Guarantee payments
Guarantee payments

The following Employment guidance note provides comprehensive and up to date legal information covering:

  • Guarantee payments
  • The basic right
  • Interaction between guarantee payments and statutory redundancy payments
  • Who qualifies for a guarantee payment
  • The need for a ‘workless day’
  • Reasons for the failure to provide work
  • The effect of industrial disputes
  • When the right to a guarantee payment will be lost
  • How a guarantee payment is calculated
  • Enforcing the right to a guarantee payment
  • Dismissal and selection for redundancy related to guarantee payments

This Practice Note explains the right to a guarantee payment, which provides limited pay protection for certain employees who are laid off or put on short-time working.

In practice the question whether a guarantee payment is due will usually arise in the case of hourly paid or piece rate workers because they are most likely to be working under contracts which give the employer the right to lay off without pay.

The basic right

The basic right to a guarantee payment is set out in section 28 of the Employment Rights Act 1996 (ERA 1996). An employee is entitled to a guarantee payment for any ‘workless day’. This is a day throughout which the employee would normally be required to work but the employer does not provide the employee with work (see: The need for a ‘workless day’ below).

The employer’s failure to provide the employee with work must be for one of the prescribed reasons (see: Reasons for the failure to provide work below).

The level of pay protection is modest:

  1. a maximum amount is payable per day

  2. the amount payable is limited to a maximum of five days in any rolling three-month period

For further guidance, see: How a guarantee payment is calculated below.

Interaction between guarantee payments and statutory redundancy payments

The rules on guarantee payments are quite separate from

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