Pay and wages

National minimum wage (NMW)

Most workers must be paid at least the NMW. From 1 October 2003, the NMW for workers aged 22 and over is £4.50. For 18–21 year olds and some older workers undergoing training in the first 6 months of their job, the NMW is £3.80.

Deductions from pay

Your employer can only make deductions from your wages where:

they are authorised by statute, for example, Income Tax and National Insurance deductions, or authorised by your contract (you must have a copy of your contract before the deduction is made);
you have already agreed to the deduction in writing; or
you have had an overpayment.

This applies to all workers. Wages include bonuses, commission, holiday pay, Statutory Sick Pay and Statutory Maternity Pay, and redundancy payments. A pension contribution may be deducted if you have agreed to this.

Tax and National Insurance deductions

Tax and National Insurance figures change at the beginning of every tax year, that is on 5 April. These figures are for the 2003–04 tax year:

Income tax

gives you a personal allowance of £4,615 before you have to start paying tax. The personal allowance is higher if you are aged 65 or over.

Your income over and above £4,615, that is your taxable income, is taxed at 10 per cent for the first £1,960. Above that it is taxed at 22 per cent up to £30,500, and above that, at 40 per cent.

National insurance contributions

are paid in four different categories, depending on whether you are employed, self-employed, or are paying voluntary contributions.

If you are employed, you pay Class 1 contributions of 11 per cent of your income (9.4 per cent if you are contracted out of the additional state pension scheme) from £ 89.01 to £595 per week, and 1 per cent if you earn more than £595.

If you are self-employed and earn less than £4,095 per year, you pay Class 2 contributions of £2 per week.

If you are self-employed and your profits are from £4,615 to £30,940 per year, you pay Class 4 contributions of 8 per cent, and you pay 1 per cent on your earnings above that.

(If you are not employed but wish to maintain your contribution record, Class 3 contributions are £6.95 per week.

Itemised pay statements

You must be given a pay statement on or before each pay day, showing:

your gross pay (before deductions) and any Tax Credit entitlements;
all deductions; and
your net pay (what you actually receive).

‘Cash in hand’ payments are illegal. You could lose the right to benefits and your employment rights by accepting to be paid in this way.

Check with your tax office if tax and NI payments have been made for you. If payments have not been made, you can apply to be credited with NI contributions.

Sick pay

Statutory Sick Pay (SSP) is the minimum level of sick pay that an employer must pay employees who are off sick. SSP is paid for a maximum of 28 weeks.

The main requirements for claiming SSP are that you:

must be betwen 16 and 65;
have average weekly earnings equal to or above the Lower Earnings Limit (LEL) for National Insurance purposes (currently £77);
have been off sick for four or more consecutive days (SSP is not paid for the first three days);
must try to notify your employer on the first day of illness – the date you notify will be the first of the four consecutive days;
will need a medical certificate after you have been off sick for more than seven days.

Your employer may offer Contractual Sick Pay more generous than SSP. Make sure you comply with any special sickness notification procedures where you work – check your contract or staff handbook.

Notice pay

You will be entitled to a paid notice period unless your contract specifically allows for a payment in lieu of notice or you have been summarily dismissed.

Redundancy pay

Redundancy can take place where:

your employer is closing the business or your workplace is being closed down; or
the size of the workforce is being reduced.

If you are made redundant and your employer cannot offer you a suitable alternative job, provided you have worked for your employer for at least two years you are entitled to:

adequate notice;
a statutory lump-sum redundancy payment; and
reasonable time off work to look for a new job or to make arrangements for retraining.

If you unreasonably refuse suitable alternative work, you can lose your entitlement to redundancy pay.

The amount of payment depends on how long you have been continuously employed by your employer, your age and your weekly pay.

Your employer may offer a Contractual Redundancy Scheme that is more favourable than the statutory minimum.

If your employer refuses you a redundancy payment or you cannot agree on the amount, you can apply to an Employment Tribunal within six months of the end of your job. Health and safety at work

Your employer is required by law to make sure, as far as reasonably practicable, that your workplace is safe for anyone working or visiting there.

There should be a written health and safety policy, saying who is responsible for the various issues. Your employer must carry out risk assessments to identify what needs to be done to comply with the law.

Safety representatives, in consultation with the employer, must make regular inspections and recommendations, with necessary time off with pay for these duties. They cannot be dismissed for carrying out their health and safety activities.

Your employer must comply with specific regulations, for example on:

noise at work;
manual handling;
particular hazards in some industries or activities;
the use of VDUs (computer screen).

Employers must carry out a special risk assessment if there are women of childbearing age in the work place, and this includes agency and self- employed workers.

As an employee, you have a general duty to take reasonable care both for your own safety and that of others, and to co-operate with the steps taken by your employer.

Enforcing health and safety rights

If you have a disagreement with your employer over health and safety, seek advice from your work safety representative or your trade union representative, or you can contact your:

local Health and Safety Executive (look in the phone book)
Local Authority (ask for the Health and Safety Officer or the Environmental Health Officer, depending on the type of work you do).

Inform your employer in advance that you have no option but to contact these outside agencies.

Always remember, if you have a problem about exercising your rights, the quickest and most effective way to resolve an issue is to speak with your employer, and to seek specialist advice before considering formal action.