Employment / Immigration

What does it mean to take on employees?

Taking on employees is an important step in growing a business. But what are the legal obligations on recruitment and during employment? Does an employee need a written contract and what will their holiday entitlement be? Will work permits be required? Will they be entitled to sick pay? What happens if you want to let an employee go?

Knowing your rights as an employer and the rights of your employees is vital. This note is intended to provide a brief introduction to employment law issues which apply to employers setting up, or doing business, in England. You should take specific advice whenever an issue arises as employment law provisions do change regularly.

Contracts of employment

Under the Employment Rights Act 1996, every employee should be given a written statement of certain terms and conditions governing his employment within two months of commencing employment.

An employee is also entitled to receive an itemised statement of pay and deductions with each payment of his wages or salary.

Maximum working hours and holiday entitlement

The Working Time Regulations came into force on 1 October 1998. Workers are protected by a Clock face 48 hours maximum working week averaged over a period of 17 weeks. There are derogations for specific sectors such as transport and more general derogations including those for "autonomous decision-takers" such as those who manage their own time. Employers are required to keep certain records regarding the working time of their workforce.

The Working Time Regulations as amended provide for a minimum of 28 days' paid holiday each year (which may include the eight public holidays in the UK). Holiday entitlement accrues from the start of the employment. Pay in respect of holiday taken is usually based on the average pay over the 12 weeks prior to the holiday.

National minimum wage

All workers now benefit from the National Minimum Wage ("NMW"). The genuinely self employed and people under the age of 18 are outside of the scope of the NMW.

Money The basic rate for payment of the NMW is £6.19 per hour for workers aged 21 and over. Young workers aged between 18 and 20 are entitled to the NMW at the lower rate of £4.98 and those aged under 18 are entitled to a rate of £3.68 and apprentices aged under 19, or in the first year of their apprenticeship, to £2.65. These figures are reviewed each year and from 1 October 2013 the rate for 18-20 year olds will rise to £5.03 and the adult rate will rise to £6.31. Employers are required to keep full records of payments to workers.

Basic gross pay, together with incentive and performance pay, bonuses and gratuities, paid through the pay-roll count towards the NMW. The NMW is not paid during lunch breaks or rest periods or when a worker is absent, for example, during a period of holiday or sick leave.

Workers can bring a claim through the courts or employment tribunals for non-payment of the NMW. They can also make claims for unfair dismissal or victimisation if the employer sacks or takes action against them to prevent them from being paid the NMW. Companies can be guilty of criminal offences by failing to comply with their duties in relation to the NMW.

Statutory sick pay

All employees (other than some specified exceptions) who are absent from work due to illness or injury are entitled to receive Statutory Sick Pay from their employer for up to 28 weeks in a rolling three-year period. The provisions operate when the employee is absent for at least four consecutive days. Shorter absences would normally, but need not, be paid as salary.

stethoscope To be eligible to receive Statutory Sick Pay an employee must notify his absence to his employer and supply evidence of illness. The level of Statutory Sick Pay is set by statute and is regularly revised. From 6 April 2013 it stands at £86.70 per week but many employers make up any salary shortfall at least for a specified period of illness.

Employers may not contract out of the Statutory Sick Pay provisions and cannot require employees to contribute towards payments. Non-compliance with the Statutory Sick Pay provisions can amount to a criminal offence by an employer.

Employers are required to keep records for Statutory Sick Pay purposes.