Pillar Guide · Updated July 2026
UK Lay-Off & Short-Time Working: A Practical Guide for 2026/27
When work temporarily dries up, some UK employers use lay-off or short-time working rather than making immediate redundancies. This pillar guide explains when an employer can lawfully impose these arrangements, the £41 daily statutory guarantee pay for 2026/27, how prolonged lay-off can trigger an employee’s right to claim redundancy pay, and how lay-off differs from both redundancy and the now-ended furlough scheme.
Lay-Off and Short-Time Defined
Lay-off occurs when an employer provides an employee with no work — and therefore usually no normal pay — for a period, while keeping the employment relationship itself in place. It is intended as a temporary measure for employers facing a short-term reduction in the amount of work available, allowing them to retain staff for when demand returns rather than making them redundant immediately.
Short-time working is the partial equivalent: rather than no work at all, hours and pay are reduced below the employee’s normal contractual level. For the specific statutory purposes described later in this guide (guarantee pay and the route to a redundancy claim), "short-time" specifically means the employee’s pay for the week in question falls below half of what they would normally receive.
Both arrangements are distinct from redundancy, which ends the employment permanently, and from a request for unpaid leave, which is usually initiated by the employee rather than imposed by the employer.
When Is It Lawful
An employer can only lawfully impose lay-off or short-time working without full pay if the right exists in the employment contract — either as an express clause, or through a genuinely well-established custom and practice specific to the industry or workplace (uncommon and hard to establish in most modern employment relationships). Without such a right, withholding pay or hours unilaterally is a breach of contract.
Where no contractual right exists, employees affected by an unagreed lay-off may have a claim for unlawful deduction from wages (via an employment tribunal claim, generally within 3 months less a day of the deduction) or, if the breach is serious enough that they resign in response, a claim for constructive dismissal. Because of this legal exposure, many employers seek employee or trade union agreement before implementing lay-off even where a contractual right technically already exists.
Where a lawful right does exist, the employee’s main statutory protection during the lay-off itself is the guarantee pay described below, together with the potential route to a redundancy claim if the arrangement continues for a sufficient period.
Statutory Guarantee Pay
Statutory guarantee pay is £41 per day for 2026/27, payable for up to 5 workless days within any rolling 3-month period, giving a maximum statutory entitlement of £205 across that window. It applies on a day the employee would normally have worked but is provided with no work, arising from a genuine reduction in the employer’s requirements for that type of work — not, for instance, a day lost to industrial action.
Guarantee pay is a statutory floor rather than a full replacement for lost earnings — for many employees it will fall well short of their normal daily pay. Many employment contracts, particularly in unionised or heavily regulated sectors, contain more generous contractual lay-off pay provisions; where these exist, the higher contractual rate applies (or is treated as already covering the statutory minimum), rather than the two being paid cumulatively.
The daily rate is uprated periodically in line with general statutory pay increases, so it is worth checking the current figure on gov.uk if the lay-off period spans a tax year boundary.
Who Qualifies
To qualify for statutory guarantee pay, an individual generally needs to be an employee (not self-employed, and generally not most agency workers) with at least one month of continuous service, the workless day must result from a genuine reduction in the employer’s requirements for the relevant type of work, and the employee must be available and willing to work, must not have unreasonably refused suitable alternative work offered by the employer for that day, and must not have been laid off because of industrial action at their own or an associated employer’s workplace.
Employees who believe they meet these conditions but have not been paid guarantee pay should raise the matter with their employer first, and can pursue an employment tribunal claim for unlawful deduction from wages if the employer disputes or refuses payment without good reason.
Claiming Redundancy After Lay-Off
An employee who has been laid off, or kept on short-time working, for either 4 or more consecutive weeks, or a total of 6 weeks (with no more than 3 consecutive) within a 13-week period, can serve written notice on the employer of their intention to claim statutory redundancy pay under this route.
The employer then has 7 days to serve a counter-notice disputing the claim, typically on the basis that normal full-time working is genuinely expected to resume within 4 weeks of the employee’s notice and to continue for at least a further 13 weeks. If the employer does not successfully dispute the claim, the employee can resign and become entitled to statutory redundancy pay, calculated in the standard way based on age, length of continuous service, and weekly pay (subject to the statutory weekly pay cap).
This route gives employees a concrete exit and financial protection if lay-off or short-time working drags on indefinitely, rather than leaving them indefinitely in limbo on minimal statutory guarantee pay.
Lay-Off vs Redundancy
Redundancy is a permanent ending of the employment relationship because the employer genuinely no longer needs the role performed, triggering full statutory redundancy pay entitlement for employees with 2 or more years of continuous service, notice obligations, and, for larger-scale redundancies, collective consultation requirements.
Lay-off, by contrast, keeps the employment and the underlying role alive, with the expectation — genuine or not — that normal working will eventually resume. The 4-week/6-in-13-week redundancy claim route described above is the formal legal bridge between the two: it lets an employee convert a prolonged, indefinite lay-off into a clean, compensated exit if the employer cannot demonstrate normal working will genuinely resume soon.
Lay-Off vs Furlough
Furlough refers specifically to the UK Government’s Coronavirus Job Retention Scheme, which ran from March 2020 to September 2021 and reimbursed employers for a substantial share of furloughed staff’s wages while they were not working, as a temporary pandemic support measure. The scheme has ended, and there is currently no equivalent government wage subsidy scheme in operation.
Lay-off, by contrast, is a permanent, ongoing feature of general UK employment law that does not depend on any government scheme — it relies solely on the employer’s contractual right (or negotiated agreement) to withhold work, backed by the comparatively modest statutory guarantee pay described above, unless the employer’s own contract provides something more generous.
If You Disagree With Being Laid Off
Start by checking your written contract of employment and any staff handbook for an express lay-off or short-time working clause. If none exists and there is no genuinely established workplace custom and practice, the employer has no unilateral right to withhold your pay, and you may have grounds for an unlawful deduction from wages claim, or a constructive dismissal claim if you resign because of the breach.
Where a valid contractual right does exist, your statutory protection is limited to guarantee pay (or any more generous contractual equivalent), together with the potential route to a redundancy claim once the qualifying period of lay-off or short-time working has been reached. ACAS offers free, impartial guidance and early conciliation for employees and employers navigating a lay-off dispute before it reaches a tribunal.