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Pay and Wages

The reason most of us work is to receive payment in return, and the law seeks to ensure that we are appropriately compensated for our effort and that employers cannot underpay or exploit us when it comes to our wages.

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.

The current hourly National Minimum Wage is as follows:

  • £6.95 for workers aged 21 or over
  • £5.55 for workers aged from 18 – 20
  • £4.00 for workers aged from 16 – 17
  • £3.40 for apprentices who are in the first year of their apprenticeship or aged below 19

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

  • self-employed people
  • workers aged below 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.

You should receive an itemised payslip at or before the time that your wages are paid. It 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.

You should 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 £5.35 per day, or £37.45 per week - this means that your employer could underpay you by £5.35 over the course of a day's work if you are being provided with somewhere to live.

Information on pay

Fundamentally, things your employer should tell you regarding your pay when you start work are:

  • the scale or rate of remuneration or the method of calculating it
  • the method of payment, i.e directly to your bank, cash or cheque
  • the date of payment, i.e weekly, monthly; and when in the month

Legally, as a new employee, or when entering a new contract at work, your employer must present you with a written document informing you of your agreed rate. Normally contained in your contract of employment, it should also state the intervals at which you will be paid. You should receive this written information within two months of your start date.

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, encouraging higher performance by rewarding hard work with pay bonuses.

However, the employer should be aware that unilaterally changing the terms of an employee’s contract of employment could potentially lead to claims for breach of contract or, in the case of an employee who resigns, constructive dismissal.

Short-term bonus schemes

It is often the case that short-term schemes are incentive-driven by offering bonus payments or commission. With varying incentive amounts, such schemes are designed to enhance staff performance.

Long-term bonus schemes

Alternatively, long-term schemes mostly offer other rewards, i.e. share options, engendering loyalty amongst staff and ensuring that they strive to meet company goals.

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

Firstly, having checked your contract of employment, and consulting your employer, further consult your employee handbook, and/or your written statement of employment terms.

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:

  • firstly, address your employer regarding the issue in the case of a misunderstanding
  • secondly, ask your employer for a written assessment of your calculated pay
  • retain copies of any written documentation including notes of any meetings

Deductions from wages/breach of contract

Any bonus rights should ordinarily be in your contract of employment, though may not always be in writing. Your employer may verbally agree on a structure, however.

When a commission or bonus is confirmed contractually, non-payment is a breach of contract by the employer, pending other terms or conditions stating differently. Payment failure could also result in a claim for unauthorised deduction of wages.

As an employee in this situation, you would be entitled to claim both breach of contract and unlawful deduction from wages, though you would not be eligible to get back more money than you have lost.

Bonus discrimination

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.

Payslips

Most employees have the right to a payslip detailing their earnings, describing any deductions to their wage and explaining how they have been paid. For full details of who has the right to receive a payslip and exactly what it should contain, take a look at our page about payslips.


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