6.3 Pay

Most workers in the UK over school leaving age are entitled to the national minimum wage (NMW).  Rates differ according to the worker’s age and whether or not they are in apprenticeship, and are reviewed annually. Failure to pay the NMW can lead to criminal proceedings against the employer, and fines may be payable.

It is unlawful to make deductions from an employee’s wages unless the employment contract provides for it (e.g. if there has been a previous error resulting in a overpayment), or the employee has given their express consent in writing (e.g. when taking out a season ticket loan from their employer), or where the deduction is required by law (e.g. PAYE income tax deductions or attachment of earnings orders).

Employers may choose to pay a bonus under a separate scheme, in addition to normal salary. The amount of bonus is usually discretionary in nature and often assessed by reference to the employee’s and the business’ performance. Whether a bonus is discretionary, formulaic, guaranteed, floored, or partially discretionary will depend upon the terms of the contract and/or relevant policies. There is mounting case law on the interpretation of bonus clauses and an employer’s discretion is now fettered by implied terms.

One of the most common implied terms that is never included as an express contractual term is that regarding equal pay between men and women.   The law implies an “equality clause” whenever an employee is employed on:

  • Like work (i.e. work which is the same or broadly similar);
  • Work rated as being equivalent under a job evaluation scheme; or
  • Work of equal value

to that performed by a member of the opposite sex in the same employment.

On or before any wages or salary payments are made, the employer must give the employee itemised pay slips setting out the gross and net pay and the amount and purpose of any deductions.