WFM UK: Statutory Guarantee Pay

Overview

Employers can ask their employees to stay at home or take unpaid leave if there’s not enough work.  This is classed as either:
 

• A Lay-off – if employees are off for at least 1 working day
• Short-time working – when hours are cut

There is no limit to how long employees can be laid off or put on short-time hours but employees could apply for redundancy and claim redundancy pay if it’s been:
 

• 4 weeks in a row
• 6 weeks in a 13 week period

Employees should receive full pay unless their contract allows unpaid or reduced pay lay-offs. If a contract states that employees will be unpaid, they are entitled to Statutory Guarantee Pay.

Guarantee pay is a legislative requirement.  Non-payment will count as an unlawful deduction from wages and may result in an employment tribunal.

https://www.gov.uk/lay-offs-short-timeworking

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Statutory Guarantee Pay

Employees who are unpaid during lay-off or short-time working are entitled to Statutory Guarantee Pay.  

To be eligible to receive Statutory Guarantee Pay, employees must:

• Have been employed continuously for 1 month
• Reasonably make sure they are available for work
• Not refuse any reasonable alternative work (including work not in the contract)
• Not have been laid off because of industrial action
• Not already be receiving pay for lay-off or short-time from the employer

If eligible, employees are entitled to:

• Up to £29* per day 
• Normal daily rate if below £29*
• A maximum of 5 days’ pay in any 3 month period

*from 6th April 2020, the day rate for Statutory Guarantee Pay will be £30

Statutory Guarantee Pay cannot be claimed for any day that the employee has carried out some work.

Paying Guarantee Pay

When paying Guarantee Pay via HR & Payroll, a new Payment Type should be created to use for payments made to employees.  The payment of Guarantee Pay is subject to normal tax and National Insurance contributions.

Under current guidelines it is not possible to reclaim Statutory Guarantee Pay back from HMRC.

The information provided herein is for informational purposes only. It does not constitute legal, tax, accounting, or other professional advice. It describes functionality and configuration options available within Fourth's solutions and services. The appropriate settings for your organisation will depend on your specific circumstances and requirements, and Customers remain solely responsible for all decisions relating to the configuration and usage of Fourth's solutions and services. The information reflects Fourth's understanding of applicable laws and regulations at the time of publication and may not reflect subsequent changes. Customers should seek independent professional advice regarding their specific compliance requirements.