Short Time Working: 2026 Rules Guide

Short time working is a legally sensitive workforce management tool that sits at the intersection of employment contract law, pay protection, redundancy rights and discrimination risk. While it can provide employers with short-term operational flexibility during periods of reduced demand, it is also an area where mistakes routinely trigger unlawful deduction of wages claims, breach of contract disputes and unintended redundancy liabilities.

This article is written for HR professionals and business owners who need to make defensible, compliance-grade decisions about short time working. It assumes a working knowledge of UK employment law and focuses on what the law actually requires, where employers go wrong and how commercial pressures interact with statutory employee protections. The emphasis throughout is on risk management, contractual authority and practical employer decision-making, rather than generic explanation.

What this article is about:
This guide explains what short time working means in UK law, when it can lawfully be used, how pay and statutory guarantee pay operate, the redundancy risks that arise if short time working continues and the key legal and commercial consequences employers must weigh before implementing it. It is designed to support employers in making compliant, well-evidenced decisions that will stand up to employee challenge, HMRC scrutiny and employment tribunal claims.

Section A: What is short time working under UK employment law?

1. What does “short time working” legally mean?

Under UK employment law, short time working is not simply a managerial decision to cut hours. It is a defined legal concept under the Employment Rights Act 1996, with specific consequences for pay protection and redundancy rights. For statutory purposes, the short time working and lay-off framework is set out in sections 147 to 154 Employment Rights Act 1996.

Short time working arises where an employee’s pay for a week is reduced to less than half of a normal week’s pay and this reduction is caused by the employer providing less work than is contractually required. The reduction in pay is therefore the result of reduced work, not a separate discretionary pay cut.

This distinction matters. If an employer reduces pay without reducing work, or reduces work without contractual authority, the arrangement may fall outside lawful short time working and instead constitute an unlawful variation of contract.

Employer action point:
Before describing any arrangement as short time working, employers must confirm that work has genuinely reduced, pay reduction flows directly from reduced work and the situation fits within the statutory framework. If it does not, different legal risks apply.

2. How is short time working different from lay-off?

Short time working and lay-off are often conflated, but the law treats them differently.

• Short time working involves a reduction in working hours, with the employee still attending work for part of the week.
• Lay-off occurs where an employee is provided with no work at all for at least one full working day and is usually asked to remain at home.

Both concepts trigger potential entitlement to statutory guarantee pay and, if prolonged, can give employees the right to claim redundancy. However, the operational and employee relations impact of each is different, and the contractual wording authorising them is often distinct.

Employer action point:
Check whether your contracts refer to short time working, lay-off, or both. Using the wrong mechanism without contractual authority significantly increases litigation risk.

3. Can employers automatically reduce pay during short time working?

No. This is one of the most common and costly errors employers make.

Employees are entitled to their normal contractual pay unless the contract of employment expressly permits reduced or unpaid short time working, or the employee has agreed to the reduction, either individually or collectively.

Without contractual authority or consent, reducing pay during short time working exposes the employer to unlawful deduction of wages claims, breach of contract and potential constructive unfair dismissal claims.

Calling the arrangement “short time working” does not, by itself, make reduced pay lawful.

Employer action point:
Before implementing any reduction in pay, identify the contractual basis relied upon, document employee agreement where required and confirm how pay will be calculated during reduced hours.

4. Why does the legal definition matter commercially?

The statutory definition of short time working is directly linked to redundancy risk.

If an employee is laid off, or kept on short time working, and earns less than half a normal week’s pay for either four or more weeks in a row, or six or more weeks in a thirteen week period, they may acquire the statutory right to claim redundancy pay, even if the employer did not intend to make redundancies.

Many employers underestimate this risk, particularly where short time working is introduced as a “temporary” cost-saving measure without a clear exit strategy.

Employer action point:
Short time working should never be implemented without tracking weeks of reduced pay, understanding redundancy trigger thresholds and planning how and when normal working will resume.

