We are being taken to a employment tribunal by a former employee. This is due to a lack of authorisation for deductions on their wage slip. We have been told that we are likely to lose and errors with the employment contract have also been noted. What level of compensation would we be expected to pay?

If an employee or worker wins a case about another issue (for example, unauthorised deductions from their wage slip), the tribunal may award compensation if there’s been a problem with their written statement as well.

Employment contracts

Overview

All employees have an employment contract with their employer. A contract is an agreement that sets out an employee’s:

employment conditions

rights

responsibilities

duties

These are called the ‘terms’ of the contract.

Employees and employers must stick to a contract until it ends (for example, by an employer or employee giving notice or an employee being dismissed) or until the terms are changed (usually by agreement between the employee and employer).

If a person has an agreement to do some work for someone (like paint their house), this isn’t an employment contract but a ‘contract to provide services’.

Accepting a contract

As soon as someone accepts a job offer they have a contract with their employer. An employment contract does not have to be written down.

Contract terms

The legal parts of a contract are known as ‘terms’. An employer should make clear which parts of a contract are legally binding.

Contract terms could be:

in a written contract, or similar document like a written statement of employment

verbally agreed

in an employee handbook or on a company notice board

in an offer letter from the employer

required by law (for example, an employer must pay employees at least the National Minimum Wage)

in collective agreements - negotiated agreements between employers and trade unions or staff associations

implied terms - automatically part of a contract even if they’re not written down

Implied terms

If there’s nothing clearly agreed between you and your employer about a particular issue, it may be covered by an implied term - for example:

employees not stealing from their employer

your employer providing a safe and secure working environment

a legal requirement like the right to a minimum of 5.6 weeks’ paid holidays

something necessary to do the job like a driver having a valid licence

something that’s been done regularly in a company over a long time like paying a Christmas bonus

Collective agreements

An employer may have an agreement with employees’ representatives (from trade unions or staff associations) that allows negotiations of terms and conditions like pay or working hours. This is called a collective agreement.

The terms of the agreement could include:

how negotiations will be organised

who will represent employees

which employees are covered by the agreement

which terms and conditions the agreement will cover

Written statement of employment particulars

An employer must give employees and workers a document stating the main conditions of employment when they start work. This is known as a ‘written statement of employment particulars’. It is not an employment contract.

The written statement is made up of:

the main document (known as a ‘principal statement’)

a wider written statement

The employer must provide the principal statement on the first day of employment and the wider written statement within 2 months of the start of employment.

Employers must tell employees or workers about any changes to the written statement. They must do this within one month of making the change.

There are special rules for agencies on documents that they need to provide to agency workers.

The principal statement

The principal statement must include at least:

the employer’s name

the employee’s or worker’s name, job title or a description of work and start date

how much and how often an employee or worker will get paid

hours and days of work and if and how they may vary (also if employees or workers will have to work Sundays, nights or overtime)

holiday entitlement (and if that includes public holidays)

where an employee or worker will be working and whether they might have to relocate

if an employee or worker works in different places, where these will be and what the employer’s address is

how long a job is expected to last (and what the end date is if it’s a fixed-term contract)

how long any probation period is and what its conditions are

any other benefits (for example, childcare vouchers and lunch)

obligatory training, whether or not this is paid for by the employer

For employees, it must also include the date that a previous job started if it counts towards a period of continuous employment.

Working abroad

If an employee or worker has to work outside the UK for more than a month, the principal statement must also include:

how long they’ll be abroad

what currency they’ll be paid in

what additional pay or benefits they’ll get

terms relating to their return to the UK

Other information the employer must give on day one

On the first day of employment the employer must also provide the employee or worker with information about:

sick pay and procedures

other paid leave (for example, maternity leave and paternity leave)

notice periods

The employer can choose whether to include this information in the principal statement or provide it in a separate document. If they provide it in a separate document, this must be something that the employee or worker has reasonable access to, such as on the employer’s intranet.

The wider written statement

Employers must give employees and workers a wider written statement within 2 months of the start of employment. This must include information about:

pensions and pension schemes

collective agreements

any other right to non-compulsory training provided by the employer

disciplinary and grievance procedures

Problems with a written statement

If an employee or worker has a problem receiving their written statement, they can:

Try to solve the problem with their employer informally.

If this does not work, take out a grievance against their employer (employers can also get advice about handling grievances).

