What is it?
Statutory guarantee pay (SGP) is the minimum amount that employees should be paid when they’re laid off. The right to SGP applies only to employees, not to workers such as contract or agency workers, or the self-employed.
The main qualifying conditions for SGP are that an employee must:
- Be laid off for at least one complete working day.
- Have been employed continuously for at least one month, including part-time employees.
- Have an employment contract for more than three months.
- Reasonably make sure they’re available for work.
- Not refuse any reasonable alternative work, including work that isn’t in their contract.
- Not have been laid off because of industrial action.
Guarantee payments are calculated by multiplying the number of normal working hours for the day in question by the employee’s average hourly rate. They’ll receive their daily rate or an upper limit value, whichever is lower.
The SGP value per day is currently £29 per day rising to £30 from April onwards.
A drop in income, lay off or short time working, means people pay less tax.
Some people may get a tax refund. If people are laid off and claim Jobseeker’s Allowance, they can claim a tax refund at the end of the tax year.
So the answer is yes the payment is taxed but people may get money back later, sadly I guess it is not what people want to hear as they would prefer money upfront in such circumstances.
Finally, people can work for other employers whilst laid off, subject to the terms of their employment contract or possibly the employee handbook.
But if they then refuse to return to do work subsequently offered to them by their employer, it could be argued that they have left and they are not entitled to redundancy payments either.
Finally, always take professional advice if in doubt.
The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for specific advice.