What Happens If You Have No Work for Employees? Your Legal Options as an Employer

Seasonal slowdowns, supply chain issues, or broader economic challenges can leave employers without enough work to keep staff fully occupied. In these situations, it’s important to understand your legal options before taking action. Can you reduce hours, lay off employees, or stop paying wages? 

The answer depends on what’s in your contracts and how you approach the process. This guide outlines what UK employers need to know about layoffs, short-time working, employee rights, and how to manage staffing changes legally and responsibly.

If you’re facing staffing challenges and need expert legal guidance, contact Helix Law for advice on navigating employment law effectively.

What Are Your Legal Obligations if You Have No Work for Employees?

Employers can’t reduce hours or stop paying employees simply because there’s a slowdown—unless certain legal and contractual conditions are met. In short, unless an employee’s contract says otherwise, they’re still entitled to their normal pay even if there’s a temporary slowdown.

Ensure you understand each worker’s employment status—full-time employees, zero-hours workers, or contractors—as rights vary significantly. For example, full-time employees are generally entitled to full pay even when there’s no work, while zero-hours workers and contractors may not have the same entitlement, depending on their agreement and employment status. Misunderstanding these distinctions can lead to legal risks and claims for unpaid wages or unfair treatment.

Can You Legally Lay Off Staff or Reduce Their Hours?

If you don’t have enough work for your employee, you can only lay them off or reduce their hours in specific situations. You can’t do it just because business is slow unless one of the following applies:

• The employee’s contract includes a layoff clause: This allows you to temporarily reduce hours or stop work if business slows, but only if clearly stated.
• There’s a national or industry-wide agreement: In some sectors, such as construction, industry agreements might allow for short-term layoffs. 
• You’ve agreed with a trade union: In unionised workplaces, collective agreements may outline procedures for layoffs or short-time working.
• The employee agrees to the change: You may ask them to agree to a temporary change in hours or pay. Make sure they understand the terms before signing anything.

If these conditions aren’t met, reducing hours or laying off employees could breach contract law and expose you to claims for unpaid wages or redundancy.

What if Layoffs or Reduced Hours Aren’t in the Employment Contract?

You must obtain employee consent before changing terms related to hours or pay. Otherwise, you risk claims for unlawful wage deductions or constructive dismissal.

If the contract doesn’t mention layoffs or reduced hours, you need your employee’s agreement before making any changes. Cutting hours or pay without consent could be a breach of contract. They might be able to claim for unlawful deduction of wages or even resign and claim redundancy, depending on how long they’ve been employed and the situation.

What Pay Must You Provide During Layoffs or Short-Time Working?

If your employee’s contract allows layoff, you may not owe full pay—but you must still pay statutory guarantee pay and ensure you meet minimum obligations. From 6th April 2025, that’ll be £39 per day. They need at least one month’s service to qualify.

If employees are placed on short-time work, they’re typically only entitled to be paid for the hours they work unless their contract or a collective agreement (such as a union deal) states otherwise.

If short-time working continues for an extended period—usually four consecutive weeks or six weeks within 13 weeks – employees may have the right to apply for redundancy pay under the Employment Rights Act 1996. Additionally, they may be able to claim benefits like Universal Credit if their earnings drop significantly.

How Long Can You Legally Keep Staff on Layoff or Short-Time Working?

If an employee is laid off for more than four weeks, they may claim redundancy if employed for at least two years. You must be ready to respond within seven days if they file notice.

They’ll need to follow the correct process and give written notice that they intend to claim redundancy. You then have seven days to offer them suitable work. If you can’t or don’t respond, they can proceed with their claim.

Could Your Layoff Decisions Be Seen as Discriminatory?

Be aware that selecting employees for layoff or reduced hours based on protected characteristics (e.g., maternity leave or age) could lead to discrimination claims. Always document your reasoning.

Frequently Asked Questions

Do I Have To Pay Employees if There Is No Work?

Under UK law, you must continue paying employees if there’s no work—unless their contract includes a layoff or short-time working clause. Without this, withholding pay may count as an unlawful deduction of wages, exposing you to legal claims or breach of contract disputes.

Final Thoughts

Even during business downturns or periods of reduced demand, employers remain legally responsible for how they treat their workforce. You can’t simply cut hours, stop offering work, or reduce pay without following the correct legal process. Missteps—whether unintentional or due to unclear contracts—can result in claims for unlawful deduction of wages, breach of contract, or even constructive dismissal.

At Helix Law, we help employers navigate these issues with confidence. From contract reviews to strategy around workforce changes, our team can guide you through the legal landscape and help you reduce risk. Get in touch with us today to protect your business and act in line with UK employment law.