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I'm curious if a company has to (or if it is normal to) pay their employees if they, for instance, close the business for a while for renovations.

For a specific case, say a restaurant closes for a month to renovate, do they fire their employees, lay them off, put them on leave without pay, or pay them their normal wage during the renovation?

It seems that if the employee is put out of work at no fault of their own, they should still get paid.

Edit: This question pertains to US laws.

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Josh, I answered this question as though you were the employer. But "through no fault of their own" makes it sound like you're the one who was laid off. If you were laid off or know someone who was laid off under these circumstances (or any others, actually) the points to remember are that it's perfectly legal in the US, and you/they should check state law for specific unemployment payment eligibility. In other words, apply for unemployment ASAP. A temporary layoff is called a furlough and it's a very common thing. – user2757 Nov 15 '11 at 16:53
It actually isn't related to me at all - I was just curious. Thanks. – Josh M. Nov 28 '11 at 18:29

4 Answers

For a specific case, say a restaurant closes for a month to renovate, do they fire their employees, lay them off, put them on leave without pay,

In most countries it is illegal to put employees on leave without pay without their fault or a catastrophy. Rnenovations don't count.

Firing them is an option, just you won't get them back if they are good. You fuck them, they leave.

At the end, you pay them. Part of renovation costs.

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Adding the moral judgement to this ("f*cking them") isn't constructive. It's perfectly legal for employers in the US to temporarily lay off workers, it's done all the time, it's not the employee's fault, and everyone who is an adult understands this. How about a consulting company that loses a big project? They probably can't afford to keep their contractors warming a bench at their full rate of pay. Answer: temporary layoff. It's done all the time. The example of a restaurant - there is no revenue during remodeling. So they either have to lay off temporarily, or go out of business. – user2757 Nov 13 '11 at 17:19
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From where do you get your facts? In most countries it's completly legal to reduce staff if income is low or downscaling. The laws regarding letting people go / laying them off is rather complicated in some countries, but still is an viable possibility. Imagine doing business if a hire was for life... – rozon Nov 15 '11 at 11:54
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Bu this is not slow business - and restaurants are teams. Letting them go for 3 weeks is normalyl not ok. You can fire them (and not get them back) but every regulation I know requires more than "I need to just renovate my restaurant" styles of problems for temporary leaves. What CAn easiyl be done is scheule combined holidays. After all, renovations are not planned a week in advance. – NetTecture Nov 15 '11 at 12:05
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@NetTecture - Once again - US laws, man. In the US most dismissals are legal. Our laws for employee protection don't extend to protection against layoffs. "Not ok" and "every regulation I know" is not valid information. – user2757 Nov 15 '11 at 18:37
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Yeah, but even in the US then you stand there after t3 weeks without the trained team. STUPID move. – NetTecture Nov 15 '11 at 20:45
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In Australia, it would depend on what basis they were employed. If they were casual then you wouldn't roster them on and therefore wouldn't pay them. If the staff were permanent employees, then you would have to pay them for the time the restaurant was closed.

There should be a government body in your area you can ask about this.

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That makes sense to me, thanks. – Josh M. Nov 13 '11 at 16:10
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More information about rules in Australia are on this page of the Fair Work Ombudsman site – Paul Filmer Nov 14 '11 at 9:37

If they are paid hourly (and I suspect they are in a restaurant), you probably are not required to pay them for the time they don't work. When I used to work in food service, occasionally I would show up to work, and be told we were closed for kitchen cleaning, or something similar, and I'd go home without pay. Of course, this was just for a single day, not for a full month.

And, as others have said, it likely depends on your local laws.

But even if it's legal not to pay them, it's probably not a good idea. As @NetTecture said, many will probably leave (whether or not you officially "fire" them).

If there's any way you can afford to continue paying them, I would suggest doing so, as it seems like the right thing to do. Maybe even if you can't pay them their full wage.

You might also look for creative ways to keep employing some of them during the rennovation. Can you pay any of them to help paint, or tear up old carpet? Whether this is possible may also depend on local laws, insurance, and who you contract most of the rennovation work to, etc.

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It seems that if the employee is put out of work at no fault of their own, they should still get paid.

Should isn't the same as "has to."

The doctrine for employment law in most areas of the US is "at will" employment. Either party can legally terminate employment at any time and that is (with specific exceptions) generally held to not be a basis for legal actions.

Layoffs tend to follow exactly the same principle. Many companies have temporary layoffs due to business conditions, and, for renovations. It's not only legal but it is widely practiced in manufacturing type fields.

Being hourly or salaried has little to do with it. If your employer has no work available for you, they can dismiss you, permanently or temporarily.

Where the law enters into this is unemployment eligibility. When an employee has exceeded a certain number of months of continuous employment and earns over a certain amount on average per time period, their state will consider them eligible for unemployment payments during a layoff, temporary or permanent. Part of the unemployment payment comes from the most recent employer. So you'd have to pay a part of your employee's unemployment payment during a temporary layoff. That is where the law applies to the employer.

There are also the following conditions - edge cases - that affect layoffs.

There is a national law that says that an employer of a certain size (number of employees) who has to make permanent layoffs of a certain number must pre-announce the layoffs publicly. This applies to employers laying off hundreds of employees. I do not know the specific laws. Since that is probably not the case here I'm not going to look it up.

Secondly, if you fire someone for cause, many jurisdictions disallow the person from collecting unemployment payments. I have witnessed a few employers treat a layoff like a firing in order to not have to affect their unemployment payments. When it is a group of, say, 10 or more employees who are "fired", that can be successfully contested and it looks like a layoff. Now, this is sleazy, but I have witnessed it attempted.

The bottom line to answer your question: normally almost never, at the vast majority of companies. The exceptions (businesses that do cover payroll while employees are furloughed) get written up in the business press as extremely generous.

Should employees get paid during a shutdown? Depends on the situation and how irreplaceable the affected employees are and how much money is available. You should determine your unemployment burden if you do a temporary layoff. That's normally what is done.

Also if practical, look for creative solutions like renting a temporary office or work-from-home that justifies keeping people on the payroll.

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Spot on! Only thing I would add is to check with the state, because some of them have lower eligibility thresholds as far as when certain laws kick in. – Apollo Sinkevicius Sep 26 '12 at 18:48

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