Pay and Benefits
Deductions from pay
The basic rule is that a worker has the right not to have any deductions made from his or her pay unless:
a) it has been authorised by statute such as tax and National Insurance;
b) it is authorised in the contract of employment; or
c) the worker has previously consented in writing.
The exception to the rule is when an employer has made an overpayment of wages or expenses.
Special rules apply to retail workers concerning till shortages or stock deficiencies. In this case, the deduction must be specified in the contract and the deduction should amount to no more than one tenth of the employees’ gross wages except for the final payment.
Payments and benefits during the notice period
An employee has the right to work any period of notice unless the contract stipulates that a payment in lieu of notice may be made or the employee is summarily dismissed for gross misconduct.
If the employee is put on ‘garden leave’, the contract must allow for this and the employee must continue to receive pay and all contractual benefits.
If a payment is made in lieu of notice, it should include an amount in respect of the cash equivalent to the benefits provided unless the contract specifies that just basic pay will be payable.
Bonus Schemes and Commission Payments
If it states in an employee’s contract of employment that they are entitled to a regular bonus or commission then the non-payment may amount to a breach of contract and or an unlawful deduction from pay. This may also be the case even if the contract specifies any bonus to be ‘non-contractual’ or paid at the employer’s discretion if the bonus or commission is paid regularly.
If the contract doesn’t specify the entitlement but the bonus or commission is paid regularly it may also amount to a breach of contract or an unlawful deduction from pay.
Holidays continue to accrue during the notice period unless a payment in lieu of notice is being made, in which case the number of accrued holidays outstanding should be calculated up to the final day of work.
A worker is entitled to receive a payment in respect of any accrued holidays not taken as at the final day of work. If the worker has taken more holidays than they are entitled to receive as at the final day, then any deduction from the worker’s final pay by the employer may be unlawful unless it has been previously authorised (see ‘Deductions from pay’ above).
National Minimum Wage
The adult rate of the minimum wage (for workers aged 22 and over) is £6.19 from 1 October 2012 to 30 September 2013.
The development rate (for workers aged 18-21 inclusive) is £4.98 from 1 October 2012 to 30 September 2013.
NB: The development rate can also apply to workers aged 22 and above during their first 6 months in a new job with a new employer and who are receiving accredited training.
The rate for 16 and 17 year olds is £3.68 per hour from 1 October 2012 to 30 September 2013.
NB: A special rate applies to apprentices for those under 19 or 19 but in the first year of their apprenticeship; this is £2.68 from 1 October 2012 to 30 September 2013.
Information on this website does not constitute legal advice.
If you have a matter you would like to discuss concerning your particular circumstances, please telephone
0845 6017756 or e-mail [email protected]