Wage Salary Issues

National Minimum Wage

The current national minimum wage rates that apply from 1 October 2011 are as follows:

  • for workers aged 21 years or more: £6.08 per hour.
  • for workers aged 18 to 20: £4.98 per hour.
  • for workers aged under 18 (but above the compulsory school age): £3.68 per hour

The employee’s wages can include items such as the basic wage, bonuses, accommodation allowances and clothing and shift allowances but tips and gratuities no longer count towards the employee’s wages. The employer cannot force the employee to accept a lower rate of pay than the national minimum wage and any such agreement would have no legal effect under the National Minimum Wage Act 1998. Where the employee considers that they are being paid less than the national minimum wage, the employee has a right to see their records if they make a request to the employer in writing. The employer must then supply those records within 14 days.  

If the employer fails to pay the employee the national minimum wage, the employee can make a complaint to HM Customs & Revenue who can then take enforcement action against the employer. The employee can also bring a claim to the Employment Tribunal within 3 months of the employer’s (latest) failure to pay the national minimum wage as an unlawful deduction from wages. Alternatively, the employee can bring a claim for breach of contract if the employment has ended or a breach of contract claim in the Courts which has a 6-year limitation period.

In addition, the employee has the right not to be subjected to a detriment at work if they take or plan to take action to enforce the national minimum wage or where they are subjected to a detriment by their employer to avoid having to pay the national minimum wage. The employee who is dismissed for taking action or proposing to take action to enforce the minimum wage or to avoid having to pay them the minimum wage, is regarded as automatically unfairly dismissed and there is no minimum qualifying period of employment required for an employee to bring a claim in the Employment Tribunal, in respect of either of these potential claims. However, the claim must be received by the Tribunal within 3 months of the dismissal or detriment.

Unlawful deductions from wages

Under section 13 of the Employment Rights Act 1996, the employer cannot make deductions from the employee’s wages unless the deduction is authorised by statute such as deductions for income tax and national insurance contributions or by a provision in the employee’s contract of employment such as in the event of an overpayment of wages or an excess by the employee on their car allowance. Further, the employer cannot threaten to make unilateral deductions from the employee’s wages nor make an unlawful deduction but, at the same time, increase another element of the employee's wages so that there is no overall reduction in pay. Examples of wages which cannot be deducted by the employer include: salary; commission and bonuses; holiday pay; statutory sick pay; statutory maternity, paternity and adoption pay; and notice pay. However, loans and advances of wages, pensions, allowances or gratuities in connection with retirement, expenses and redundancy payments are not classed as wages.

Where the employer owes the employee wages, the employer can either bring a claim for unlawful deduction of wages to the Employment Tribunal within 3 months of the date that the wages were due to be paid. Alternatively, if the employment has terminated, the employee can bring a claim for breach of contract to the Employment Tribunal within 3 months of the termination of employment although the cap of £25,000 will apply. Otherwise, the employee can bring a claim in the Courts within 6 years of the date that the wages were due to be paid for which there is no cap on the compensation that can be awarded.