Section A summary
Short time working is a legally defined mechanism with specific statutory consequences. It is not simply a flexible management option. Employers must be clear on what constitutes short time working in law, how it differs from lay-off and why contractual authority is critical. Misunderstanding these foundations is what turns a cost-saving measure into a significant legal and financial liability.

Section B: When can an employer lawfully impose short time working?

1. Can an employer impose short time working without employee agreement?

In most cases, no. An employer cannot lawfully impose short time working unless there is a clear legal basis for doing so. That basis must come from one of three sources:

• an express term in the employee’s contract of employment
• a collective agreement or recognised industry agreement that applies to the workforce
• the employee’s informed agreement to a variation of contract

Absent one of these, imposing short time working is highly likely to be unlawful.

This is a critical compliance point. Many disputes arise not because short time working is inherently unlawful, but because employers assume that commercial necessity or business survival justifies unilateral action. UK employment law does not support that assumption.

Employer action point:
Before any implementation decision is taken, employers must identify and document the precise legal authority relied upon. Commercial pressure does not replace contractual authority.

2. What does a valid contractual short time working clause look like?

An express contractual clause allowing short time working is the strongest legal footing for employers. However, not all clauses drafted as “flexibility” provisions will be sufficient.

A compliant and enforceable short time working clause should:

• clearly permit reductions in working hours and/or pay
• specify the circumstances in which short time working may be used
• explain how pay will be calculated during the period
• avoid excessive discretion that could render the clause unenforceable or unreasonable

Vague wording such as “the employer may vary hours as required by business needs” is often insufficient to justify unpaid or reduced-pay short time working.

Risk example:
Employers relying on general variation clauses often lose unlawful deduction claims because tribunals interpret such clauses narrowly, particularly where pay is affected.

Employer action point:
Contracts should be reviewed before use. If clauses are ambiguous, employers should assume they do not have authority to impose unpaid short time working.

3. What if there is no contractual clause?

If no express contractual right exists, the employer must move into variation territory. This changes the legal risk profile significantly.

The employer’s options typically include:

• seeking individual employee consent to temporary short time working
• consulting collectively where a recognised trade union or representative body exists
• proposing permanent contractual changes following consultation

While employers may explain the commercial consequences of refusal, including the risk of redundancies, they cannot lawfully impose short time working without agreement unless prepared to accept litigation risk.

Where an employer seeks to impose changes by dismissing and re-engaging employees on new terms, this can create significant legal exposure, including unfair dismissal risk, even where there is a genuine business rationale. Employers must take particular care to follow a fair process and consider alternatives before relying on dismissal and re-engagement as a mechanism to introduce short time working terms.

Employer action point:
Where consent is required, consultation must be genuine, documented and conducted before any change takes effect. If dismissal and re-engagement is being considered, employers should treat this as a high-risk last resort and ensure the decision-making trail is defensible.

4. Can employers rely on “custom and practice”?

In theory, yes. In practice, this is one of the weakest justifications available.

To establish a contractual term by custom and practice, an employer would need to show that short time working has:

• been applied consistently over time
• been known to employees
• been accepted without objection
• been treated as binding by both parties

This is a high evidential threshold and is frequently unsuccessful before tribunals, particularly where pay is reduced.

Employer action point:
Custom and practice should be treated as a last resort, not a primary strategy. Where possible, formalise arrangements contractually.

5. What role do collective and industry agreements play?

In some sectors, collective agreements or nationally negotiated frameworks include provisions for short time working. Where incorporated into contracts, these may give employers lawful authority to act.

However, employers must confirm:

• the agreement is still in force
• it applies to the relevant employees
• it has been properly incorporated into individual contracts

Assuming coverage without verification can expose the employer to breach of contract claims.