Take a case to an employment tribunal as a last resort.

The tribunal will decide what the employment particulars in the statement should have been.

Compensation

Compensation can be up to 4 weeks’ pay although there’s a limit on how much a tribunal will award for a week’s pay.

Employment contracts

Overview

employment conditions

rights

responsibilities

duties

These are called the ‘terms’ of the contract.

Accepting a contract

Contract terms

Contract terms could be:

verbally agreed

in an employee handbook or on a company notice board

in an offer letter from the employer

Implied terms

employees not stealing from their employer

your employer providing a safe and secure working environment

a legal requirement like the right to a minimum of 5.6 weeks’ paid holidays

something necessary to do the job like a driver having a valid licence

Collective agreements

The terms of the agreement could include:

how negotiations will be organised

who will represent employees

which employees are covered by the agreement

which terms and conditions the agreement will cover

Written statement of employment particulars

The written statement is made up of:

the main document (known as a ‘principal statement’)

a wider written statement

The principal statement

The principal statement must include at least:

the employer’s name

how much and how often an employee or worker will get paid

holiday entitlement (and if that includes public holidays)

how long any probation period is and what its conditions are

any other benefits (for example, childcare vouchers and lunch)

obligatory training, whether or not this is paid for by the employer

Working abroad

how long they’ll be abroad

what currency they’ll be paid in

what additional pay or benefits they’ll get

terms relating to their return to the UK

Other information the employer must give on day one

sick pay and procedures

other paid leave (for example, maternity leave and paternity leave)

notice periods

The wider written statement

pensions and pension schemes

collective agreements

any other right to non-compulsory training provided by the employer

disciplinary and grievance procedures

Problems with a written statement

Try to solve the problem with their employer informally.

Take a case to an employment tribunal as a last resort.

Compensation


My employer has told me that we have no contract after I injured myself at work. I received a job offer, which I accepted.  I never received any written contract, and they are saying they have no responsibility over my health and safety. Do I have no rights because the job was only verbally agreed?

Contract terms could be:

Employment contracts

Overview

All employees have an employment contract with their employer. A contract is an agreement that sets out an employee’s:

employment conditions

rights

responsibilities

duties

These are called the ‘terms’ of the contract.

Employees and employers must stick to a contract until it ends (for example, by an employer or employee giving notice or an employee being dismissed) or until the terms are changed (usually by agreement between the employee and employer).

If a person has an agreement to do some work for someone (like paint their house), this isn’t an employment contract but a ‘contract to provide services’.

Accepting a contract

As soon as someone accepts a job offer they have a contract with their employer. An employment contract does not have to be written down.

Contract terms

The legal parts of a contract are known as ‘terms’. An employer should make clear which parts of a contract are legally binding.

Contract terms could be:

in a written contract, or similar document like a written statement of employment

verbally agreed

in an employee handbook or on a company notice board

in an offer letter from the employer

required by law (for example, an employer must pay employees at least the National Minimum Wage)

in collective agreements - negotiated agreements between employers and trade unions or staff associations

implied terms - automatically part of a contract even if they’re not written down

Implied terms

If there’s nothing clearly agreed between you and your employer about a particular issue, it may be covered by an implied term - for example:

employees not stealing from their employer

your employer providing a safe and secure working environment

a legal requirement like the right to a minimum of 5.6 weeks’ paid holidays

something necessary to do the job like a driver having a valid licence

something that’s been done regularly in a company over a long time like paying a Christmas bonus

Collective agreements

An employer may have an agreement with employees’ representatives (from trade unions or staff associations) that allows negotiations of terms and conditions like pay or working hours. This is called a collective agreement.

The terms of the agreement could include:

how negotiations will be organised

who will represent employees

which employees are covered by the agreement

which terms and conditions the agreement will cover

Written statement of employment particulars

An employer must give employees and workers a document stating the main conditions of employment when they start work. This is known as a ‘written statement of employment particulars’. It is not an employment contract.

The written statement is made up of:

the main document (known as a ‘principal statement’)

a wider written statement

The employer must provide the principal statement on the first day of employment and the wider written statement within 2 months of the start of employment.

Employers must tell employees or workers about any changes to the written statement. They must do this within one month of making the change.

There are special rules for agencies on documents that they need to provide to agency workers.

