Guarantee Payments
Key points
§ Section 28 of the Employment Rights Act 1996 states that an employee is entitled to a guarantee payment if his (or her) employer does not provide him with work throughout a day on which he would normally expect to work under the terms of his contract of employment. Such a day is referred to in the 1996 Act as a workless day. It should be stressed at this point that, in the absence of any contractual right to do so, an employer does not have any automatic right to lay-off his employees (whatever the circumstances).
§ At present (March 2003), the maximum guarantee payment is £17.30 a day. This figure will be increased or decreased in February of each year in line with the previous September-on-September changes in the retail prices index. If an employee's average daily earnings are less than £17.30, his employer need only pay him the lesser amount. Finally, guarantee payments are payable for a maximum of five workless days only in any period of three consecutive months (ibid. sections 29 to 35).
§ The expression throughout a day in the paragraph above means the whole of an employee's normal working day or shift. An employee who is sent home after he has 'clocked-in' for work is not entitled to a guarantee payment in respect of the remainder of that working day or shift. The word day for these purposes means the 24-hour period between midnight and midnight. However, if a nightshift worker's usual shift begins before midnight and ends in the early hours of the following morning, his (or her) period of employment will be treated as falling wholly on the day on which the major portion of the shift falls. If, for instance, a shiftworker is not provided with work throughout a shift that normally begins at 10:00 pm on Monday and ends at 6:00 am on Tuesday, the workless day in relation to that shift is Tuesday. If his shift normally begins at 7:00 pm on Monday and ends at 3:00 am on Tuesday, the workless day will be Monday. If the number of working hours is the same, before and after midnight, the workless day will be the day on which the shift ends.
§ An employer's inability to provide an employee with work must be due to factors beyond his control – such as a power failure, a fire or flood, the sudden cancellation of an important contract or order, a major equipment breakdown, the non-delivery of essential raw materials, and so on. But, guarantee payments are not payable if an employer's inability to provide some of his employees with work is due to a strike or other industrial action involving other employees within the same organisation or employees employed by an associated employer (ibid. section 29(3)).
For example, a laboratory technician is not entitled to guarantee payments if his employer instructs him to stay at home for a day or two because of industrial action on the shopfloor. But, he would be entitled to a guarantee payment if he was told to stay away from work because of damage caused by a fire or explosion in the laboratory or elsewhere in the same premises.
§ To qualify for a guarantee payment in respect of a workless day, an employee:
o must have been continuously employed for a period of at least one month ending with the day before that in respect of which the guarantee payment is claimed;
o must not unreasonably refuse an offer by his employer of suitable alternative work, even though the work in question may not be of a kind which the employee is normally required or paid to do; and
o must comply with any reasonable request by his or her employer to keep himself available for work against the possibility that his employer may find suitable alternative work for him to do.
Meaning of 'continuous employment'
§ A week counts as part of a period of continuous employment if, during the whole or part of that week, his (or her) relations with his employer are governed by a contract of employment. In short, a period of continuous employment begins with the day on which an employee started work with his (or her) employer and ends with the day by reference to which the length of his period of continuous employment is to be ascertained. In the present context, that day is the day immediately preceding that in respect of which a guarantee payment is claimed (ibid. section 29(1)).
Contractual and statutory rights
§ An employee who has a contractual right to be paid part or all of his (or her) normal wages or salary, when his employer fails to provide him with work, is not entitled to be paid a statutory guarantee payment in addition to that payment. But if the contractual remuneration paid to an employee falls short of the minimum guarantee payment to which he would otherwise be entitled under the 1996 Act, his employer must make up the difference. As we have seen, the present (2003/04) maximum guarantee payment is £17.30 in respect of any one workless day.
Collective agreements
§ Nowadays, most collective agreements between employers (or employers' associations) and representative trade unions include provisions for guaranteed minimum remuneration on workless days. The parties to any such agreement may, if they wish, apply to the Secretary of State for Education & Employment for an order exempting the employees specified in the agreement from any entitlement to a guarantee payment under the 1996 Act. The Secretary of State will not make an exemption order unless satisfied that the collective agreement incorporates safeguards for the protection of the employees covered by the agreement, or that the agreement provides for disputes to be referred for determination by an independent referee or an employment tribunal. As the terms of a collective agreement are usually imported or 'read into' the individual employee's contract of employment, any payment made under the agreement in respect of a workless day may be offset against any statutory payment made under section 28 of the 1996 Act.
Complaint to an employment tribunal
§ An employee may complain to an employment tribunal that his (or her) employer has failed to pay the whole or part of a guarantee payment to which he believes he is entitled. The complaint must be presented within three months of the alleged failure. If a tribunal upholds the employee's complaint, it will order the employer to pay the amount of the guarantee payment due.
§ As was mentioned earlier, an employer is not obliged to pay a guarantee payment to an employee if his (or her) inability to provide that employee with work is the direct result of an industrial dispute initiated by the employee himself (or herself) or by other employees within his organisation (including persons employed by an associated employer). If, for instance, a strike or 'go-slow' in one area of a factory results in employees being laid-off in another area or department of the same factory (or in other premises owned or managed by the same or an associated employer), those employees have no legal right to a guarantee payment – even though they are not involved in any way in the industrial action which gave rise to their being laid off.
§ It follows that an employer must pay guarantee payments to those of his employees who are laid off because of an industrial dispute within another (wholly unrelated) organisation, eg within a company which supplies the bulk of the employer's raw materials.
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