Archive RSS
Blog  »  Pay/Wage
17
Apr 18

Posted by
Laura Murphy

Pay in Lieu of Notice (PILON) – Do you need to review your employment contracts?

Changes to the way in which termination payments are taxed came into force from 6 April 2018.

From 6 April all notice pay is to be treated as earnings and subject to tax and national insurance contributions – irrespective of whether or not there is a pay in lieu of notice clause (PILON) in the employment contract, this effectively removes the distinction between contractual and non-contractual PILON.

As a matter of best practice, we would certainly recommend that going forward all employment contracts contain a PILON clause.

In fact, in light of these recent changes, not having a PILON clause now will only leave you at a disadvantage. If you were to process a payment in lieu of notice without a contractual right to do so it could leave you at risk of not being able to rely on any post-termination restrictions such as non-competition clauses and confidentiality. Processing a PILON without a contractual right to do so would be considered a breach of contract. This is because you would be in breach of contract by making the payment and would therefore result in you not being able to rely on any of the other contractual clauses.
Contracts of employment created in Bright Contracts will contain a PILON clause by default.

To book a free online demo of Bright Contracts click here
To download your free trial of Bright Contracts click here
To subscribe to our newsletter click here

 

BrightPay - Payroll and Auto Enrolment Software
Bright Contracts - Employment Contracts and Handbooks

Posted in Contract of employment, Dismissals, Employee Contracts, Pay/Wage

20
Dec 17

Posted by
Debbie Clarke

National minimum wage to increase on 1st April 2018

The Low Pay Commission’s Autumn 2017 report has been published and on the 1st April 2018, the minimum wage will increase again.

The National Minimum Wage (NMW) is the minimum pay per hour most employees are entitled to by law. An employee's age and if they are an apprentice will determine the rate they will receive.

  Rates from 1 April 2017 are: Rates from 1 April 2018 will be:
25 yrs old and over             £7.50 per hour £7.83 per hour
21-24 yrs old £7.05 per hour £7.38 per hour
18-20 yrs old £5.60 per hour £5.90 per hour
16-17 yrs old £4.05 per hour £4.20 per hour
Apprentices under 19 or 19 or over who are in the first year of apprenticeship £3.50 per hour £3.70 per hour

 

To book a free online demo of Bright Contracts click here
To download your free trial of Bright Contracts click here

Posted in Pay/Wage

13
Dec 17

Posted by
Lauren Conway

Christmas Bank Holiday Entitlements

There are three public holidays coming over the festive season – Christmas Day, Boxing Day and New Year’s Day. Although many offices across the country will close during this period it can be one of the busiest times of the year for industries including retail, hospitality, and hair and beauty. So what public holiday entitlement are employees entitled to over this time?

Bank holiday entitlement

Employers do not have to give employees paid leave on bank holidays. Any right to time off, payment for time off or extra pay for bank holidays worked depends on the terms of the employee's contract of employment. Therefore employees may be required to work on bank holidays. Employers may choose to include bank holidays as part of a worker’s statutory annual leave.

Holiday leave entitlement

Employees’ holiday rights start on the first day of their employment.

Under the Working Time Regulations 1998, workers (including most agency and freelance workers) have the right to:

• 5.6 Weeks’ paid leave each year, this equates to 28 days for full-time employees

Part-time employees

Part-time employees are entitled to the same holidays as full-time workers, calculated on a pro-rata basis. For example:

• 5.6 x 5 working days = 28 days
• 5.6 x 4 working days = 22.4 days
• 5.6 x 3 working days = 16.8 days

Irregular hours

Annual leave for irregular workers is best calculated as a percentage using 12.07% of days worked.

Limits on statutory leave

Statutory leave is capped at 28 days per year. If an employee works 6 days per week their statutory entitlement is 28 days, not 33.6 (6 multiply by 5.6)

To book a free online demo of Bright Contracts click here
To download your free trial of Bright Contracts click here

Posted in Contract of employment, Pay/Wage, Wages

25
Sep 17

Posted by
Jennie Hussey

National Minimum Wage (NMW) in the news again

A junior minister has revealed that shortfalls in national minimum wage (NMW) payments hit a record £10.9m in 2016, affecting up to 100,000 employees.

