County Commissioner Handbook

Payment of employees

The rate of pay

An employee must be paid at least the National Minimum Wage, the levels of which are available on the GOV.UK website.

Care should be taken to set levels of pay for employees on a consistent or at least rational basis so that differences in pay can be explained (if challenged) by non-discriminatory reasons.

Tax responsibilities

Employers have a responsibility to deduct Pay as You Earn (PAYE) tax and National Insurance contributions (NICs) from employees’ pay. Employers must register with HMRC and will be given a PAYE reference and an Accounts Office reference. A report must be made to HMRC every time an employee is paid. The employee is entitled to receive an itemised pay statement showing deductions of PAYE and NICs (and any other deductions). Employers also need to keep their own records of monies paid and deductions made.

Payroll can either be run in-house with one of the payroll software tools available online, or can be outsourced to an appropriate third party (such as an accountant) to make calculations and reports and keep records.

Each time a payment is made to an employee a Full Payment Submission must be made by the employer to HMRC, and all tax and NICs must be paid to HMRC by a specified date.

Detailed guidance on all of the above steps is provided on the HMRC website.

Pension

It is a requirement for all employers to enrol employees aged between 16 and 74 for whom you deduct tax and National Insurance into a pension scheme into which the employer contributes. This is known as auto-enrolment. It is coming into force for employers with fewer than 50 employees between 1 June 2015 and 1 April 2017. More information is available from the Pensions Regulator.

Annual leave entitlement

Every employee is entitled to a minimum of 5.6 weeks’ annual leave in any annual leave year. This equates to 28 days for someone who is working five days per week. This can include public and bank holidays, of which there are normally eight in the UK. Employees are entitled to their full normal pay during any period of annual leave, and should be encouraged to take at least the statutory 28 days’ leave within the annual leave year. If this is not possible by reason of sickness, then it may be necessary for an employee to be permitted to carry forward unused annual leave entitlement. If the employer gives annual leave in excess of 28 days, then it is a matter for agreement whether any of the annual leave may be carried forward and in what circumstances.

Time off in lieu/overtime

If employees are going to be permitted to take time off in lieu or to work paid overtime, there needs to be a clear system where this is being monitored, so that employees are not accruing large amounts of time off in lieu (commonly known as ‘TOIL’) or overtime without their employer’s knowledge.

Sick pay

Employees are entitled to statutory sick pay after the third working day of sickness absence, for a period of up to 28 weeks. The current SSP rate may be found here. The contract of employment may provide for an additional amount of contractual sick pay, after the expiry of which statutory sick pay will continue to run for the remainder of the 28-week period, if applicable.