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Working reduced hours as an alternative to redundancy

Short-time working

Short-time working means your employer is reducing your working hours.

For example, you might be asked to work a three-day week, instead of a five-day week.

If you’re are laid off or put on short-time working you are entitled to full pay unless your contract says you can be asked to take unpaid leave or take reduced pay unless it has been agreed otherwise.

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Lay-offs

If there’s not enough work for you, your employer might ask you not to come into work.

A lay-off is when you’re off work for a minimum of one working day.

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Step one – get advice

It’s important not to make any snap decisions. If you have one, it’s a good idea to discuss your options with your union or employee representative. Put time aside to talk it over with your family – as it’ll affect them too.

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Step two – check your contract

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Can your employer reduce your hours, or lay you off? The short answer is – only if your employment contract allows it.

If not, your employer will have to negotiate a change to your contract.

Typically, this will involve many members of staff. They, or their union, will have to agree to the new arrangement.

You should also check if your contract allows you to take on another paid job while you’re on reduced hours.

Step three – get what you’re entitled to

Employees who are laid off or put on short-time working are entitled to pay for days they do not work at all. This is called 'statutory guarantee pay' and is the legal minimum an employer must pay.

It’s paid for a maximum of five days in any three-month period and is capped at £30 a day – so a maximum of £150.

Employees who usually earn less than £30 a day will get their usual daily rate. 

If employees work part time, their entitlement is worked out in proportion to their part-time hours.

However, you might get more than this if it’s written into your contract of employment.

Step four – claim any benefits and tax credits

Universal Credit 

You might be able to claim Universal Credit if you’re on short-time working or have been laid off.

If you need help with things such as housing costs or bringing up children, you can make a claim for Universal Credit.  

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Tax credits

If you are receiving tax credits you must contact the Tax Credits Helpline on 0345 300 3900 if your income or working hours have been affected.

If this is a temporary drop for up to four weeks, it shouldn’t affect your tax credits.

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What to consider when faced with reduced hours

Top of your list is probably going to be money. How is your household income going to be affected by reduced hours?

If there are other jobs available where you live, you might be tempted to leave – even for slightly less money.

But be aware that leaving voluntarily could mean missing out on valuable redundancy rights.

How long can you be put on reduced hours?

Depending on what your contract says, there’s no limit to how long you can be laid off or put on short-time working for.

But if you’ve been in this position for four weeks in a row (or six non-consecutive weeks in a 13-week period), you should be able to claim redundancy pay if you decide you’ve had enough.

Changes in your contract

Your employer might want to change the terms in your contract, such as a cut in pay or change to part-time working, but they can’t without your consent.

Before agreeing to a change, find out from your employer how it would affect any pay-related benefits and rights you’re entitled to, such as

  • sick pay
  • future redundancy pay, and
  • employer’s pension contributions

What if you and your employer don’t agree?

Your employer can’t just bring in a change to your contract if you don’t agree.

However, if they make changes and you don’t do or say anything, this might be seen as you accepting the changes.

It’s important to know your rights so speak to your trade union rep, if you have one. Or contact one of these workplace advice services:

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MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

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