Some of the country’s well-known retailers were caught out by failing to pay staff correct wage rates, including John Lewis & Tesco. Tesco stated that it had paid their staff less than the NMW when a new payroll system was introduced, leaving 140,000 of its employee’s being short-changed nearly £10m between them. John Lewis also blamed a payroll error when it was discovered they had breached the NMW laws to the tune of £36m.

Charles Cotton, performance and reward advisor at the CIPD said there were various reasons for shortfalls in payments from employers – “…employers may be ignoring the law and exploiting their workers…another is that the employer doesn’t fully understand the legal requirements…so it is important that employers are aware of the rules.”

This is not the first time NMW underpayments have been brought to light this year, we recently posted a blog on the government's name and shame scheme where 233 employers had to pay back £2m to underpaid workers. And also the release of a recent survey by the Dept. for Business, Energy and Industrial Strategy (BEIS) indicated that 1 in 5 apprentices have not been receiving the mandatory minimum wage. The survey discovered that the number of apprentices receiving less than the NMW they are entitled to rose sharply from 13% for those aged 16-18 to 32% for those aged 19-20.

Underpayments occurring since April 2016 have been subject to a penalty of 200% of the value of the underpaid amount – capped at £20,000 but this does not seem to have had the desired effect of discouraging employers from breaching the rules.

It is extremely important that organisations pay the wage rates that they are legally obliged to. Employers that are found to be deliberately flouting the law should also be prosecuted, so that good companies aren’t undermined by bad ones.

 

To book a free online demo of Bright Contracts click here
To download your free trial of Bright Contracts click here

Posted in Company handbook, Contract of employment, Employee Contracts, Employee Handbook, Employee Records, Employment Contract, Pay/Wage, Staff Handbook, Wages

30
Aug 17

Posted by
Jennie Hussey

The importance of having an Absence/Sick Leave Policy

As an employer, it can be quite a daunting prospect having to deal with sick leave and long-term sick leave can throw up other issues making it seem more complicated and even more daunting for the employer to deal with effectively. So how can an employer ensure compliance during these periods of absence?

First and foremost an Absence/Sick Leave Policy needs to be put in place. It must contain clear and concise guidelines for the employee and employer to follow in cases of absence

Your Absence Policy should include:

1. Details of any company Sick Pay Policy:

  • If an employer will/will not pay employee while on certified/uncertified sick leave.
  • If payments are to be made, length of term for payments.

2. Notification and certification requirements if employees are absent due to illness:

  • How much notice an employee needs to give an employer if they will be absent from work.
  • After how many days of absence a medical certificate is required.
  • For long-term absences, how often a medical certificate is required to be presented to the employer.

3. A statement that in the case of long-term absence due to illness, the employee may be required to attend a company GP or other nominated medical persons/facilities at the request of the employer.

It would also be advisable to include details on what is classed as being short-term, long-term and unauthorised absences - Unauthorised leave is absence by the employee without consent or approval from management or without proof of illness by means of a doctors certificate and should be dealt with as a matter of misconduct via the company disciplinary procedures.

As with most company policies and procedures, once in place, the employees will be aware of what is expected of them during times of absence or sick leave; this, in turn, should eliminate any further issues from arising.

Bright Contracts has a comprehensive Absence and Sick Leave Policy built into the Company Handbook which can be customised to suit your own company specifications and requirements.

BrightPay - Payroll and Auto Enrolment Software
Bright Contracts - Employment Contracts and Handbooks

Posted in Company handbook, Contract of employment, Employee Contracts, Employee Handbook, Employee Records, Employment Contract, Pay/Wage, Sick Leave/Absence Management, Staff Handbook

23
Aug 17

Posted by
Lauren Conway

233 employers to pay back £2 million to underpaid workers

233 employers have been ordered to pay back almost £2 million to 13,000 of the UK’s lowest paid workers, as part of the Government’s scheme to name and shame employers who fail to pay the National Minimum Wage and Living Wage.

A list that identifies these employers has been published by The Department for Business, Energy and Industrial Strategy. As well as paying back the money owed, employers on the list have also been fined £1.9 million by the Government.

The sectors that featured frequently on the list included:

Hair and Beauty: approximately 60 employers, in arrears of £121,000 for circa 200 workers
Hospitality: approximately 50 employers, in arrears of £77,000 for circa 220 workers
Retail: approximately 20 employers, in arrears of £1.5m for circa 12,200 workers

Employers in this round fell short by failing to pay workers overtime hours, deducting money from wages to pay for uniforms and wrongfully paying apprentice rates to workers.

