Temporary lay-off: how and when?

Temporary lay-off: Circumstances beyond the employer’s control, such as the COVID-19 pandemic, can add to create a challenging environment where the employer has to make difficult decisions in order to continue business operations sustainably. When such unforeseen circumstances lead to a standstill of business and consequential loss of income, the employer still has a responsibility towards employees. The employer can then consider temporary lay-offs where employees are temporarily retrenched due to operational requirements.

We strongly advise employers to be proactive and include a clause in the employment contract where the employee agrees to this, so that in a case of unforeseen circumstances beyond the employer’s control, the employer is in the position to act. If no such clause exists in the employment contract, an agreement between the employer and employee must be in place prior to implementing the temporary lay-offs.

How does it work?

During a temporary lay-off period, the employee will not report for duty and will not be paid remuneration for this period. It is important to understand that the employee has not been dismissed. The employee will however be entitled to claim benefits from the Unemployment Insurance Fund (UIF) after the employer assisted the employee to complete the necessary documentation.

When can the employer implement it?

Examples of unforeseen circumstances beyond the employer’s control include:

  • a client fails to make payment for work done;
  • a client fails to deliver orders;
  • receipt/delivery of orders are delayed;
  • in the event of power failure bringing production to a halt;
  • weather circumstances negatively affecting operations;
  • or any other instance which is beyond the control of the employer, including the COVID-19 pandemic, etc.

Take care to follow the correct procedure

  • The employer should draft a notice to consult with the employees setting out the points of discussion, enabling the employees to prepare for the meeting.
  • Issue the notice to consult and have the employees sign to confirm receipt thereof.
  • If there is a trade union involved in the workplace, ensure that the notice to consult is also sent to them.
  • Keep an attendance register and minutes of the meeting.
  • Discuss the points as listed on the notice during the meeting.
  • Give the employees the opportunity to provide alternatives to the temporary lay-offs.
  • Report back on the employees’ suggestions.

Advantages of a temporary lay-off

A temporary lay-off hold definite advantages for both the employer and employee.

Employer advantages:

  • “No work no pay” principle will apply.
  • As it is only temporary, there is no need for the employer to take drastic action to liquidate the business.

Employee advantages:

  • The employee is not dismissed and is still employed.
  • The employee may claim for the UIF.

Is there a time limit on a temporary lay-off?

Temporary lay-offs cannot be implemented indefinitely. The time period must be reasonable and fair. If it becomes apparent that the circumstances remain unchanged, the employer may need to consider retrenchments.


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LWO Regsadviseur - LWO Legal Advisor

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