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Employment Law Makes Concessions for Downturns in Business

Employment is viewed as a ‘wage/work bargain’ and it is almost always a breach of contract for an employer to cut a worker’s wages. However, one important Employment Appeal Tribunal (EAT) decision has made it clear that exceptions can be made in the event of unexpected downturns in business.

A designer was laid off indefinitely by his employer without pay due to a falling off in orders. After four weeks without work, the man resigned and claimed that he had been constructively dismissed unfairly. He argued that he had been laid off for an unreasonably long period and should have been made redundant. His claim was, however, rejected by an Employment Tribunal (ET).

In dismissing his challenge to that decision, the EAT noted that his contract specifically provided for lay-off periods when business was slow. His employer had told him that he would be asked to return to work in due course and a requirement that he would only be laid off for a reasonable period could not be implied into the contract. Both the man and his employer had been adversely affected by the downturn and the ET had struck an appropriate balance between them.