Business Minister Margot James said:

“It is against the law to pay workers less than legal minimum wage rates, short-changing ordinary working people and undercutting honest employers. Today’s naming round identifies a record £2 million of back pay for workers and sends the clear message to employers that the government will come down hard on those who break the law.”

This is the 12th round of Government naming and shaming with so far £6 million recovered for 40,000 workers with 1,200 employers being fined £4 million. Employers need to be aware of the National Minimum and National Wage and Apprentice rates. Employers who fail to comply with these rates could face substantial fines and risk their business being named and shamed. To view the current rates click here.

To view the full list click here.

BrightPay - Payroll and Auto Enrolment Software

Bright Contracts - Employment Contracts and Handbooks

Posted in Company handbook, Contract of employment, Employee Contracts, Employee Handbook, Employment Contract, Employment Update, Pay/Wage, Staff Handbook, Wages

9
Aug 17

Posted by
Lauren Conway

Employers must now include voluntary overtime when calculating holiday pay

A landmark legal victory for Unite union means that employers must now include normal voluntary overtime when they are calculating holiday pay. The ruling is of major significance to workers who receive payments for working voluntary overtime but these payments are not reflected in their holiday pay. The union says that the ruling has set a legally binding precedent which employment tribunals across the UK are obliged to follow.

The Case

The case against Dudley Metropolitan Borough Council was brought by 56 council employees who worked on maintaining Dudley’s housing stock as electricians, carpenters, and plumbers. The employees worked regular voluntary overtime, beyond their fixed contractual hours, including Saturdays and they also elected to go on a standby rota every four weeks, to deal with emergency call-outs and repairs. The loss of earnings from holiday pay underpayments varied between £350 and £1,500 a year depending on each worker and how much voluntary overtime they carried out.
The decision by the employment appeal tribunal is the first to confirm that payments for entirely voluntary duties, such as voluntary overtime, standby, call-out work and travel-time linked to that work, should be included in the calculation of workers holiday pay.

Learning Points for Employers

The area of whether overtime should be included in employees holiday pay is a hot topic. This ruling echoes that of Fulton & Baxter v Bear Scotland Ltd when the ET found that overtime and other payments should have been included in the calculation of holiday pay.

Employers who do not pay employees normal voluntary overtime as part of their holiday pay are urged to reconsider this and make a change otherwise they might see themselves in hot water if a case were brought against them.

BrightPay - Payroll and Auto Enrolment Software
Bright Contracts - Employment Contracts and Handbooks

Posted in Annual Leave, Company handbook, Contract of employment, Employee Contracts, Employee Handbook, Employment Contract, Employment Tribunals, Employment Update, Pay/Wage, Staff Handbook, Wages

29
Jun 17

Posted by
Lauren Conway

Should holiday pay include overtime and commission?

With the unusually high temperatures we have gotten recently in Britain we can agree that summer is officially here. While that is great news for most, especially for employees packing their bags and getting ready for their summer holidays, it leaves employers with the headache of calculating annual leave entitlements. The areas of whether holiday pay should include commission and overtime have been hot topics of late.

Lock v British Gas Trading Ltd

Mr. Lock claimed that British Gas had calculated his holiday pay incorrectly by not including a commission element. Mr. Lock was employed by British Gas as a sales consultant and receives a basic salary plus commission based on the sales he achieves. During a period of annual leave, Lock saw his income was reduced as he was paid only his basic salary and not commission as he was not making sales during his holiday. The Employment Tribunal found that Mr. Lock’s holiday pay should include an amount to reflect the commission that he would have otherwise earned had he not taken annual leave. They found that by penalizing an employee’s holiday pay might discourage them from taking annual leave for the fact that they would not be able to make sales and earn commission during that period.

Fulton & Baxter v Bear Scotland Ltd

Fulton and Baxter (the claimants) claimed that Bear Scotland Ltd (the respondent) made unauthorized deductions from their wages when overtime and other payments had not been included in the calculation of their annual leave pay. The ET found that by omitting these additional payments from its annual leave calculations, the respondent had indeed made unauthorized deductions from the claimant’s wages.