6. What are the risks of getting authority wrong?

Imposing short time working without lawful authority can trigger multiple claims simultaneously, including:

• unlawful deduction of wages
• breach of contract
• constructive unfair dismissal
• discrimination claims if selection or impact is unequal

In addition to tribunal risk, employers face reputational damage, loss of employee trust and difficulty re-engaging the workforce when normal operations resume.

Employer action point:
Authority should be treated as a gating issue. If authority is uncertain, the safer course is consultation and agreement, even where this delays implementation.

Section B summary
Short time working can only be imposed lawfully where the employer has a clear contractual or consensual right to do so. The absence of authority transforms a workforce management tool into a high-risk contractual breach. Employers must treat authority, consent and consultation as foundational compliance steps, not procedural afterthoughts.

Section C: How does pay work during short time working?

1. Are employees entitled to full pay during short time working?

The default legal position is that employees are entitled to full contractual pay, even where their working hours are reduced, unless the employer has lawful authority to reduce pay.

Short time working does not automatically entitle an employer to pay employees only for the hours worked. Reduced pay is only lawful where the employment contract expressly permits unpaid or reduced-pay short time working, or where the employee has agreed to a variation of contract permitting reduced pay.

Where neither applies, reducing pay will almost certainly constitute an unlawful deduction of wages, regardless of business pressures or financial necessity.

Employer action point:
Before implementing reduced pay, employers must confirm both that hours are lawfully reduced and that pay reduction is contractually authorised or agreed. Failing to establish both exposes the employer to immediate wage claims.

2. What is statutory guarantee pay and when does it apply?

Statutory guarantee pay is a limited form of wage protection designed to compensate employees who are provided with less work than their contract requires.

Employees may be entitled to statutory guarantee pay where they are not provided with a full day’s work due to a lack of work and they meet the statutory eligibility conditions. These include having at least one month’s continuous employment, being available for work, not unreasonably refusing suitable alternative work and not being affected by industrial action.

Guarantee pay is payable only on days when no work is provided at all. If an employee works part of a day, statutory guarantee pay is not due for that day.

3. How much is statutory guarantee pay?

Statutory guarantee pay is capped at a daily statutory maximum and is payable for up to five days in any rolling three-month period.

The daily statutory cap is reviewed periodically and employers must apply the rate in force at the relevant time. Employers should not rely on historic figures when calculating entitlement.

Where an employee’s normal daily pay is lower than the statutory cap, they are entitled only to their normal daily rate. For part-time employees, entitlement is calculated on a pro rata basis, reflecting their normal working pattern.

Employer action point:
Failure to pay statutory guarantee pay where due exposes employers to unlawful deduction of wages claims, even where reduced pay is otherwise contractually permitted.

4. Can employers operate their own guarantee pay scheme?

Employers may operate a contractual guarantee pay scheme instead of the statutory scheme, provided that it is no less favourable than the statutory minimum.

Employees cannot receive both statutory and contractual guarantee pay for the same day. Where a contractual scheme applies, statutory guarantee pay is displaced.

Employers should ensure that payroll systems correctly apply the relevant scheme to avoid underpayment.

5. How does short time working interact with the National Minimum Wage?

Short time working can create National Minimum Wage compliance risks, particularly where employees are paid only for hours worked.

Employers must ensure that pay received for hours actually worked meets or exceeds the applicable National Minimum Wage rate. Deductions, averaging or pay adjustments must not reduce effective hourly pay below statutory thresholds.

Failure to monitor National Minimum Wage compliance can result in HMRC enforcement action, financial penalties and public naming.

Employer action point:
Payroll calculations should be stress-tested during short time working periods to ensure ongoing National Minimum Wage compliance.

6. What are the wider pay-related risks for employers?

Beyond wage claims, mishandling pay during short time working can undermine employee relations, trigger grievances and collective disputes, increase attrition and weaken the employer’s position in later redundancy or restructuring processes.

Employers who handle pay transparently and lawfully are better positioned to retain workforce goodwill and operational flexibility.