The principal statement

The principal statement must include at least:

the employer’s name

the employee’s or worker’s name, job title or a description of work and start date

how much and how often an employee or worker will get paid

hours and days of work and if and how they may vary (also if employees or workers will have to work Sundays, nights or overtime)

holiday entitlement (and if that includes public holidays)

where an employee or worker will be working and whether they might have to relocate

if an employee or worker works in different places, where these will be and what the employer’s address is

how long a job is expected to last (and what the end date is if it’s a fixed-term contract)

how long any probation period is and what its conditions are

any other benefits (for example, childcare vouchers and lunch)

obligatory training, whether or not this is paid for by the employer

For employees, it must also include the date that a previous job started if it counts towards a period of continuous employment.

Working abroad

If an employee or worker has to work outside the UK for more than a month, the principal statement must also include:

how long they’ll be abroad

what currency they’ll be paid in

what additional pay or benefits they’ll get

terms relating to their return to the UK

Other information the employer must give on day one

On the first day of employment the employer must also provide the employee or worker with information about:

sick pay and procedures

other paid leave (for example, maternity leave and paternity leave)

notice periods

The employer can choose whether to include this information in the principal statement or provide it in a separate document. If they provide it in a separate document, this must be something that the employee or worker has reasonable access to, such as on the employer’s intranet.

The wider written statement

Employers must give employees and workers a wider written statement within 2 months of the start of employment. This must include information about:

pensions and pension schemes

collective agreements

any other right to non-compulsory training provided by the employer

disciplinary and grievance procedures

Problems with a written statement

If an employee or worker has a problem receiving their written statement, they can:

Try to solve the problem with their employer informally.

If this does not work, take out a grievance against their employer (employers can also get advice about handling grievances).

Take a case to an employment tribunal as a last resort.

The tribunal will decide what the employment particulars in the statement should have been.

Compensation

If an employee or worker wins a case about another issue (for example, unauthorised deductions from their wage slip), the tribunal may award compensation if there’s been a problem with their written statement as well.

Compensation can be up to 4 weeks’ pay although there’s a limit on how much a tribunal will award for a week’s pay.

verbally agreed

Employment contracts

Overview

employment conditions

rights

responsibilities

duties

These are called the ‘terms’ of the contract.

Accepting a contract

Contract terms

Contract terms could be:

in a written contract, or similar document like a written statement of employment

verbally agreed

in an employee handbook or on a company notice board

in an offer letter from the employer

required by law (for example, an employer must pay employees at least the National Minimum Wage)

implied terms - automatically part of a contract even if they’re not written down

Implied terms

employees not stealing from their employer

your employer providing a safe and secure working environment

a legal requirement like the right to a minimum of 5.6 weeks’ paid holidays

something necessary to do the job like a driver having a valid licence

something that’s been done regularly in a company over a long time like paying a Christmas bonus

Collective agreements

The terms of the agreement could include:

how negotiations will be organised

who will represent employees

which employees are covered by the agreement

which terms and conditions the agreement will cover

Written statement of employment particulars

The written statement is made up of:

the main document (known as a ‘principal statement’)

a wider written statement

There are special rules for agencies on documents that they need to provide to agency workers.

The principal statement

The principal statement must include at least:

the employer’s name

the employee’s or worker’s name, job title or a description of work and start date

how much and how often an employee or worker will get paid

holiday entitlement (and if that includes public holidays)

where an employee or worker will be working and whether they might have to relocate

how long a job is expected to last (and what the end date is if it’s a fixed-term contract)

how long any probation period is and what its conditions are

any other benefits (for example, childcare vouchers and lunch)

obligatory training, whether or not this is paid for by the employer

Working abroad

how long they’ll be abroad

what currency they’ll be paid in

what additional pay or benefits they’ll get

terms relating to their return to the UK

Other information the employer must give on day one

sick pay and procedures

other paid leave (for example, maternity leave and paternity leave)

notice periods

The wider written statement

pensions and pension schemes

collective agreements

any other right to non-compulsory training provided by the employer

disciplinary and grievance procedures

Problems with a written statement

If an employee or worker has a problem receiving their written statement, they can:

Try to solve the problem with their employer informally.

Take a case to an employment tribunal as a last resort.

The tribunal will decide what the employment particulars in the statement should have been.

Compensation

required by law (for example, an employer must pay employees at least the National Minimum Wage)

Employment contracts

Overview

employment conditions

rights

responsibilities

duties

These are called the ‘terms’ of the contract.

