What is a Short Time Working / Lay-off clause, and why have them in contract of employment?

A short time working / lay-off clause in your contracts give you the contractual right to ask an employee to work shorter time (e.g., 3 days a week) or to lay them off completely for a period.

Furlough was a version of lay-off / short-time working, but supported financially by the government. However, you can have such clauses without ‘Furlough’.

So why would you need such a clause?

The world and business in unpredictable and if you have a sudden and significant downturn in business or business interruptions this can be a way to protect the business and reduce costs to allow for recovery (COVID was an extreme example of this).

No one is saying that a decision to implement short time working or lay off is easy, and it should never be taken lightly. But there are situations where this can literally be the difference between a company being able to continue or go under. And if the business goes under, then no-one has a job!

You do have to pay a small, guaranteed payment for 5 workless days in a 3-month period, and there are some rules round short-time working (https://yourhr.guide/categories/contracts-of-employment/6-lay-off-and-short-time-working).

Example / Case Study

Example: We had a client who lost a very big contract that accounted for over 40% of their turnover. They did not want to lose their work force (i.e., make redundancies) as they were confident that they could recover. They implemented many cost savings across the company and implemented a period of short time working. Yes it was tough, but the outcome was that everyone was soon back to full employment, and no-one was made redundant. The business kept its skilled work force and was able to compete in the marketplace. They became more competitive as they had reduced costs in other areas and had become more efficient. 

Without this clause, the options would have been limited. They would have had to make redundancies or even closed the business.


Check your contracts to see if you have a short time working / lay-off clause. This clause must be in the contract of employment to be enforceable.

More information

For further information on contracts of employment and templates contracts and clauses, please visit www.yourhr.guide.

Natalie Rodda


If you feel that you need guidance or advice on this matter, please call Practical HR on 01702 216573


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