Coronavirus and being made redundant

Despite the best intentions of your employer and the government’s business support packages, many UK workers are having to cope with being laid off.

Aside from dealing with the emotional strain and trimming down your financial outgoings, there are some steps you can follow to make sure you’re making the best of a bad situation.

Check your employment contract

You must check your contract of employment. You can only be laid off if your employment contract includes a clause specifically stating that your employer can lay you off or put you on short term working.

There are other circumstances which allow for lay-offs:

  • If a Trade Union and the employers work together to agree lay offs
  • There is a nationwide industry agreement
  • There is evidence that lay offs are both custom and practice in your workplace.
  • Both employee and employer agree to change the employment contract, preferably with confirmation of new terms in writing as soon as possible.

Usually any lay off clause will include the fact that you will not be paid during any period of being laid off.

Employment contracts are legal documents and, as such, aren’t always the easiest things to understand. If you belong to a Trade Union, they will be able to unravel its details for you. Don’t be shy about calling them, it’s what you pay your subs for. Even if you just want to confirm what you already know, there is no such thing as a stupid question here.

How long can I be laid off for?

If your contract does include an option for lay off or short term working arrangements, your contract will also include how long this can be imposed. Some contracts have an indefinite clause, which means there is no fixed length of time that a lay off can go on for.

What’s the difference between being laid off and short time working?

These are similar but different solutions an employer can use in response to a lack of work.

Lay off: you are sent home

Short time working: Your hours are cut to less than half a normal week’s working hours and pay

What is contractual guarantee pay?

You are entitled to guarantee pay when you are on short-time working or laid off. You can get a maximum of £150 – broken down into £30 per day for five days in any quarter. You’ll get paid your usual daily rate, if it is less than £30. Part time workers are allowed to claim the relevant proportion of this.

To be eligible for guarantee pay, you must meet the following criteria:

  • Be available for work
  • Accept any alternative work offered to you by your employer, even if it’s outside your contract
  • Been working for your employer for one month
  • Not laid off because of participation in industrial action

Can I get other work while I’m laid off or on short time working?

Again, your employment contract will state whether or not you can get another job while you are laid off. Most employers don’t have a problem with it, as long as you’re not working for a direct competitor and can come back to work when they need you. You do have to be careful if redundancy is a possibility. An employer could legitimately say you resigned to start new work and therefore you will lose any redundancy pay.

Will being laid off lead to redundancy?

Lay-offs sometimes lead straight into redundancy. And this may actually be beneficial to you. You can claim for redundancy as an individual employee if you have been laid off for six out of thirteen weeks, or for four consecutive weeks.

If you are redundant, you are entitled to claim redundancy pay. But you’ll have to resign in order to claim it. You need to be very careful with the timings of this process and it’s advisable to get help from your Trade Union or Citizens Advice before you go ahead.

You need to apply for redundancy to your employer in writing. Then wait for them to either accept your claim or give you a counter notice. The latter usually means that work is soon to recommence.

Note the date you sent your initial claim for redundancy. From seven days after this date, you have three weeks to hand in your notice in order to secure redundancy payments.

What about my income tax payments?

We all know that if your income decreases then you pay less tax. In this complicated laid off or short time working situation, you may be entitled to a tax refund. If you’re not going work again within the tax year, you can submit a tax refund to HMRC a month after you finish work (are laid off).

Even if you’re claiming Jobseekers’ Allowance, you can apply for a tax rebate at the end of the tax year in April.

When we help you with a tax refund, we take your entire financial position into account. We’ll look at your position as a laid off or short time working employee. We’ll also check to see if you’re missing out on any tax reliefs and allowances for work expenses.

Things like Trade Union fees, washing a work uniform and tools are all common claims.  Working from home tax relief is relevant for many workers having to work remotely during the coronavirus lockdown period.

What’s even better is that most of them can be backdate for four tax years. We put everything into one tax relief claim and you just wait for the cheque to arrive.

If you’re wondering how much that might actually be, pop your basic numbers into our most relevant tax rebate calculator and see for yourself. They’re free to use and don’t collect or store any personal details.

You don’t have to work out this tax stuff alone. This is our area of expertise and our average initial rebate is worth £900. You only pay us if you get a rebate, so there’s no upfront costs to worry about. We’ll get you tax efficient and you sort out your next job.


Tony Shanks
Operations Director
Member of the ATT

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