The Employment Appeal Tribunal has ruled in Abercrombie & Others v Aga Rangemaster Limited that employees who agree to reduced working hours are not entitled to guarantee payments.

What does this mean?

Subject to certain conditions, employees have a statutory entitlement to a guarantee payment where their employer exercises a contractual right to give them no work at all on a day when they would normally be required to do at least some work. However, this right is lost where there has been a variation to an employee’s contract of employment in respect of their normal working hours even if the variation is only a temporary one.

What should employers do?

It may be more cost effective for employers who are seeking to avoid making redundancies to seek the agreement of their employees to reduced working hours in the first instance. If in doubt, they should seek legal advice to ensure the effectiveness of the variation of contract.