Section C summary
Pay is the highest-risk area of short time working. Employers must distinguish between reduced hours and reduced pay, understand when statutory guarantee pay applies and ensure ongoing compliance with wage protection laws. Errors in this area frequently lead to claims that outweigh any short-term cost savings achieved through short time working.

Section D: How long can short time working last and when does redundancy risk arise?

1. Is there a legal time limit on short time working?

There is no fixed statutory time limit on how long short time working can last. Employers can, in principle, keep employees on short time working indefinitely, provided there is contractual authority and the arrangement is otherwise lawful.

However, the absence of a formal time limit is misleading. UK employment law imposes a functional limit through redundancy rights, which can be triggered if short time working continues for a defined period and pay falls below statutory thresholds.

This is where many employers misjudge the risk. Short time working may feel temporary and reversible, but the law treats prolonged reduced pay as a potential redundancy situation, regardless of the employer’s intentions.

Employer action point:
Short time working should always be planned with a clear timeline, review points and exit strategy. Open-ended arrangements materially increase redundancy exposure.

2. When does short time working give rise to redundancy rights?

Under the Employment Rights Act 1996, an employee may acquire the right to claim statutory redundancy pay if they are laid off or kept on short time working and they receive less than half a normal week’s pay for either four or more consecutive weeks, or six or more weeks in any rolling thirteen-week period.

This right arises automatically once the threshold is met. It does not depend on whether the employer intended to make redundancies or whether the business expects work to return.

Employer action point:
Employers must actively monitor weekly pay levels during short time working, not just working patterns. Redundancy risk is triggered by pay, not hours alone.

3. How does an employee exercise the right to claim redundancy?

The redundancy process triggered by short time working is procedurally strict and time-sensitive.

To initiate a claim, the employee must give written notice to the employer claiming redundancy within four weeks of the last short-time working or lay-off week.

The employer then has seven days to either accept the redundancy claim or serve a counter-notice stating that normal work will resume shortly.

If a counter-notice is served, the employer must be able to show that work will be available within four weeks and that it will last for at least thirteen consecutive weeks. If these conditions are not met, the employee remains entitled to redundancy pay.

4. What happens if the employer does nothing?

If the employer fails to respond to the employee’s redundancy notice within the required timeframe, the employee must resign in order to crystallise their entitlement to redundancy pay.

The resignation must be submitted within three weeks, starting from either seven days after the employee served their redundancy notice or the date a counter-notice was withdrawn, if one was issued.

Failure to follow this process precisely can invalidate the redundancy claim, which is why disputes in this area are often highly technical.

5. Why is this risk commonly underestimated by employers?

Employers often assume that redundancy only arises where there is an intention to reduce headcount permanently. That assumption is incorrect.

Short time working is treated by the law as a potential indicator that work has diminished to the point where redundancy may exist, even if the employer expects recovery. This reflects the policy aim of protecting employees from prolonged income loss without resolution.

Risk example:
An employer introduces short time working as a temporary measure during a downturn, allowing pay to fall below half pay for several months. Even if work later improves, affected employees may already have acquired enforceable redundancy rights.

6. How should employers manage redundancy risk during short time working?

To manage risk effectively, employers should track weeks of reduced pay for each affected employee, diarise redundancy trigger points, review whether work is genuinely expected to resume within statutory timeframes, consider whether redundancy consultation should begin proactively and document the business rationale for continued short time working.

Ignoring these steps can turn a temporary cost-saving measure into an unplanned redundancy liability.

Section D summary
While short time working has no formal statutory end date, it carries built-in redundancy risks that escalate over time. Employers who fail to monitor pay levels and statutory thresholds may inadvertently create redundancy entitlements, regardless of commercial intent. Managing duration, documentation and review points is therefore a core compliance requirement, not an administrative detail.

Short time working FAQs

1. Do employees have to agree to short time working?

Employees must agree to short time working unless their contract of employment already contains an express and enforceable short time working clause, or the arrangement is authorised through a collective or industry agreement incorporated into their contract.

