Understanding Pay and the Entitlements for Your Employees…

1 year ago

It’s a minefield; and something that quite simply has to be right. As employers, we are in a position of responsibility and are duty bound to ensure that our employees are rewarded for their hard work.

In the government’s latest ‘low pay crackdown’ a huge 360 firms have been named and shamed having failed to pay staff minimum wage. In total the 360 businesses that broke the law were fined £800,000 and more than 15,500 workers had to be paid back nearly one million pounds worth of owed income.empty pockets

Tip of the Iceberg

But that may represent just the tip of the iceberg: The Office for National Statistics has calculated that 362,000 jobs did not pay the National Minimum Wage (NMW) in April 2016.

The biggest offenders were employers in hairdressing, hospitality and retail. One worker at a dental practice in London’s Harley Street was refunded nearly £12,000 alone.

In light of these revelations, I wanted to share the ‘need to know’ facts about the entitlements of your employees when it comes to both pay and annual leave…


  • All employees are entitled to an individual written pay statement; Payslips/statements must be given on or before the pay date
  • Fixed pay deductions must be shown with detailed amounts and reasons for the deductions – e.g. Tax, National Insurance, Student Loan Repayments
  • Part-time workers must get the same rate as full-time workers
  • All workers are entitled to be paid the National Minimum Wage and National Living Wage
  • If workers with contracted hours are being asked to work beyond these hours on a regular basis – ensure they are still within the NMW/NLW limits
  • NMW is age applicable – review your payroll regularly to ensure you have not missed birthdays which would entitle the worker to the next level of pay
  • When making agreed non-statutory deductions from pay, ensure the amount you are deducting does not take the worker to below NWM/NLW for that period.

Annual Leave

  • Almost all workers are legally entitled to 5.6 weeks’ paid holiday per year (known as statutory leave entitlement or annual leave). An employer can include bank holidays as part of statutory annual leave entitlement
  • Part-time workers are entitled to the same amount of holiday (pro rata) as full-time colleagues
  • Employers can set the times when workers can take their leave – for example, a seasonal shutdown.
  • If employment ends workers have the right to be paid for any leave due but not taken
  • There is no legal obligation to pay public holidays if these have not been included in the worker’s statutory entitlement
  • Workers earning commission must have these earnings factored into statutory holiday pay calculations
  • A worker’s entitlement to holiday pay will continue to accrue during sick leave

Pay is one of the most important factors in our working life. It’s a sensitive subject – the way it’s handled can have a huge impact on employee morale and productivity. The challenge for most companies is to set consistent pay levels that give value for money while rewarding workers fairly.

If in doubt – do your research! Don’t risk losing top talent through oversight on something so important.

For more information please don’t hesitate to get in touch.helen-circle-for-intro

Helen Jackson

Director of Commercial Development


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