Labour & European Law Review Weekly Issue 301 10 January 2013
Section 28 of the Employment Rights Act 1996 (ERA) states that during periods of lay off or short time working, employees are entitled to a statutory guarantee payment, in certain circumstances. In Abercrombie and ors v Aga Rangemaster Ltd, the Employment Appeal Tribunal (EAT) said that, for the right to apply, the affected employees must “normally be required” to work on a day or a part of a day when work was not provided.
The claimants’ union, the GMB, instructed Thompsons to act on behalf of its members.
In order to avoid redundancies at Aga’s Lemington Spa sites, the GMB asked its members whether they would agree to a temporary reduction in working hours from 39 to 34 (along with an equivalent reduction in pay) during the first six months of 2009. This meant that most of the affected employees would not work on Fridays as their working hours would be compressed into Monday to Thursday. After a secret ballot, the proposal was accepted.
However, when the GMB organiser asked the company in March 2009 to confirm that statutory guarantee payments would be made during the short time working, it refused on the basis that the reduction in working hours constituted an agreed collective variation to the employees’ terms and conditions. The union raised a grievance which was rejected and then lodged a tribunal claim for unlawful deductions from wages, including non-payment of guarantee payments, under section 28 ERA.
As trading had not improved by early June 2009, the GMB asked its members to continue to work reduced hours until 31 December. This was agreed on 15 June 2009, but in September 2009, Aga said that any employees working reduced hours who wanted to return to a 39 hour week could do so but there were not enough volunteers.
Aga wrote to the shop floor workers on 2 November 2009, informing them that the reduction in the working week would cease from 31 December 2009. The union lodged a further claim in February 2010 against the company for failing to pay guarantee payments.
Section 28 ERA states that during periods of lay off or short time working, employees are entitled to a statutory guarantee payment as a result of a downturn in the employer’s business “where throughout a day during any part of which an employee would normally be required to work in accordance with his contract of employment the employee is not provided with work by his employer”.
The tribunal rejected the claim, saying that the change amounted to a temporary contractual variation. As a result, the claimants were no longer “ normally required” to work on Fridays as part of their previous 39 hour working week.
The employees appealed, arguing that:
- a temporary contractual variation did not constitute a change to "normal working hours"
- sections 30(5) and 31(6) of the ERA expressly allow for entitlement to guaranteed payments if "the contract has been varied, or a new contract has been entered into, in connection with a period of short-time working”.
The EAT rejected the appeal, saying that it was irrelevant whether the change of hours was temporary. It held that the right to a guarantee payment hinged on whether the employee would “normally be required to work in accordance with their contract of employment”. As there was no requirement to work Fridays during the reduced hours period, the employees were not required to work and thus were not entitled to guarantee payments.