SECTOR SUPPORT

• Welsh Assembly Government (WAG) has announced a support scheme called ProAct

We will introduce, with effect from early in the New Year, a major extension to our Workforce Development Programme that will provide additional training assistance to businesses that are suffering during the downturn. It will complement the existing ReAct programme by enabling us to support businesses and their employees before the need for redundancies arises, hence its name, ProAct. On a selective basis, we will provide additional financial support for employee training and, as an innovative new measure, we will also provide support towards wage costs whilst training is underway. The scheme will be flexible, designed to meet the needs of individual businesses, and sector clusters such as supply chains. Up to £2000 training costs and £2000 wage support will be available per employee.

The scheme will be introduced in pilot form in the first instance with a view to its continuation, after examining the scope for European funding, until March 2010

• I am very pleased to announce that after extensive lobbying by the WAF, with additional support from the Welsh Manufacturing Forum, the pilot phase of funding support for January to March 2009 has been allocated almost entirely for automotive manufacturing companies based in Wales.
• In addition I have agreement from WAG that Terry Morgan will be leading a team of Relationship Managers to visit you and assess your situation. It is our intention to gather as much information as we can, as quickly as we can, hence this move. The RM's will explain ProAct and ask you to complete a Business Case form which we have consolidated to an A3 sheet.
• WAF have been authorised to hold all the information coming in from Terry and his team which will obviously be held as confidential. Applications for ProAct support will be evaluated by a panel comprising representatives from WAG, WAF and will be chaired by Roger Guest. (Roger chaired the Accelerate Wales evaluation panel)
• Once a Business Case has been endorsed an HRD Advisor will visit to develop the training plan.
• Payment for external training providers will be handled by WAG.

Other Actions

• WAF is involved in wider lobbying with Westminster in support of wage subsidy during periods of short time working. This is based on the German model where payment of 60 - 67% of the wage cost for non working days are paid by the government to the employee. This system, known as Kurzarbeit, is in operation for 18 months and will place German companies in a very competitive position when the economy picks up. e also understand that this operates in a number of European countries as well.
• I have arranged a meeting with the Wales based directors of Barclays and HSBC to inform them of our sector and the issues as well as finding out how they will be handling requests for loan guarantees etc through their branches. We could be a very useful support mechanism if you are applying for additional banking facilities.
• I and Mike Firth from WAG will be attending a meeting tomorrow in London along with colleagues from the W Midlands, N East / West and S East /West with the Department for Enterprise and Regulatory Reform, DBERR, to discuss UK automotive supply chain issues. I will be requesting that we create a central knowledge bank so that we have a very quick way of knowing what schedule changes are being made and can relay this information down the supply chain. You will appreciate that following the collapse of Wagon Automotive just before Christmas that there is a great deal of nervousness as to the strength of UK supply chains. The upside is that there will be opportunities for those who can take advantage as and when gaps appear, and we will do all that we can to support you in winning new business.
• We will be sending under separate email invitations to WAF meetings to be held at Waterton on the 29th of January and at the offices of Isringhausen in Wrexham on the 5th of February. This will provide an opportunity for information dissemination, an update on ProAct as well as an open forum to discuss issues etc.

Lay-off & short time working

Clarkslegal LLP

INTRODUCTION

In circumstances where it is unclear what an employer's staffing needs will be in the longer term where there is a downturn in work, employers may not wish to make a decision at that stage to carry out redundancies.

In such a situation, an employer may consider laying off employees or putting them on short time working. It is good practice to consider these alternatives in any event.

LAY-OFF

Lay-off means that the employment relationship between the company and the employee continues, but the obligation for the employer to provide work is suspended temporarily. Lay-off is very different from redundancy and the two terms should not be confused. When an employee is made redundant, their employment comes to an end. When an employee is laid off, they remain an employee pending an expected return to work. However, an employee has the right to end their employment and claim redundancy pay if it turns out that no further work will be forthcoming, as explained below.

There is no automatic right to lay employees off - this can only be done where there is a contractual right to do so, either:

• Expressly reserved in the contract of employment;
• By express agreement between the parties; or
• Implied into the contract of employment by custom and practice.

It is very difficult to establish that such a right is implied into the contract and this will only usually occur when there is a custom of laying off within that industry sector that is reasonable, certain and notorious.

If there is no contractual right to lay-off it is likely that the employer will be in fundamental breach of contract if it insists on not providing employees with work. The employee will then be entitled to treat himself as dismissed and may be able to bring a claim for wrongful and constructive unfair dismissal in the employment tribunal.

Even where a right to lay-off is reserved in the contract, it is likely that there is a requirement that this right be exercised for a reasonable time only, unless there is a contractual provision covering its duration. What is reasonable will depend on the circumstances and will differ from case to case. If an employee thinks that the lay-off has persisted beyond a reasonable time the remedy is for him to seek a redundancy payment through the procedure described later in this fact sheet.

If an employee was not available for work (e.g. because the employee was absent due to sickness) then that employee will not be treated as being laid off.

SHORT TIME WORKING

With short time working, instead of not providing the employee with any work at all, the employer provides the employee with work but for less than their normal weekly hours, at a reduced, pro-rated level of pay.

Short time working is very similar to lay-off and again cannot be insisted on unless there are contractual terms permitting it, as a unilateral attempt to introduce this could be a fundamental breach of contract.

