Where a variation of a worker’s contract is agreed, for example to avoid job losses in the case of the business incurring financial difficulties – are employees entitled to receive guaranteed payments in place of wages for time when they would normally be required to work in accordance with their contract of employment, in accordance with section 28 of the Employment Rights Act 1996 (ERA)?
In the case of Abercrombie & Ors v Aga Rangemaster Ltd the EAT held the answer to this question was no. The claim for guaranteed payments failed because in respect of the period for which claims were made the Claimants would not normally be required to work in accordance with their contract of employment. It did not matter that the variation of their contracts of employment was temporary and not permanent. The Honourable Mr Justice Silber commented “To my mind, the wording of section 28(1) ERA does not preclude an agreed temporary variation constituting a change to an employees normal working hours so as to prevent the award of a guarantee payment merely because the variation is temporary….The focus has to be on when the employees are normally required to work and not when they were permanently required to work.”
In addition the Claimants contended that sections 30 (5) and 31(6) of the ERA provided for entitlement to guarantee payments if the “contract has been varied or a new contract has been entered into, in connection with a period of short term working.” However, it was held that these provisions were only concerned with the quantification of guarantee payments, not with establishing entitlement to them.