Guarantee pay

Guarantee pay

If you are laid-off then you may be entitled to receive guarantee pay. Find out how to work out if you are entitled to guarantee pay and how to calculate the amount you should receive.

Statutory guarantee pay

Statutory guarantee pay is the minimum you should be paid for any complete day you are laid-off work. To get statutory guarantee pay you must:

  • have been employed continuously for at least one month(this includes part-time workers)
  • reasonably make sure you are available for work
  • not refuse any reasonable alternative work, including work that is not in your contract
  • not have been laid-off because of industrial action
  • Continuous employment
  • Understanding your employment status

Statutory guarantee payments are made for a maximum of five worklessdays in any three month period. If you normally work fewer than five days a week, you may be paid for the number of days in your normal working week in any three month period.

If you are asked to do some work, but not the usual amount of work, during a particular day, you cannot claim statutory guarantee pay for that day.

Rate of statutory guarantee payments

The daily rate of the guarantee payment you should receive is worked out by multiplying the number of hours your employment contract shows you would have worked that day by the guarantee payments hourly rate.

  • Pay
  • Working hours

You should base the calculation on the working hours covered by your employment contract on the day you are laid-off. If a varied or new contract was introduced because of short-time working, you should use your employment contract immediately before this change.

There is a limit of 21.20 per day (from 1 February 2010) on the guarantee payment rate, giving a maximum guarantee payment of 106 for five workless days.

You should find out about other benefits you might be able to receive when statutory guarantee pay has run out.

  • How to claim benefit (money, tax and benefits section)

Contractual guarantee pay

If your employment contract includes guarantee payments then your employer should pay you this. If your contractual guarantee pay is higher than statutory guarantee pay then your employer does not need to pay statutory guarantee pay on top of your contractual guarantee pay.

While you are laid-off, youhave the right to be paid the larger of either:

  • what your employmentcontract provides for, which could be full pay or a reduced amount
  • statutory guarantee pay (if you qualify)

You are only entitled to be paid statutory guarantee payfor a maximum of five days in any three month period. Your employment contract may give you the right to receive more thanfive days of contractual guarantee pay in this period.

If your contractual guarantee pay is calculated on a weekly basis but you are laid-off for less that a whole week, the amount you receive should be adjusted in proportion to the number of days you are laid-off.

Effect of guarantee pay on Jobseekers Allowance

For the purposes of Jobseekers Allowance, guarantee payments will be seen as earnings if they are:

  • statutory guarantee payments
  • part of an exempted collective agreement on guarantee pay (see Exemption from guarantee pay entitlement below)
  • part of any other collective agreement on guarantee pay which obliges you to be available to work on that day
  • Jobseeker's Allowance (money, tax and benefits section)

Exemption from guarantee pay entitlement

In some situations collective agreements can be made where an employer and the workforce decide that they do not want part of the statutory guarantee pay process to apply to them. For example, you and your employer could decide that you want to use your own complaints procedure, rather than an Employment Tribunal process.

In practice, the collective agreement must contain guarantee pay provisions which are at least as favourable overall to employees as statutory guarantee pay.

In rare situations you may be part of a collective agreement with your employer saying that you will not be entitled to parts of the guarantee payment process. For this to be legal it must be agreed by your employer and your workforce and have the agreement of the Secretary of State for Business.

  • Trade unions

What to do next

If your employer lays you off without pay, and you feel they had no right to do this, or they fail to pay you guarantee pay, you can take the matter to an Employment Tribunal. Not paying you money you are due is classed as an unlawful deduction from wages.

Once you have been laid-off for some time, consider whether you wish to leave and claim redundancy pay.

  • How to resolve a problem at work
  • Pay deductions
  • Temporary lay-off: applying for redundancy

Where to get help

If you need furtheradvice on your rights to receive guarantee paysee the employment useful contacts section. If you are a member of a trade union, you can get help, support and advice from them.

  • Employment contacts
  • Trade unions
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