Pay & Pensions

Although employers are allowed to pay any wage they wish, it is a legal obligation to pay an employee at least the national minimum wage and equal pay for work of equal value. As a business, it is beneficial to strike a balance by picking a wage rate that both motivates and attracts employees. An employee’s entitlements must also be maintained; entitlements such as sick pay and maternity leave etc.

There are four tiers for the national minimum wage; an employee must be above school leaving age to be to qualify for the national minimum wage. The current national minimum wage rates are as such;

An apprentice: £2.65 p/h

Aged under 18: £3.68 p/h

Aged 18-20: £4.98 p/h

Aged 21 and over: £6.19 p/h

Employees must be given a detailed payslip. Employers are legally obliged to deduct from wages to cover things such as PAYE tax and National Insurance contributions.

Pensions

A pension scheme is a way of saving, so that you have an income after retirement. Pensions can be taken with employers through a company scheme or through a personal scheme, usually run by banks or insurance companies. When a pension is taken though an employer, the employer must then also pay contributions into the employee’s pension fund. Pension funds may be built on defined contributions; money physically paid into the fund, or through defined benefits. In the latter, a certain amount is promised, either as a lump sum, at a rate or as a mixture of the two. This amount promised is usually based on salary and length of time in the job.

Due to recent pension reforms, employers are now obliged to enter eligible employees onto a suitable pension scheme and pay contributions to their find. However, employees can opt out of the scheme where as in previous years; people wanting pensions would have to opt in. Due to the heavy administrative burden of setting up a pension scheme, only large employers are currently ‘auto-enrolling’ eligible employees onto schemes.  All exiting employees will be phased in and required to comply with this new regulation by February 2018.