The Employment Appeal Tribunal has held that a contractual term allowing an employer to lay an employee off due to lack of work is not subject to an implied requirement that this be limited to a reasonable time.
Mr Craig worked in Computer Aided Design. He had been laid off due to shortage of work by his employer a couple of times during the 10 years that he had been employed by them.
He was laid off again on 21st July 2014.
On 22nd August 2014 he emailed the employer to say that he had got another job starting on 1st September and stating that as he had been laid off for 5 weeks he assumed he was entitled to a Redundancy Payment.
The employer emailed him back the same day and said that it hoped to have work for him shortly and had no intention of making him redundant.
Mr Craig relied upon his initial email as being a resignation and claimed constructive unfair dismissal.
To succeed with a Claim he had to prove that there was a fundamental breach of contract by his employer.
His contract contained an express power to lay him off. He argued that there was an implied limit on this to a reasonable period. There was a previous EAT decision that supported this assertion but a later EAT decision in Scotland went the other way.
The Employment Tribunal rejected his Claim, finding that there was no such implied term and that they were not convinced that the duration of the lay off had been unreasonable anyway.
The EAT agreed. It preferred the later of the two previous decisions. There had been no breach of contract by the employer.
This does not mean that an employer can lay someone off indefinitely. Part of the reason why Mr Craig lost is that there are detailed statutory provisions which lay out the circumstances in which an employee who has been laid off for more than 4 weeks can serve notice to claim redundancy. These allow the employer to serve a counter-notice within 7 days if they expect to have enough work for the employer to work full time for at least 13 weeks starting within the next 4 weeks.
Here, the email in reply from the employer had been the necessary counter-notice.
Given the existence of that statutory scheme it cannot have been the intention of Parliament that an employee could bypass the provisions and claim constructive dismissal, which would potentially lead to them receiving more than they would get on a redundancy.
The decision does not give all employers carte blanche. If there is no express contractual right to lay off, one will not be implied automatically. The decision also makes clear that if the actions of the employer in laying someone off are in some other way a breach of contract (for example singling someone out for an unfair reason so that there is a breach of the implied term of trust and confidence) there could still be a constructive dismissal Claim.