All about payments
Payment by cash
Workers do not have the right to be paid by cash anymore. For those who are still paid by cash it would be a simple matter, for business reasons, for the method of payment to be changed with reasonable notice, although the employer may get a slap on the wrist for contravening any contract terms and conditions should a complaint be made.
National Minimum Wage
All workers aged 16 and above must be paid a minimum hourly rate, or equivalent basic salary. There are different rates for 16 and 17 years old, 18 to 21 years old inclusive, over 21's, adult farm workers, apprentices and those on accredited training courses.
Proven self-employed and voluntary workers do not qualify for this entitlement.
Standard pay plus performance related payments count as part of the NMW calculation but the majority of allowances and benefits as well as enhanced payments for overtime etc do not count. In general the number of hours worked, or agreed hours for the pay, is divided into the qualifying pay to arrive at the rate per hour pay.
Sufficient records must be kept for three years to be able to prove an employer is not contravening the regulations.
Itemised pay statements
All employees must have an itemised pay statement containing a minimum of the gross pay, net pay, amounts and reasons of deductions and the methods by which every part of the net pay will be paid. The statement, or pay slip, must be given to the employee either prior to or on the pay day.
Deductions from Wages
An employer is allowed to make certain deductions from an employees wages, which include Tax & NI, attachments of earnings, authorised third person payments without prior written authorisation from the employee.
Even if the employee owes their employer money, repayment of a loan for example, and fails to pay it the employer, without specific written consent from the employee, can not just deduct it from their wages.
There are certain payments that are not classed as wages, which include advances, redundancy payments and compensation.
A retail shop worker may have a maximum of 10% of their gross wages deducted to pay back cash and stock shortages following written notification.
If a complaint to a tribunal is upheld then the deduction is made illegal and, no matter how justified the deduction was, must be paid back, furthermore, no other court action to recover the deduction may be made.
Overpayment of Wages
An employer is allowed to recover overpayments of wages, if the amount was quite large the employer would generally be expected to inform and then negotiate a repayment schedule with the employee. An employee need not pay back the overpayment if they can prove to a court that they did not know nor could they have reasonably been expected to have known of the overpayment.
Attachment of Earnings
An attachment of earnings order is made by a court against an employee for the payment of a number things. The employer must action the order, regardless of the comments made by the employee, and forward the deductions made to the court, failure to comply is a criminal offence. The deduction may be reduced to ensure that the net pay does not fall below the amount advised on the order, this is the only circumstance under which the deduction may be altered.
Statutory guarantee payments
An employee has the statutory right to receive a gaurenteed payment regulated by law for the contracted number of work days in a week, to a maximum of five, within any three month period where no work was provided and they were laid off. The gaurenteed amount includes any payments made as a result of the contract of employment terms.
An employee is 'laid off' when the employer can't provide work of the workers normal type due to a reduction in business. The employee may be put on 'short time' if there was enough work for part of the working week and then laid off for the rest of the week.
Workers on un-extended short term contracts of three months or less and workers with less than one months service are excluded as are workers who unreasonably refuse alternative employment or who are unavailable for work.
The insolvent employer
When an employer becomes insolvent or bankrupt and therefore unable to continue in business the employees become 'preferred creditors'. This type of creditor is second in the list to be paid behind, generally, government agencies, and the employee is entitled to up to four months owed wages plus accrued holiday pay owing as long as there are sufficient funds available after paying the 'secured creditors'.
Should the funds not be available the government will guarantee certain debts owed by the employer.
The right to payment during notice
An employee is entitled to be paid their normal rate of pay through their notice period if they:
- work their period of notice
- are not required to work by the employer
- fall sick during the statutory notice period, after that SSP rates apply
If an employee refuses to work the notice period they are only entitled to be paid up to and including their last period of work.
Statutory Sick Pay
SSP is the payment an employee is entitled to starting on the four continuous normal work day of sickness. Payment can only be made for twenty eight consecutive weeks. There are a number of conditions that have to be met before SSP can be paid which include being less than 65 years old, earning in excess of the NI lower earnings limit and must notify the employer of their absence.
Equal pay
The Equal Pay Act 1970 refers to both men and women and gives the right that a person of the opposite sex is entitled to be paid the same if they do 'like work', or a job evaluation rates the work as equivalent, and that the effort, skill, qualifications and responsibilities are similar and that, broadly, the jobs are of equal value.
An employer may not insert more favourable terms and conditions in the contract of employment based up on the sex of the worker.
An employer is allowed to pay employees at different rates based on length of service or productivity etc.
