In an ever-changing economic and social landscape, businesses may find it necessary to temporarily close their operations. These closures may arise from unforeseen circumstances such as extreme weather events, pandemics, supply chain disruptions or financial uncertainty. For employees, this creates understandable concern around their employment status, pay, and general workplace rights during the period of closure. At Stephensons, we specialise in providing clear and practical legal advice to individual employees regarding their rights in these situations.
Understanding temporary business closures
A temporary business closure occurs when an employer suspends business operations either wholly or partially for a limited time. Unlike redundancy or permanent layoffs, the intention is typically to resume normal operations once the cause of the interruption has passed. This can include full closure of all sites or partial, such as shutting specific offices or departments.
During such a period, employees remain under contract, which means certain employment rights continue to apply. However, the specifics of each situation, including whether employees are entitled to pay, depend on the terms of their employment contract and the circumstances of the closure.
Right to pay during a temporary closure
One of the most pressing concerns for employees is whether they are entitled to be paid during a business shutdown. In most cases, if you are ready, willing and able to work but the employer cannot provide work, you may still be entitled to your full pay. This principle stems from the Employment Rights Act 1996 and case law interpreting it.
However, there are exceptions. If the employment contract contains a 'lay-off' clause, an employer may be able to temporarily suspend your work and pay only statutory guarantee payments. These are currently capped at a certain daily rate and paid for a maximum of five working days in a three-month period. Beyond that, no payment is legally required unless the contract states otherwise.
Statutory lay-off and short-time working
Some employers invoke statutory lay-off or short-time working provisions during a closure. Lay-off means providing employees with no work and no pay (except the statutory guarantee payment), while short-time working involves a significant reduction in working hours and thus pay. These measures can only be lawfully used if the employment contract allows for them, or if the employee agrees to the change.
If you are subject to lay-off or short-time working for four continuous weeks or six weeks in a 13-week period, you may have the right to claim redundancy and seek compensation, provided you follow the correct procedure. Stephensons can advise on whether you qualify and assist in submitting the necessary notice.
Furlough and other government support schemes
During wider economic disruptions such as the COVID-19 pandemic, the government introduced schemes like furlough to subsidise workers’ pay while businesses were closed. While these schemes are not currently active, it is worth being aware that future government support might be available depending on the nature of the closure. Employees should keep records of communications with their employer and seek legal advice where government schemes are being referred to.
Annual leave and forced holidays
Some employers may attempt to require employees to take annual leave during a closure. Employers can generally insist on this, provided they give the correct notice—typically twice the length of the intended leave period. For example, to require one week’s leave, your employer must give at least two weeks’ notice. However, forcing employees to use all their annual leave entitlement may raise concerns around reasonableness and contract terms.
Discussing any concerns with your employer is often a useful first step. If this does not resolve the matter, a solicitor at Stephensons can provide tailored legal advice, especially where contractual terms are being misapplied or abused.
Changes to terms and conditions of employment
Temporary closures often lead to employers attempting to vary employees’ terms and conditions, such as pay, hours or job roles. In most cases, changes to employment contracts can only be made with the employee’s consent. Imposing changes without agreement can result in a breach of contract or even constructive dismissal if the changes are particularly detrimental.
Stephensons can help you assess whether a proposed change is lawful and advise you on your options if you are being pressured to accept new terms under duress. In some cases, you may have grounds to bring a claim in the employment tribunal for unlawful deduction from wages or breach of contract.
Communication and consultation obligations
Employers are expected to engage in proper communication during temporary closures, particularly if significant workforce changes are being proposed. Where 20 or more employees are affected, collective consultation requirements may also apply. This involves informing and consulting with employee representatives about forthcoming changes. Failure to comply with these duties can result in protective awards payable to employees.
Even where fewer staff are affected, employees should be consulted individually and given the opportunity to raise concerns. If you believe your employer has failed to properly consult or has made decisions unlawfully, it is advisable to seek legal advice as soon as possible.
What to do if you believe your rights have been breached
Should you believe that your employer has wrongly withheld pay, failed to follow contractual terms, or otherwise breached your rights during a temporary closure, you have several potential legal remedies. These may include raising a grievance internally, lodging a claim for unlawful deduction from wages, or pursuing a claim for constructive dismissal if the employer’s actions have fundamentally breached your contract.
Stephensons offers expert advice tailored to your specific circumstances. Our experienced employment solicitors can guide you through your options, ensuring your rights are protected and any potential claims are pursued effectively and efficiently.
Speak to an employment solicitor
If your workplace is affected by a temporary business closure and you need legal advice about your employment rights, speak to a member of our employment team. Call Stephensons on 0161 696 6170 or fill in our enquiry form.
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