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Pay

All employees are entitled to be paid for the work they have done. They are also entitled to be paid if they are ready and willing to work but their employer has not provided them with any work to do.
If you're an employee, you're entitled to be paid if you can't work because you are off sick or away from work on maternity leave, paternity leave or adoption leave, or parental leave.
You are also allowed a certain number of days paid holiday a year.

National Minimum Wage
In the UK, most workers aged 16 or over are entitled to a National Minimum Wage (NMW).

The minimum wage covers you whether you are in a permanent job, working for an agency or on a short-term contract.

How much is the National Minimum Wage?

There are three different rates of pay under the National Minimum Wage:

  • for workers aged 22 and over, the current rate of pay is £5.52 per hour
  • for workers aged between 18 – 21, the current rate of pay is £4.60 per hour
  • for workers aged 16 (who are above school leaving age) and 17, the current rate of pay is £3.40.

The NMW is an average hourly rate which must be paid for each hour worked over a certain period of time. If you are paid weekly, this period of time is a week, and if you are paid monthly, the period is a month. As long as your average pay an hour is not below the NMW during this period, you may earn less than the NMW for some hours.

Some workers are not covered by the National Minimum Wage. These include:

  • workers under the age of 16
  • some apprentices
  • au-pairs and nannies if they are living with a family and not paying for
    accommodation or meals
  • self-employed people
  • members of the armed forces
  • voluntary workers
  • Some trainees on government schemes.

Wage Deductions
The most common deductions from wages are:

  • Income Tax
  • National Insurance contributions
  • Pension contributions
  • Union dues

Of these legal deductions, only Income Tax is compulsory, and the IWW refuses to allow employers to handle union dues.

Some deductions of wages can be allowed for breakages and other things that are the fault of the employee. However, for these deductions to be legal, they must be written into the contract of employment.

If your employer deducts money from your wages for any other reason, you may wish to go to an Employment Tribunal that will decide the legality of those deductions.

Wage Statements
You have the right to an itemised wage statement from your employer. This should include gross pay, net pay, and any additions or deductions of pay.

Pensions
There are three types of pension:

  • State Pension: from the government
  • Occupational pension: from your employer
  • Personal Pension: private pensions and savings.

You automatically receive a basic state pension when you reach retirement age. However, the other two types of pension are entirely voluntary. Your employer cannot force you to take part in the company pension scheme if you do not wish to.

This is an extremely complex topic for which there are several good sources of information:

Tax

Income Tax
Income Tax is deductible from your wages, and is on a Pay As You Earn (PAYE) basis. It is variable according to how much money you earn. In order to calculate how much you have to pay you are given a tax code. Your tax code will change every now and again, as your personal circumstances change.
The details held under your tax code are confidential between you and the Inland Revenue. Although your employer may know your tax code, (s)he is not allowed to know your personal tax details. Any attempt by him/her to get hold of these details is illegal.

Tax Returns
At the end of each financial year, your employer should give you a P60 form. It is important to receive this form, since without it, you may end up paying more tax than you need to the following year.
Similarly, you will receive a P45 form when your employment comes to an end, and this should be kept too.

National Insurance
National Insurance contributions come directly out of your wages. You are not obliged to make National Insurance contributions, but they can help towards receiving more money if something happens to you, for example retirement or receiving incapacity benefits.
More information can be found at www.hmrc.gov.uk

Working Tax Credit
This acts as a sort of 'top-up' to wages for people working in low paid jobs. It is separate from Child Tax Credit, and you may apply for both if you have dependents.
Provided you are aged 25 or over, and work at least 30 hours a week, you can claim Working Tax Credit.
Although many fear retributions from their employer, it is illegal for employers to interfere with this scheme, and if a worker is dismissed for claiming Working Tax Credit, it is automatically considered to be unfair dismissal. Similarly, workers have the right to go to an employment tribunal if their employer harasses them over this scheme.