GUARANTEE PAYMENTS

The Employment Rights Act 1996 provides that where an employee is laid off or on short time working he is entitled to receive a guarantee payment. This right only arises where the lay-off or short time working is because of a shortage of work or where there is an occurrence that affects the normal running of the business.

To qualify for the payment the employee must have been employed by the employer for more than one month and cannot be on a fixed term contract of less than three months. This right does not apply to seasonal workers. Additionally, the payment will not be paid if the failure to work is owing to industrial action or the employee has unreasonably refused to undertake suitable alternative employment.

Calculation of Payment

The calculation is based on guaranteed hourly pay. This is calculated by dividing a normal weeks pay by the normal hours worked per week. Where the hours worked per week differ from week to week, an average is taken over the previous 12 weeks.

The guaranteed hourly pay is then multiplied by the number of normal hours that have not been worked on the day in question.

Maximum Payments

The daily guarantee payment is subject to a statutory maximum, which is at present £20.40.

The payment is only guaranteed for five days over any period of three months, to a maximum of £102.

Where there is a contractual right in the contract to receive a payment during periods of short time working and lay-off, any statutory guarantee payment made will be set-off against this entitlement, and vice versa. This means that the employee will receive whichever is the greater of the statutory or contractual payment, but will only receive one of these.

Complaint to the Employment Tribunal

Where an employee has not received all or part of a guarantee payment to which he is entitled he may make a claim to the employment tribunal for the amount owing. Such a claim must be made within three months from the day to which the payment relates.

REDUNDANCY PAYMENT

If the period of lay-off or short time working lasts long enough, the employee may be able to claim a redundancy payment.

The statutory scheme for lay-off and short time working does not apply where the employee has been dismissed. To use the scheme the employee does not have to be redundant within the statutory definition of redundancy. However, the employee does have to comply fully with the terms of the scheme.

Under the scheme lay-off or short time working occurs where the employee's contractual remuneration depends on him being provided with work and he has not been provided with work. This means that the scheme only applies if the employer has a contractual right to withhold remuneration if there is no work.

In summary, the employee is able to claim a redundancy payment if he complies with the following procedure:

1. He has been laid off or on short time working (or any combination of the two) for four consecutive weeks or any six weeks (with a maximum of three consecutive weeks) in any 13 week period. If the main cause of the lay-off or short-time working is a strike or lock-out (regardless of whether the employee is involved in either) then that period of time will not count as part of this period.

2. The employee has given the employer written notice of his intention to claim a redundancy payment within four weeks of the last week of lay-off or short time working.

3. The employer can contest this claim by serving a written counter-notice within seven days of service of the notice.

4. The employee must then apply to the employment tribunal to decide the matter. If the employee has complied with the procedure, the employer can only avoid making the payment if it can show that, at the date on which it received the notice of intention to claim a redundancy payment, normal working for a period of at least 13 weeks was expected to resume within four weeks.

5. The employee must then terminate their contract of employment by giving either one week's notice or contractual notice (whichever is the longer period), within three weeks of:

• The employer's failure to serve a counter-notice;
• The employer's withdrawal of a counter-notice; or
• (If the case is being contested) The employment tribunal decision.

If you would like any more information, please do not hesitate to contact one of Clarkslegal's automotive Team:

 

Dafedd Downes Nick Huffer Victoria Hall

Partner Associate Senior Solicitor

029 2055 7554 029 2055 7554 029 2055 7553

ddownes@clarkslegal.com nhuffer@clarkslegal.com vhall@clarkslegal.com

www.clarkslegal.com

Or for specialist HR assistance please contact Graham Coleshill on 029 2055 7555 gcoleshill@clarkslegal.com or visit www.forburypeople.com

We also offer a very cost effective HR solution through our Employment Buddy website www.employmentbuddy.com . Visit the site for a tour of the resources available.

WAF TECHNOLOGY

WAF aims to drive technological development and to provide the opportunity to learn about leading edge technologies being developed which have applications in the automotive sector.

The Welsh Automotive Forum (WAF) acts as a information point for its members and the welsh automotive sector as a whole. WAF brings together key developments in automotive technology.

There are six main subjects which are the fucus of a bespoke programme of events designed to disseminate and culture tech improvements in our industry:

• Powertrain
• Materials – Metals/Plastics/ Composites/Ceramics/Bio
• Automotive Electronics – Telematics
• Fuels – Alternate
• Design
• Automation – Robotics/Vision Systems/Micro

Invitations to events will be sent to members to attend events who can select their appropriate representatives to attend. Speakers at these events will provide members with the opportunity of learning about leading edge technologies being developed, that have applications in the sector.

Where possible, events will be held at locations that offer opportunities for ‘tours’ to share best practice. Networking will be promoted, and either a breakfast buffet or lunch will be provided to this end.

The programme will be continually developed and attendee's feedback will help us shape the next series of events. If there is a particular issue that you would like to know more about then get in touch with the Forum. The events not only roll-out new methods and developments but will also help shape the overall Strategic Plan for the Automotive sector in Wales. The Technology Working Group acts as an advisory board that can influence technoloy strategies throughout Wales. If there is a development you want to know more about or one which you feel a worthy champion then there is no better place to contact than us.

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