Over the past few of months we have spoken to some well-meaning employers who are inadvertently making things much harder for themselves by not getting the basics of employment law right. We are finding that many of these risky employment practices have been going on a long time, and when something goes wrong and the relationship breaks down, those little things that were missed suddenly become meaningful, problematic and potentially expensive to remedy.
Here are the common employment law pitfalls we are coming across:
Payslips
All employees, workers and office holders must receive a payslip every time they are paid, even if they are not earning enough to be paying tax and National Insurance. Payslips need to include:
total pay before deductions (‘gross amount’)
total pay after deductions (‘net amount’)
amounts of any ‘variable deductions’, where the amounts depend on the amount of pay, for example tax, National Insurance, Student Loan repayments and pension schemes
amounts of any fixed deductions, for example union subscriptions
Pensions
Auto-enrolment pensions now apply to all employers, even if you only have one employee. Any employee or worker who is aged between 22 and state pension age, earns at least £10,000 per year and has worked for you for 3 months must be automatically enrolled into a workplace pension.
This is a pension where the employer and employee both contribute to the pension at least at the minimum contribution rate of 3% for employer and 5% employee.
Employees can choose to opt out of being in the pension but if they do you must periodically auto-enrol them again.
Top tip – find a scheme which can be run on a salary sacrifice basis. Using salary sacrifice means the employee pays less tax, and both the employee and employer pay less National Insurance.
All employees and workers must receive at least minimum wage, the only exceptions to this are interns or work experience students. These can only receive less than minimum wage if they are being assessed on the work, they do by an education provider for example a school or university.
Top tip – the NMW rate can be offset by £9.10 per day if you provide accommodation to employees or workers.
Paid Holiday
Every employee and worker is entitled to 5.6 weeks of paid leave; this can include bank holidays. This is not something employees can opt-out of, they must take at least 5.6 weeks paid time off. For a traditional ‘5 day per week’ employee this is 28 days, which can be made up of 8 normal public holidays and 20 additional days paid leave.
The rules for calculating holiday entitlement and pay for variable hours employees have changed recently following a high profile case. You can find out how to make those calculations on the .gov website.
If you’re not sure how to deal with the additional bank holiday for the coronation, you can apply this guidance.
Working Time
Unless you are working in certain specific sectors, a young employee (where more stringent rules apply) or you are a company director without an employment contract then the following working time rules apply:
20 minutes break for every 6 hours worked (unpaid).
11 hours rest between working periods (16 for night workers)
1 day off in every 7-day period, or 2 days in every 2 week period
a maximum 48-hour working week on average – employees can opt out of this, but not from other parts of the working time regulations
Get in touch if you need any support with the above, or if you’d like to hear about our Employer Compliance Bundle, giving you tailored documents to cover your employment law basics.
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