The disruption to production caused by industrial action may mean that a company has to lay employees off or make them redundant. The law on lay off and redundancy is explained elsewhere in this Guide (redundancy). Here we explain, in outline, how those rules are affected by industrial action.
As explained elsewhere (alternatives to redundancy), it is lawful for an employer to lay an employee off if it has no work for the employee to do, provided that it has the power to do so under the employee's contract of employment. An employee who is laid off would normally be entitled to a guarantee payment under the Employment Rights Act 1996. This right does not apply, however, if the employer cannot provide work because of industrial action involving the employer or an associated employer. Similarly, hourly-rated manual workers covered by a National Guarantee of Employment Agreement will have their guarantee of a minimum amount of weekly pay suspended if production has been disrupted as a result of industrial action in their own or any other federated establishment.
The law on redundancy payments is set out in the Employment Rights Act 1996. Special rules apply in relation to employees who are involved in industrial action. These rules are complex, and companies that are considering their impact on a redundancy exercise they are planning may wish to contact their Association for advice.
In summary:
- If an employee has taken industrial action that amounts to gross misconduct and is then dismissed for redundancy, the company may not be obliged to pay a redundancy payment. In order to avoid liability to pay, the company must dismiss the employee:
– without notice; or
– with shorter notice than he or she would normally be entitled to; or
– by giving the employee notice but including a statement that the company would be entitled to terminate the contract without notice because of the employee's conduct.
- If an employee has already been given notice of dismissal for redundancy and then takes part in industrial action involving a stoppage of work (such as a strike or an overtime ban) and is dismissed for that reason, the employee is still entitled to a redundancy payment.
- If an employee is given notice of dismissal for redundancy and then takes part in action that does not involve a stoppage of work and is dismissed for that reason, the employee may still be entitled to the whole or part of his or her redundancy payment, if an employment tribunal considers it just and equitable that the employee should receive it.
- If an employee takes part in a stoppage of work after receiving notice of dismissal for redundancy, the company may ask the employee to extend his or her contract for the number of working days lost by the strike. If the employee refuses, he or she loses the right to a redundancy payment, unless the he or she was unable to extend the contract for some reason such as sickness or injury, or it was reasonable in the circumstances for the employee not to agree the extension. In that case, an employment tribunal may award the employee the whole or part of the redundancy payment, according to what it thinks fit.