiday must occur during the first 13 weeks of lay-off. Part-time employees must have worked at least 40 hours in the four weeks prior to the public holiday to avail of the benefit. Employees who are eligible to benefit from public holidays are entitled to one of the following:
- A paid day off on the public holiday;
- An additional day of annual leave;
- An additional day's pay; or
- A paid day off within a month of the public holiday.
Employees’ Right to Trigger a Redundancy Payment
Under usual circumstances, where an employee has been laid-off, or placed on short-time, for a period of 4 consecutive weeks (or for a period of 6 weeks in a 13-week period, of which not more than 3 weeks are consecutive), the employee has the right to serve a notice on his employer, claiming a statutory redundancy payment. However, under the Emergency Measures in the Public Interest (COVID-19) Act 2020, the Government temporarily suspended the right of employees to issue such a notice.
Coming as welcome news to many employers, the Government recently once again extended the suspension of employees’ right to claim a statutory redundancy payment until 31 March 2021. It was announced that this decision was made to help businesses survive the pandemic period and to protect as many jobs as possible. Should lay off or short-time work continue after 31 March 2021, employers may be faced with notices for redundancy payments, which could pose cash flow and other risks for Employers.
This is an area which is subject to change and we will have to wait and see what further measures, if any, are put in place to support both businesses and their employees.
If you have queries on any of the issues raised in this article or if you require guidance, you can speak to Breda O'Malley email@example.com, Jamie Doddy firstname.lastname@example.org or any member of the Employment Law Group at Hayes solicitors.Back to Full News
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About the Authors
Breda practises in both Employment and Commercial Law and is Partner and Head of the Employment Law team at Hayes solicitors. Breda has trained and qualified as a mediator with the UK based, internationally renowned Centre for Effective Dispute Resolution (CEDR). Breda practices as a mediator of commercial, employment, boardroom, charity trustee and shareholder disputes.
Jamie is an associate solicitor in the Employment Law team at Hayes solicitors. Jamie advises both employers and employees, in relation to contentious and non-contentious employment matters, including contracts of employment, workplace policies, workplace investigations, statutory compliance, redundancies and dismissals.