Indefinite Lay-Off Without Pay?

Indefinite Lay-Off Without Pay?

As the economic effects of Covid-19 drag on, employers are faced with new questions surrounding the temporary lay-off of employees. Surely lay-off cannot continue forever. So, for how long may employees be laid off?

While most employees are by now able to tender their services, businesses may not be able to take them due to a lack of work. What are the legal requirements?

If there is no agreement

Employees who lawfully tender their services are entitled to be paid, unless a lay-off agreement provides otherwise. Employers may not unilaterally impose lay-off without pay. Laying employees off without an agreement can be regarded as a de facto dismissal.

However, as mentioned in a previous article, the unwillingness of employees to agree to unpaid lay-off could result in their retrenchment.

Bargaining councils

Some bargaining council agreements provide for temporary lay-off by prescribing certain procedures that employers have to follow. Employers may lay off employees without the agreement of the employees, provided that they follow the prescribed procedures. The maximum period of lay-off is normally specified.

Open-ended agreement

Where an employer and its employees have already entered into an open-ended lay-off agreement (i.e. no end date is stipulated), the question is whether lay-off may continue indefinitely.

Lay-off without pay is intended to be temporary. If a lay-off agreement does not specify an end date, we are of the view that the lay-off may continue for as long as the employer has sound operational reasons not to recall the affected employees.

Where possible, employers should attempt to accommodate employees by offering them the opportunity to return to work on reduced working time and reduced pay and benefits (short–time working). It is advisable for the terms of a short-time agreement to be specified in writing.

If it becomes apparent that the employee’s services will not be needed for the foreseeable future or at all, the employer could initiate retrenchment procedures.

An employer may not use lay-off as a ruse to get rid of employees. There may come a point in time where lay-off is no longer justifiable and where continued lay-off may amount to a de facto dismissal despite the existence of a lay-off agreement. Whether this is the case will depend on the circumstances.

Other questions

Other Covid-related questions that are becoming increasingly relevant include: Does leave accrue during lay-off? What selection criteria apply when an employer wants to allow only some employees to return to work? Are employees who are retrenched during a period of lay-off entitled to notice pay? These questions will be addressed in our next article.

Legal considerations

Other legal considerations surrounding temporary lay-off, short–time work and retrenchment were covered in a previous article – see https://www.labourwise.co.za/labour-articles/employment-challenges-after-lockdown.


Original article by Jan Truter for Laboursiwe

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