Short-time Working and Lay off

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  • If you reduce the number of days your employee works, they will get Jobseekers Benefit for the days they dont' work. If  the number of hours each day is reduced, they will not get Jobseekers Benefit. So, they will be financially better off if you reduce their days, rather than their hours.
  • To get Jobseekers Benefit, the employee must be unemployed for at least two working days each week. So if you reduce their working week to a 4 day week, they won't qualify for Jobseekers Benefit.
  • A higher rate of Jobseekers Benefit is payable to those on temporary short-time working arrangement than to those on a permanent short-time working arrangement.
  • Jobseekers Benefit for short-term working is not taxable. However, Jobseekers Benefit for lay-off is taxable. So it is better for your employee to work week/on week off, than month on/month off.
  • If you cannot guarantee your employee a full-time job, they can demand to be made redundant.

Definitions:

Redundancy

Permanent loss of one's job

Lay-off

Temporary loss of one's job

Short-time

Various arrangements such as 3 day week and week-on/week-off

Reduced hours

Works every day but for fewer hours

Job sharing

An existing arrangement, entered into voluntarily

Part-time

 An existing arrangement, entered into voluntarily

 

If your employee's days at work are reduced temporarily, they will get one fifth of the weekly rate of Jobseekers Benefit for each day that they are unemployed. So if they are entitled to the personal rate of €204.30 and their working week is reduced to a three day week, they will get €40.86 per day or €81.72 for the two days.

They do not get any payment for the first three days of any Jobseekers Benefit claim, so if they are on a three day week, they will get no payment for the first week and they will get only one day the following week. After that, they will get two days per week.

If they are unemployed for only one day per week, they are not entitled to Jobseekers Benefit. I have heard that, in practice, people are paid for this, but I have been unable to verify it.

If their days at work are reduced permanently, they will get one sixth of the weekly rate of Jobseekers Benefit. So if they are entitled to the personal rate of €204.30 and their working week is reduced to a three day week, they will get €34.05 per day or €68.10 for the two days.

If they work week-on/week-off or month-on/month-off, they will get the Jobseekers Benefit for that full week or month.

If they normally work an 8 hour day, but reduce it to a 6 hour days, they will not be entitled to any Jobseekers Benefit. They get Jobseekers Benefit only for days on which they do no work.

If they voluntarily agree with a colleague to job share, they are not entitled to Jobseekers Benefit. So it's important to get a letter from you to say that the short-time working is not voluntary.

The taxation of Jobseekers Benefit

From the Revenue Guide  Taxation of Jobseekers Benefit

If they are participating in a short-time working arrangement Jobseekers Benefit payable is not taxable.

 

Short-time employment means employment in which the employees have been transferred from a normal working week to a short-time working arrangement each week (e.g. 3 days on / 2 days off) or within a period of four consecutive weeks (e.g. 1 week on /1 week off; 2 weeks on /2 weeks off; 3 weeks on /1 week off).

 

This is important. The Revenue's definition of "short-time" working is different from the definition used by Social Welfare. So if they have a choice of week on/week off or month on/month off, they should opt for week on/week off.

An employee on short-time working can claim redundancy

Under the Redundancy Payments Acts, short-time working is defined as "where an employee's working week decreases to less than half of his normal weekly hours or his pay is less than half of his normal take home pay and the situation is not considered to be permanent"

If they have been kept on short-time for 4 consecutive weeks or for 6 weeks over a 13 week period, they can claim redundancy. If you can guarantee them work for 13 consecutive weeks, then you do not need to make them redundant. If you do make them redundant, they will get statutory redundancy, but not payment in lieu of notice as they will be terminating the contract voluntarily.

Lay-off

You have no right in law to lay an employee off. However, most employees accept it voluntarily as an alternative to being made redundant. They can demand to be made redundant instead of being laid off temporarily.