What do I need to know about “guarantee pay”?

What do I need to know about “guarantee pay”?

What is a lay-off?

As an employee, at certain times it may be necessary for your employer to temporarily lay you off from work.

If your employer does not have sufficient work for you to do, they may advise you not to come into work.

If you remain off work for at least one full working day, this is called a ‘lay-off.’ This is different to ‘short-time’ working when you continue working, but your hours are reduced.

A lay-off is only intended to be temporary. If your employer no longer needs you to do your job, this will be considered a redundancy.


Is it legal for your employer to lay you off?

You do not have a legally enforceable right to work, therefore your employer is within their rights to ask you not to come into work if there is nothing for you to do.

However, your employer does have a legal obligation to pay your agreed remuneration. Therefore, unless your employment contract states that you have agreed to reduced pay or no pay at all, your employer must pay you in full.

If your contract states that you can be laid off without pay, you will have the right to Statutory Guarantee Pay (provided you qualify).  If not, you will have the right to be paid the larger of:

  • The amount the contract provides for (which may be the full or reduced amount)
  • Statutory Guarantee Pay (if you are eligible).


How much is Statutory Guarantee Pay?

 Statutory Guarantee payments are payable for complete days without work. They are not payable for any days partially worked.

The maximum you can receive is £26 a day for five days in any three-month period, which is a maximum of £130. If you typically earn less than £26 a day, you will receive your normal daily rate.

If you are a part-time worker, your entitlement is calculated proportionally.


Are you eligible for Statutory Guarantee Pay?

To receive Statutory Guarantee Pay, you must:

  • Have been continuously employed for a minimum of one month (this includes part-time workers)
  • Reasonably ensure that you are available to undertake work
  • Not reject any reasonable alternative work, including work that does not form part of your contract
  • Not have been laid off due to industrial action.


How long can your employer lay you off for?

You can only be laid off for as long as is considered reasonable.

If you are paid for work you actually do, you have the right to leave your job and claim redundancy if it has been:

  • Four weeks in succession
  • Six weeks in a 13-week period.


Your employer may run their own Guarantee Pay scheme, which cannot be less than statutory arrangements. If you receive payments from your employer, you cannot receive statutory lay-off pay in addition to this.


What can you do if your employer does not make guarantee payments to you?

Non-payment of Guarantee Pay constitutes an unlawful deduction from wages.

If your employer has laid you off without pay and you believe they are not entitled to do this – or they fail to make Guarantee Payments – you can pursue the matter before an employment tribunal.

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