‘Lay-off’ and short time working clauses: the employment contract between parent employer and nanny employee

24 Oct

By Tricia Pritchard, Senior Professional Officer (Early Years and Childcare)
‘Lay-off’ and short time working clauses

nannyLay-off and short time working clauses are rarely seen within the childcare and early years sector other than in the employment contracts between parent employers and their nanny employee.

The employment contract may provide for short time working and/or lay-off. Voice does not support the inclusion of these clauses in employment contracts, but recognises that when being offered an employment contract, employees seldom have the stronger bargaining position.

The information set out below is for guidance only.  Should you be in a situation where you are being asked to agree to the inclusion of a lay-off or short time working clause in your employment contract, you should seek advice from Voice before entering into the contract. 

Voice considers that nanny agencies that assist their employer clients with the drafting of employment contracts should argue against the inclusion of a lay-off or short time working clause and should certainly draw it to the attention of the nanny when the contract is being offered.

What is a lay-off or short time working clause?

An employee is considered to be laid off where, during a particular week, he/she gets no pay because there is no work to be done (s147 (1) Employment Rights Act (ERA) 1996). A lay-off clause will reflect the fact that the employer can tell the employee not to attend work for a certain period of time due to a lack of work.

An employee is considered to be on short time where they receive less than half pay for the relevant week (s147 (2) ERA).

Unless the employment contract expressly provides that the employee will not be paid during short time or lay-off, the employee must be paid.

Where the short time or lay-off is continuous for four weeks; or, a period of six weeks out of 13 weeks where not more than three weeks were continuous, the employee may be able to claim redundancy pay or, subject to certain conditions, they may be able to complain of unfair dismissal to an employment tribunal.

When can an employer lay-off its employees?

This can be done where there is a contractual right to lay-off. A right to lay-off will exist where there is an express contractual term agreed between employer and employee. It can also be implied where an employer can show that there has been an established practice over a long period that has become custom and practice.

In the absence of a contractual clause (express or implied) allowing the employer to lay-off, the employer cannot unilaterally change the contract by imposing the insertion of a clause. This may give rise to a dismissal. In some cases, the contract may expressly allow the employer to make changes from time to time. Even where this is the case, if the employer tried to impose a significant or unreasonable change to the terms and conditions without agreement, this may give rise to a dismissal and reengagement.

Where the employer acts in breach of contract, it may give rise to a claim for constructive dismissal. A member should always consult with Voice before resigning under such circumstances.

If there is no contractual right to lay-off without pay but the employer does so, they will be acting in breach of contract.

The employee may:

  • bring a claim in the employment tribunal that there has been an unlawful deduction of wages contrary to the Employment Rights Act 1996;
  • bring a claim that the employer’s action amount to a dismissal (constructive or otherwise), giving rise to a potential claim of unfair dismissal and/or, if eligible, redundancy pay;
  • bring a claim for damages for breach of contract in the civil court or, where the employment has ended, in the employment tribunal.
Is the employee entitled to payment during a period of lay-off?

Employees can be ‘laid-off’ without pay where there is a specific term in their contract of employment allowing the employer to lay-off the employee. Where there is a contractual right to lay- off, an employee can claim guarantee pay during lay-off or short-time working (subject to entitlement). The maximum entitlement is £26 a day for five days in any three-month period, that is a maximum of £130. For the remainder of the period of non-payment, the employee can claim Jobseeker’s Allowance.

Where there is no contractual entitlement to pay during lay-off, there will be a breach of contract which will entitle the employee to claim that they have been constructively dismissed or alternatively clam that there has been an unlawful deduction from wages.

Voice is opposed to lay-off and short term working clauses primarily because:
  • it creates financial uncertainty for the employee; and
  • it reduces flexibility for the employee in circumstances when the employee feels compelled to use their own annual leave to compensate for the lay-off (common where parent employers lay-off during their vacation period).

Further information

For further information about lay-off and short time, see gov.uk or contact Voice (members).









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