5th March 2009


 Issue No.  2009/03




In our last ‘update’ we introduced the concept of laying employees off from work as a short term alternative to redundancy and the contractual entitlement required to achieve this.  In this update we consider the employees’ entitlements whilst ‘laid-off’.
Guarantee Pay
When laid-off, employees are not paid their contractual earnings.  There is however, statutory protection in the form of ‘Guaranteed Pay’.  This is paid for a maximum of five days in any rolling period of three months.  The employee must do no paid work at all in a day to qualify for Guaranteed Pay.  After three months and if still laid-off, the employee should be paid for another five days. If the employee normally works fewer than five days a week Guaranteed Pay is pro-rata.
Guarantee payments are worked out by multiplying the number of normal working hours for the day in question by their average hourly rate. The employee should receive their daily rate or the upper limit of £21.50, whichever is less.
This “upper limit” amount of a day’s Guarantee Payment is laid down by parliament from time-to-time and was increased from £20.40 to £21.50 on 1st February 2009.
An employee is not entitled to receive Guarantee Payments until he has at least one month’s service with the employer. 
Other Entitlements
During any day or period in which lay-off applies, the contract of employment continues in all respects save for payment of wages/salary.  Continuity of service, entitlement of maternity rights, paid holiday entitlement accrual all continue during the lay-off period.
As with all employment matters a great deal of confusion and argument can be avoided by confirming things to employees in writing.  A straight forward explanatory letter to employees who are laid off should explain:
  • The reasons for the lay-off
  • The start and finish (if known) of the lay-off period
  • How the employer will keep in touch with the employee during lay-off
  • What ‘Guarantee Pay’ the employee is entitled to receive
There is nothing stopping an employee requesting that any remaining accrued holiday entitlement be used as an alternative to being laid-off.  This option can by made available at the point of initial discussion with employees.
Next Update
In the final of our Information Updates on Lay-off, we shall examine the employee’s right to request to be made redundant and the employer’s right to object.
If you have any questions about short time/lay-off or redundancy matters please call us on 08456 446006.




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