ABSTRACT Outward guarantees serve as a crucial mechanism for enterprises to uphold supply chain stability and foster financial interconnectedness. Amidst endeavours to advance high-quality, comprehensive employment and amidst the frequent occurrence of enterprise guarantee-related risks, this study employs data from Chinese A-share listed companies spanning from 2012 to 2021 to explore the influence of enterprise outward guarantee conduct on labour employment. The investigation reveals that such behaviour inhibits labour employment, a trend robust across various tests and treatments for endogeneity. Mechanism analysis indicates that enterprise outward guarantee conduct primarily curtails labour demand by heightening financing constraints and escalating operational risks. Heterogeneity analysis underscores that the dampening effect of outward guarantees on enterprise labour employment is particularly pronounced in the realms of large-scale enterprises, those reliant on labour, non-state-owned entities, and enterprises situated in central regions with abundant labour supply. These research findings offer valuable policy insights for averting enterprise external guarantee risks, thereby fostering stability in financial and employment domains.