If there is no such provision, employee consent is required. That consent may be given individually or collectively, but it must be informed and obtained before short time working is imposed. Simply notifying employees of reduced hours or pay is not sufficient and will not cure a contractual breach.

Employer risk if handled incorrectly:
Imposing short time working without consent can lead to unlawful deduction of wages claims and, in some cases, constructive unfair dismissal.

2. Can short time working be unpaid?

Short time working can be unpaid only where the employer has contractual authority to reduce pay or where employees have agreed to the reduction. There is no automatic right for employers to pay only for hours worked.

Where pay is reduced lawfully, employees may still be entitled to statutory guarantee pay for qualifying days on which no work is provided at all, subject to statutory limits.

Employer action point:
Always separate the question of reducing hours from the question of reducing pay. Authority is required for both.

3. Can short time working be imposed temporarily?

Yes, but temporary status does not remove legal risk. Even short-term arrangements can trigger wage claims if authority is missing and redundancy rights if statutory thresholds are reached.

Employers should clearly document the anticipated duration, review dates, the business rationale and how and when normal working will resume. Open-ended or poorly documented “temporary” arrangements are a common source of disputes.

4. Do employees continue to accrue holiday during short time working?

Yes. Employees continue to accrue statutory holiday entitlement during periods of short time working.

Where working hours are reduced, holiday pay calculations may be affected, particularly for employees with variable hours, but accrual itself does not stop. Employers should ensure payroll and holiday systems reflect this accurately.

5. Can employees work elsewhere during short time working?

Employees may be able to take on additional work during periods of short time working, subject to the terms of their contract. Employers should check for exclusivity clauses, conflict of interest provisions and availability requirements.

It is generally considered reasonable to allow secondary work, provided the employee remains available to return when required. However, if an employee becomes unavailable, the employer may treat this as resignation or misconduct, depending on the circumstances.

6. Can short time working be used selectively?

Yes, but selection decisions must be objectively justified.

Selecting employees for short time working carries discrimination risk, particularly where selection disproportionately affects part-time workers, women, disabled employees or other protected groups.

Even where there is no discriminatory intent, indirect discrimination can arise based on impact alone.

Employer action point:
Selection criteria should be documented, business-led and objectively defensible.

7. Does short time working affect redundancy consultation duties?

Short time working does not, by itself, trigger collective redundancy consultation duties. However, if it becomes apparent that redundancies may follow, or if short time working is being used as a precursor to workforce reduction, consultation obligations may arise.

Employers should be alert to when short time working shifts from a temporary cost-control measure to a redundancy planning stage.

FAQs summary
Short time working raises complex questions around consent, pay, discrimination and redundancy. Employers who treat it as a purely operational decision often overlook statutory protections that employees can enforce with relative ease. Clear authority, documentation and monitoring are essential to managing both legal and commercial risk.

Conclusion

Short time working is a legitimate workforce management mechanism under UK employment law, but it is one of the most commonly mishandled. For employers, the legal risk does not arise from the concept itself, but from how and when it is implemented.

The law places clear limits on an employer’s ability to reduce hours and pay. Contractual authority or employee consent is essential. Where reduced pay is involved, statutory protections such as guarantee pay and redundancy rights operate automatically, regardless of commercial intent. Employers who fail to understand these mechanisms often expose themselves to unlawful deduction claims, breach of contract disputes and unintended redundancy liabilities that far exceed any short-term cost savings.

From a risk management perspective, short time working should never be treated as an informal or ad hoc response to reduced demand. It requires advance planning, careful contract analysis, accurate pay monitoring and a clear exit strategy. Selection decisions must be objectively justified, and the impact on different groups of workers must be considered to avoid discrimination risk.

For HR professionals and business owners, the key takeaway is this: short time working is a compliance-led decision first, and a commercial one second. Employers who approach it with that mindset are far more likely to achieve operational flexibility without creating long-term legal exposure.

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