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Guarantee pay
[ch 4: pages 109-110]Employees laid off or on short-time working should receive their normal pay, unless there is a clear contractual term to the contrary (Miller v Hamworthy Engineering [1986] IRLR 461). That contract term can be express or implied. An implied term can arise through conduct, custom or practice, but it must be clear (see Chapter 3: Work rules and collective agreements).
A collective agreement stated that short-time working could be introduced, but only where “approved as an alternative to redundancy” by the union. Introducing it without that consent gave employees the right to use Part II of the ERA 96 (see page 105) to claim their full wages, since their employer had made an unlawful deduction from wages under the Act.
Davies v Hotpoint [1994] IRLR 538
If the contract gives the right to lay off workers or to put them on short-time working, those workers must be paid at least statutory guarantee pay, as long as they have been working for the employer for at least a month. This is the case even if the contract gives the right to lay off workers without pay.
An employer can agree to pay contractual guarantee pay that is better, but not worse, than statutory guarantee pay.
The rules on statutory guarantee pay are found in section 28 of the ERA 96.
Statutory guarantee pay is based on normal hourly earnings, subject to a cap, and is limited to a maximum of five days’ pay in any three-month period. The maximum paid for a day is £25.00 (2014-15) (section 31, ERA 96). Employees laid off because of industrial action taken by any employees against the employer or an associated employer do not qualify for guarantee pay.
Employees who refuse an offer of suitable alternative work for the days they are laid off lose their right to guarantee pay. A tribunal claim for unpaid guarantee pay must be made within three months of the day payment should have been made (section 34, ERA 96). From 6 May 2014, the first step in any tribunal claim is to contact Acas for early conciliation. This first step must be taken within the three-month time limit for bringing the claim. For information about new rules on Acas early conciliation, see Chapter 1.
Tribunal fees: There is a fee for claiming a guarantee payment in the employment tribunal: £160 to issue the claim and £230 for the hearing, regardless of the size of the claim (2014-15). Given that maximum daily statutory guarantee pay for a full-time employee is £25.00 per day for five days in any three months, providing a maximum claim value of £125, tribunal fees effectively wipe out the value of this kind of claim for any worker who does not qualify for fee remission. For information about fees and remission see Chapter 1.
Employees with at least two years’ service who are laid off for a period of at least four consecutive weeks (or six non-consecutive weeks in a 13-week period) may be entitled to a redundancy payment (section 148, ERA 96).
Reps need to take care when negotiating arrangements for short-time working, to make sure they take account of workers’ rights to guarantee pay (see Abercrombie and others v Aga Rangemaster Limited [2012] UKEAT/0099/12/8M).