As an employer employment law is something which you must give
due consideration to. If you fail to comply with this area of the law
when hiring employees, it could result in costly and time-consuming
lawsuits, and could damage your business' reputation. In this article,
we discuss the law surrounding payment and salary requirements.
Broadly
speaking, employers are free to pay an employee a wage which they
believe corresponds with their role in the company. However, the law
states that employers have to pay at least the NMW (National Minimum
Wage). The same NMW is applicable for almost all employees, but those
under a certain age, or those who are working as apprentices, may be
paid a slightly lower amount. In addition to this, employers are
required to honour their entitlements of their employees to things like
adoption, paternity or maternity pay, and statutory sick pay.
Employer
employment law also states that you can only make a deduction from a
employee's wage when you are legally obliged to (i.e. to make National
Insurance and PAYE tax contributions) or when you have agreed to do so
in advance (for instance, if a deduction agreement is included in their
employment contract). Employers have to provide all of their employees
with payslips as well.
In addition to ensuring that your employees
are paid a fair wage for the work they do, and that they receive all of
the benefits they are entitled to, you may also have to address the
issue of employee share schemes. These schemes are designed to align the
shareholder and employees' interests, by providing employees with the
opportunity to take a direct interest in the company's financial
performance.
These types of schemes are useful for start up and
small business owners, who cannot afford to pay very high salaries, but
still want to attract and reward employees of a high calibre. Many job
seekers nowadays actually prefer to participate in share schemes and get
a slightly lower salary offer, as in the long run, owning shares is
more profitable. Schemes which have been approved by the HMRC can have
tax benefits for both employees and employers, but it's important to
bear in mind that the do come with a considerable administrative burden.
Employer employment law allows business owners to develop their own
share schemes too, but if these are not approved by the HMRC, then they
won't come with the added tax advantages.