What you need to know about pay and wages

The law seeks to provide a fair structure and ensure that we are appropriately compensated for our efforts, and that employers cannot underpay or exploit us when it comes to our wages. Bethan Mack takes a look at some basics.

15th October 2019

Your pay rights as an employee

You have a right to be paid for the work you have done, and in most cases you should also be paid if you are prepared to work but your employer has not made any work available to you. Almost everyone is entitled to receive pay at the National Minimum Wage rate at the very least.

Minimum wage and living wage

The current hourly National Minimum Wage (as of April 2019) is as follows:

  • £8.21 for workers aged 25 and over (referred to as National Living Wage);
  • £7.70 for workers aged 21-24;
  • £6.15 for workers aged 18 – 20;
  • £4.35 for workers aged 16 – 17;
  • £3.90 for apprentices who are in the first year of their apprenticeship or aged below 19;
  • Please note that these rates change every April.

There are some types of worker who do not have the right to be paid the minimum wage. These include:

  • Self-employed people;
  • Workers who are younger than school leaving age (usually 16);
  • Voluntary workers;
  • Company directors and other office holders;
  • Members of the armed forces;
  • Share fishermen;
  • Workers (such as nannies) living in their employer’s family home who do not contribute to the cost of their accommodation or meals;
  • Trainees on some government schemes or European Community Schemes;
  • Workers on government employment or pre-apprenticeship schemes;
  • Higher and further education students on work placements lasting up to a year;
  • Members of religious communities who live and work there;
  • Prisoners

Your employer may of course choose to pay you more than the National Minimum Wage and this will be set out in your contract of employment. How you are paid is also up to the employer; the law does not say anything about the way in which you should receive your money. Your contract should also state how often your wages will be paid.

If an employer does choose to pay more than the National Minimum Wage, they cannot discriminate against certain groups of people when deciding on wages. See our discrimination section for more details on this.

Payslips

You should receive an itemised payslip at or before the time that your wages are paid, which should detail the gross and net amount of salary, the total amount of any deductions, and the purpose of the deductions. If your wage is split and paid in several different ways, the payslip should also provide full details of this.

Deductions from your wage which are not required or permitted by law (as opposed to, for example, tax or national insurance) must meet with your approval before they can be taken. An employer may detail certain deductions in your contract, but you must have been provided with a copy of this or a written explanation of the deductions before they are taken.

Alternatively, you may be asked to consent to additional deductions in writing.

Paid leave

You may still be paid if you are off sick, or on maternity, paternity or adoption leave. You also have the right to a certain amount of paid holiday per year. For details of this, please see our section about time off work.

If an employer provides accommodation for a worker or employee, this may entitle them to pay less than the minimum wage. This is known as the accommodation offset. Currently the maximum accommodation offset is £7.55 per day, or £52.85 per week.

Information on pay

Within two months of starting work, your employer should be providing you with a written statement of the terms of your employment. This is normally done within a contract of employment, but can be done in alternative documents. This statement should provide the following information regarding your pay:

  • The scale or rate of remuneration or the method of calculating it; and
  • The date of payment, i.e. weekly, monthly; and when in the month

Bonuses and performance-related pay

It is commonplace for a business to have a system of pay related to employee performance. A company may at any point introduce such a structure which encourages higher performance by rewarding hard work with pay bonuses. This may be something that is set out in the contract, or it may be done at the discretion of the employer.

What if you don’t receive or only partially receive your bonus?

Firstly you would need to check the wording of your employment contract and/or your employee handbook. It may be the case that bonus payments are distributed at the employer’s discretion, meaning your employer is entitled to determine which employees receive payment and the set amount. In this instance, your employer must be able to reasonably justify the system in place.

If you suspect a mistake has been made you should:

  • Address the matter with your employer, it may be that it is just a misunderstanding
  • Ask your employer for a written assessment of your calculated pay
  • Retain copies of any written documentation including notes of any meetings
  • If you are still unsatisfied at your employers’ response, you are able to submit a formal grievance in line with your companies’ grievance policy.

Deductions from wages/breach of contract

When a commission or bonus is confirmed contractually, non-payment may a breach of contract by the employer, depending on the terms. Payment failure could also result in a claim for unauthorised deduction of wages. You should seek legal advice if you consider you haven’t been paid correctly as there are strict time frames in pursuing a legal claim.

It is unethical and illegal for an employer to discriminate against groups or individuals, e.g. against sex and age by awarding smaller bonuses to women or younger employees of the same position. In most cases, an employer would have some guidelines setting out the normal bonus amount and structure.

Disclaimer: This information is for general guidance regarding rights and responsibilities and is not formal legal advice as no lawyer-client relationship has been created. Note that the information was accurate at the time of publication but laws may have since changed.

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