| Deciding the right rate of pay | | | | full time colleagues should be paid the same rates |
| | | | | based on the number of hours worked pro rata. |
| Employers look at what the job entails, what | | | | - Fixed-term Regulations –fixed-term |
| competitors are offering for similar work roles | | | | employees total pay package must be the |
| and the abundance or lack of in the relevant | | | | equivalent to that paid to comparable permanent |
| skills. For new businesses this process is more | | | | employees in monetary terms. |
| straightforward but for established employers, it is | | | | - Employment Equality (Age) Regulations 2006 |
| slightly more complex. Existing employees set a | | | | – discrimination on the grounds of age is |
| precedent with their pay rates and therefore | | | | unlawful. Pay and benefits schemes, are |
| creates less flexibility to agree a pay rate | | | | potentially discriminatory on the grounds of age if |
| different from one already given to current | | | | based on the length of service. Limiting pay and |
| payroll employees in the same or similar job | | | | or benefits schemes to 5 years' service would |
| roles. | | | | enable employers to operate fairly. Reward |
| | | | | schemes based on length of service of more than |
| Established employers recruiting new payroll staff, | | | | 5 years must be objectively justified. |
| does provide an opportunity to review pay rates | | | | |
| generally. It is not always simple to stick to the | | | | Under HM Revenue and Customs rules, employers |
| rates currently being paid to existing employees, | | | | have other legal duties regarding pay such as the |
| as external factors, such as shortages of skills in | | | | deductions of tax and NI. These deductions must |
| specific areas, can have an effect on rates of | | | | be paid directly to HM Revenue and Customs on |
| pay. Employers unaware of this issue can face | | | | behalf of the payroll employee. The employer is |
| difficulties in recruiting new employees, but may | | | | then required to provide each employee with a |
| also suffer when current employees become | | | | written statement or payslip at the time of |
| attracted by higher rates of pay elsewhere. | | | | paying staff to indicate the gross pay, deductions |
| | | | | of tax and National Insurance, fixed deductions |
| An employer must decide where they want to | | | | (e.g. loan repayments or Trade Union subs) and |
| position the business and the rates of pay being | | | | net pay total. |
| offered. To attract the best payroll employees, | | | | |
| employers may wish to pay a ‘top of the | | | | Only in certain circumstances are employers |
| market' rate. At the other end of the scale, | | | | entitled to make other deductions from pay:- |
| employers who are unwilling or unable to pay | | | | |
| premium rates may have to compromise on the | | | | - Where written authorisation from the employee |
| calibre of employees they recruit. | | | | has been given prior |
| | | | | - If employee's contract of employment has a |
| The law requires employers to pay a fair and | | | | clause that allows the employer to make |
| equal rate of pay for equal jobs, regardless of | | | | deductions |
| who is doing them. The National Minimum Wage | | | | - A Court order, e.g. an attachment of earnings |
| is a standard minimum amount prescribed by law | | | | order |
| and is the lowest amount an employer is allowed | | | | |
| to pay to any employee. There are three rates | | | | |
| of the National Minimum Wage in force from 1st | | | | Our advice to you. |
| October 2009. | | | | |
| | | | | An employee's pay rate is a term of employment |
| - £5.80 per hour, for those aged 22 or more | | | | which by law must be specified in the terms and |
| - £4.83 per hour, for those aged 18 – 21 | | | | conditions of the written statement of |
| inclusive | | | | employment, given to employees within their first |
| | | | | 2 months of starting. When an employee |
| Apprentices aged 19 and above qualify for the | | | | receives a pay rise or is promoted or a change in |
| National Minimum Wage after the first 12 months | | | | role occurs, the pay rate may be renegotiated. |
| of their apprenticeship. | | | | |
| | | | | Individual employees can undertake very different |
| - £3.57 per hour for 16 and 17 year olds (above | | | | roles from one another and therefore require |
| compulsory school leaving age) | | | | different pay rates. However, when a number of |
| | | | | employees perform the same or similar roles, pay |
| 16 and 17 year old apprentices are not entitled to | | | | should be made on an equal terms. To pay |
| this rate. | | | | different rates to different people based on |
| | | | | gender or employment status is discrimination and |
| The minimum wage figures are reviewed and | | | | unlawful. There are some important age |
| updated regularly by the government. Failure to | | | | exceptions to this provision as described above. |
| pay the minimum rate is a criminal offence. | | | | |
| | | | | Regularly review your rates of pay to help you |
| | | | | attract and retain good payroll employees. It will |
| What the Law says | | | | ensure that differences do not arise in the rates |
| | | | | given to employees doing the same or similar |
| There are key regulations that you should be | | | | jobs or highlight areas where this has occurred. |
| familiar with, which lay down rules regarding how | | | | There are circumstances where differences in |
| much you pay your workforce, as follows:- | | | | pay rates legitimately do occur, e.g. where an |
| | | | | employee's job role demands a higher level of skill |
| - National Minimum Wage – minimum rates | | | | or competency. In these instances, make sure |
| you can pay your employees. | | | | you can justify the differences in pay. Reasons |
| - Equal Pay Act – states how men and | | | | for pay differences must be objective, |
| women are to be paid an equal rate for the same | | | | measurable and noted down, helping you avoid |
| and similar roles. | | | | potential claims of discrimination. You must be able |
| - Part-time Workers Regulations – part-time | | | | to demonstrate that the differences are due to |
| workers doing the same or similar jobs as their | | | | reasons other than age or gender. |