Tribunal Tale – A situation Where Reasonableness is Not Implied

Can an employee who has been temporarily laid off resign and claim constructive dismissal on the basis that the length of the lay-off has been unreasonable? No, according to a recent decision of the Employment Appeal Tribunal (EAT).

Providing it is permissible in terms of the relevant employment contract, an employer may lay off employees or reduce hours during a temporary downturn in work as an alternative to making employees redundant. Where employees are laid off or their hours reduced for a period of four or more consecutive weeks (or six non-consecutive weeks in a thirteen week period), they have the right to make a claim for a statutory redundancy payment. An employer can defend such a claim if it can demonstrate it had a reasonable expectation of a resumption of work within four weeks of the employee’s notice of claim.

However, if an employee can claim that the length of the lay-off was unreasonable such that it amounted to a breach of contract, they could pursue a constructive unfair dismissal claim which could be more valuable than a statutory redundancy payment. The case of Craig v Linfield & Son looked at whether there is an implied term of reasonableness in contractual lay-off and short time working clauses.

In this case, Mr Craig had been laid off from a design and technology company for between four and five weeks at which point, having secured alternative employment, he claimed a statutory redundancy payment. The employer responded that it hoped work would resume shortly. Mr Craig claimed to the employment tribunal that he had been constructively unfairly dismissed as the lay-off period had been unreasonably long.

The EAT confirmed the tribunal’s decision that there is no implied term of reasonableness in contractual provisions for lay-off. The law provides a remedy for an employee who believes they have been laid off for too long – they can apply for a statutory redundancy payment. This achieves a balance between the employer’s and employee’s interests which would be upset if an employee could claim constructive dismissal after a period of, as was the case here, less than five weeks.

The EAT went on to agree with the original tribunal in its conclusion that the period of lay-off in this case would not have been unreasonable in any event, being barely longer than the statutory period which must elapse before a redundancy payment claim is made.

While it would be possible for an employer to act in such a way when laying off staff that there is a breach of the duty of mutual trust and confidence, this was not the case where there was a genuine downturn in work, a realistic expectation of an increase in orders in the near future and no evidence to suggest that the employer was in some way abusing the right to lay off workers to avoid making redundancy payments.

If you have any questions on any of the issues raised in the above article, please contact Alan Sutherland.

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