Learning Points

These recent rulings indicate a new perspective on what is deemed to be fair in relation to the calculation of leave entitlements. In light of these cases, employers across the board are reviewing how they calculate holiday pay. The current position is that, if there is a fundamental link between commission received and the performance of tasks, the commission should be included in the calculation of holiday pay. Therefore, where an employee would have earned commission during the leave period had they worked, it should be included when calculating holiday pay.

BrightPay - Payroll and Auto Enrolment Software
Bright Contracts - Employment Contracts and Handbooks

Posted in Annual Leave, Company handbook, Contract of employment, Employee Contracts, Employee Handbook, Pay/Wage, Wages

14
Apr 15

Posted by
Michelle Arkins

UK National Minimum Wage

The Small Business, Enterprise and Employment Act 2015 is now an act of law and will amend the current penalty for underpayment of the National Minimum Wage (NMW).

Part 11 of The Small Business, Enterprise and Employment Act 2015 contains measures that amends section 19A of the NMW Act so that the maximum penalty will be determined by the amount owed to each worker and the limit on the penalty will be so the extent to which the amount owed to each individual worker can be taken into account. Previously the maximum fine was just £5,000 for each employee.

Secondary legislation will be introduced to ensure that employers in breach of the NMW regulations will be subject to a fine of up to £20,000 for every underpaid worker.

Most workers in the UK over school leaving age are entitled to be paid at least the NMW. The NMW rates are reviewed each year by the Low Pay commission.

Current NMW rates

- £6.50 for workers 21 and over
- £5.13 18 - 20 yrs
- £3.79 for 16-17 yrs, who are above school leaving age but under 18
- £2.73 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

New NMW rates from 1 October 2015

- £6.70 for workers 21 and over
- £5.30 18 - 20 yrs
- £3.87 for 16-17 yrs, who are above school leaving age but under 18
- £3.30 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

It is important to note that these rates, which come into force on the 1st October 2015, apply only to pay reference periods beginning on or after that date.

If HMRC finds that an employer hasn’t been paying the correct rates, any arrears have to be paid back immediately. There will also be a penalty and offenders can also be named by the government.

It is the employer’s responsibility to keep records proving that they are paying the minimum wage - most employers use their payroll records as proof. All records have to be kept for 3 years.

It is important that information outlining how much and how often an employee gets paid be shown very clearly in the written statement of particulars. The employer must provide the employee with a copy of this written statement within 2 months of their start date. This is the law!

If you have no contracts in place or wish to update your current employee contracts then simply click here? There is no need to use HR specialists or solicitors; Bright Contracts keeps things simple and easy for everyone!

Bright Contracts – Employment Contracts and Handbooks.
BrightPay – Payroll & Auto Enrolment Software.

Posted in Company handbook, Contract of employment, Pay/Wage

9
Nov 14

Posted by
Laura Murphy

New 2015 Living Wage Rate announced

The UK "living wage" - an hourly rate based on the amount needed to cover the basic costs of living - has been raised by 20p to £7.85, whilst The London Living Wage has been raised from 8.80 an hour to £9.15.

What is the difference between the Living wage and the national minimum wage?
The living wage is an informal benchmark, not a legally enforceable minimum level of pay line the national minimum wage. The national minimum wage is set by the business secretary each year on the advice of the Low Pay Commission. Unlike the living wage, the national minimum wage is enforced by HM Revenue and Customs (HMRC).

The basic idea of the living wage is that these are minimum pay rates needed to let workers lead a decent life.

Does this effect employers?

The living wage is a voluntary wage so employers are not legally obliged to pay it. Nevertheless, it has been adopted by more than 1,000 employers across the country benefitting 25,000 workers. Citizens UK, the community behind the living wage project say that the number of companies paying the rate has doubled in the last year. However, some business groups are not happy with the increase saying some employers might struggle to pay it.

The advice to employers should be to seriously consider the living wage, but only implement it if it is affordable.

Bright Contracts – Employment Contracts and Handbooks.
BrightPay – Payroll & Auto Enrolment Software.

Posted in Pay/Wage, Payroll, Payroll Software

Older Articles >

BrightPay

The new standard in payroll software, now available for employers in the UK and Ireland.

UK Website  Ireland Website

Bright Contracts

Create tailored professional employment contracts and staff handbooks. Available for employers in the UK and Ireland.

UK Website  Ireland Website