employment law
You cannot include in an employee’s minimumpay: • Service and cover charges • Tips and gratuities •Advances inwages • Loans •Redundancy payments •Rewards under staff suggestion schemes • Extra amounts paid for overtime, shifts of bank holidayworking
• Expenses or allowances for clothing •Refunds onmoney spent in relation to your business, for example laundry expenses or purchasing equipment.
Commission, bonuses
and tips If you choose a pay systemfor your salon that pays by results, youwill need to considerwhether to top upworkers’ earningswith payments such as commission, bonuses, tips and gratuities. These earnings are on top of basicwages and salaries.
Commission is a payment based on the individualworker’s or team’s performance and is commonly used to provide an incentive to sell, andmay lead to a lower basic salary.
Bonuses are generally linked to a business’ performance but, for somemanagers, they are alsomade to reward outstanding individual performance.
Tips and gratuities can be distributed to workers in a number ofways such as directly fromcustomers or as a share of a pooling arrangement.
Mostmoney payments that are similar to salaries orwagesmust have income tax and National Insurance contributions deducted. If you choose any of thesemethods of payment, you should alsomake sure that the systemboosts performance and effective teamwork and does not lead to harmful rivalry between staff.
Pension schemes
Abusiness that employs five ormore staff mustmake provision for a Stakeholder pension scheme, unless any other formof pension scheme is offered.
Employers are exempt fromhaving to provide a stakeholder pension scheme if they:
22 • Employ fewer than five people;
•Offer an occupational pension scheme that all staff can joinwithin a year;
•Offer staff access to a personal pension scheme.
As this is a complex issue,more information and advice can be found on the government’s Business Linkwebsite at
www.businesslink.gov.uk
Holiday entitlement
As pointed out in theWTR, an employee can begin to accrue holiday as soon as they start their employment and are entitled to fourweeks’paid holiday each year.During their holiday time they are entitled to their normal salary and benefits. Employers can agree for additional holiday to be taken although this should be outlined in the Contract of Employment.
It is up to the employer to decidewhether BankHolidays are included in the holiday entitlement orwhether they are given as extra entitlement.
The statutoryminimumpaid annual leave entitlement for thoseworking on a five day week is 5.6weeks (28 days) and includes bank
holidays.Thismeans that all employees are entitled to annual leave at 5.6 times their usualworkingweek, capped at 28 days. For example, someoneworking a three-dayweek is entitled to 16.8 days.
Statutory sick pay
Statuory Sick Pay (SSP) is the name of the paymentmade to employeeswho are unable towork because of sickness. SSP is paid by employers for up to amaximumof 28 weeks, and is a daily payment for the days an employeewould normallywork, known asQualifyingDays. SSP is not paid for the first threeQualifyingDays.
To qualify for SSP, employeesmust:
•Be sick for at least four ormore days in a row, includingweekends and bank holidays, known as a Period of Incapacity forWork;
• Earn an average of £102 perweek, before tax andNational Insurance;
•Have a contract of employment in place.
If, as detailed above, an employee’s earnings before deductions stand at £102 perweek or more, they are entitled to the current
standard rate of £81.60 perweek, and employerswillwork out a daily rate of SSP, by dividing theweekly rate by the number of days youwould
normallywork.This is paid to employees in the sameway as their wages/salary.
Employers are entitled to request evidence, in the formof amedical certificate, after the first seven days of sickness. Employees can be asked to ‘self-certificate’ their illness by completing a formprovided by their employer or a formSC2which can obtained fromaGP or theHMRevenue&Customs website, before this seven day period.
There are some circumstanceswhich prevent employees fromclaiming SSP - again see theHMRevenue&Customs website formore information.
Some employers choose to pay their employees additional sick pay, however this must be detailed in the contract of employment and is at their discretion.
Part-timeworkers
There is a separate lawcovering the employment rights of part-timeworkers - The Part-timeWorkers (Prevention of Less FavourableTreatment)Regulations 2000 which apply throughoutGreatBritain except inNorthern Ireland,where the lawis similar but slightly
different.These regulationswere introduced to ensure that part-timeworkers receive the same rights andworking conditions as full-timeworkers doing comparable jobs under the same type of contract.
Afull timeworker is someonewhoworks the normal full time hours, for example, 9amuntil 5.30pm,whilst a part-timeworker is classed as an employeewhoworks less than the normal hours, for example 1pm until 5.30pm.Under the regulations,which cover all businesses nomatterwhat the size of theworkforce, part time employees should:
•Receive the same hourly rate as comparable full-timeworkers,
•Receive the same rate of overtime pay once they haveworked over the normal full-time hours,
•Receive a comparable amount of sick pay andmaternity pay,
•Have the same access to pension schemes as full-timeworkers.
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