In what circumstances can employees claim statutory guarantee payments?Posted in : First Tuesday Q&A NI on 5 May 2020
Statutory guarantee payments are covered under Part V (Article 60 – Article 67) of the Employment Rights (Northern Ireland) Order 1996. They are statutory payments which aim to provide a degree of financial assistance to employees who are subject to temporary lay-off or short time working (provided an employee’s weekly remuneration is reduced by at least 50%).
In order to be eligible for a guarantee payment, the following criteria must be met:
- Employee has one month’s continuous service;
- Employer must have failed to provide work; and
- The reason for the failure to provide work must be:
- diminution in the requirements of an employer’s business for work of the kind that the employee is employed to do; or
- any other occurrence affecting the normal working of the employer’s business in relation to the work that the employee is required to do.
In practice, guarantee payments will usually be more applicable to hourly paid workers because they are most likely to be working under contracts which give the employer the right to lay off without pay.
The pay protection offered by statutory guarantee payments is modest. Employees can only claim for a maximum of five “workless days” (i.e. a day on which the employee would normally be required to work but their employer does not provide work) within a three month period and the current rate of payment is a maximum of £30 per day.
Please note, if an employee only works two days per week, they can only claim for two payments. The rules on statutory guarantee payments have an unfortunate effect on those employees who compress their hours.
The right to a statutory guarantee payment will be lost if:
- Employees unreasonably refuse offers of suitable alternative work from their employer; and/or
- Employees fail to comply with their employer’s reasonable instructions to ensure that the employees’ services can prevail e.g. asking an employee to remain on stand-by while alternative arrangements are put in place.
For the avoidance of any doubt, employees who are furloughed are not eligible to receive a statutory guarantee payment. Even though they are not carrying out work for their employer, they will still be receiving at least 80% of their wages.
The calculation of statutory guarantee payments can be difficult, and you may wish to obtain specific advice if the situation arises.
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The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.