Accepting a contract

Contract terms

Contract terms could be:

in a written contract, or similar document like a written statement of employment

verbally agreed

in an employee handbook or on a company notice board

in an offer letter from the employer

implied terms - automatically part of a contract even if they’re not written down

Implied terms

employees not stealing from their employer

your employer providing a safe and secure working environment

a legal requirement like the right to a minimum of 5.6 weeks’ paid holidays

something necessary to do the job like a driver having a valid licence

something that’s been done regularly in a company over a long time like paying a Christmas bonus

Collective agreements

The terms of the agreement could include:

how negotiations will be organised

who will represent employees

which employees are covered by the agreement

which terms and conditions the agreement will cover

Written statement of employment particulars

The written statement is made up of:

the main document (known as a ‘principal statement’)

a wider written statement

There are special rules for agencies on documents that they need to provide to agency workers.

The principal statement

The principal statement must include at least:

the employer’s name

the employee’s or worker’s name, job title or a description of work and start date

how much and how often an employee or worker will get paid

holiday entitlement (and if that includes public holidays)

where an employee or worker will be working and whether they might have to relocate

how long a job is expected to last (and what the end date is if it’s a fixed-term contract)

how long any probation period is and what its conditions are

any other benefits (for example, childcare vouchers and lunch)

obligatory training, whether or not this is paid for by the employer

Working abroad

how long they’ll be abroad

what currency they’ll be paid in

what additional pay or benefits they’ll get

terms relating to their return to the UK

Other information the employer must give on day one

sick pay and procedures

other paid leave (for example, maternity leave and paternity leave)

notice periods

The wider written statement

pensions and pension schemes

collective agreements

any other right to non-compulsory training provided by the employer

disciplinary and grievance procedures

Problems with a written statement

If an employee or worker has a problem receiving their written statement, they can:

Try to solve the problem with their employer informally.

Take a case to an employment tribunal as a last resort.

The tribunal will decide what the employment particulars in the statement should have been.

Compensation


I requested time off to look after my son, who has developed cancer. I have been dismissed by my employer for this reason, and believe this is unfair. Where can I complain about this?

If you think you’ve been unfairly treated for taking time off for dependants, get advice from your staff or trade union representative or Acas.

Time off for family and dependants

Your rights

As an employee you’re allowed time off to deal with an emergency involving a dependant.

A dependant could be a spouse, partner, child, grandchild, parent, or someone who depends on you for care.

How much you get

You’re allowed a reasonable amount of time off to deal with the emergency, but there’s no set amount of time as it depends on the situation.

Tell your employer as soon as possible how much time you’ll need so it can be agreed.

Limits on time off

There are no limits on how many times you can take time off for dependants. Your employer may want to talk to you if they think time off is affecting your work.

Pay

Your employer may pay you for time off to look after dependants but they don’t have to. Check your contract, company handbook or intranet site to see if there are rules about this.

Exceptions

You can’t have time off if you knew about a situation beforehand. For example you wouldn’t be covered if you wanted to take your child to hospital for an appointment. You might get parental leave instead.

Check your employment status to see if you’re classed as an ‘employee’.

Compassionate leave

If you aren’t given time off for dependants, your employer may allow you ‘compassionate leave’ - this can be paid or unpaid leave for emergency situations. Check your employment contract, company handbook or intranet for details about compassionate leave.

What's an emergency?

You could get time off when a dependant is involved in the following emergencies.

Illness, injury or assault

This includes mental or physical illnesses that don’t have to be life-threatening or need full-time care - it could be an existing condition that has worsened.

For example, if a dependant is mugged without being physically hurt, you could take time off to comfort or help them.

You can also take time off to arrange longer term care for a dependant.

Having a baby

You could take time off if a dependant goes into labour unexpectedly and they rely on you to take them to the hospital. You can’t take time off for dependants after the birth to care for the child, unless it’s an emergency. However, if you’re the child’s parent you could be entitled to paternity or parental leave.

Disruption of care arrangements

You could get time off if:

a child minder or carer doesn’t turn up to look after a dependant

a nursing home or nursery closes unexpectedly

If your child is involved in an incident during school time

You could get time off if your child has been:

involved in a fight

injured on a school trip

suspended from school

Taking time off

Tell your employer as soon as possible if you need time off. If it’s an emergency, you may not be able to do this before you leave work but you should let your employer know as soon as possible.

You don’t have to do this in writing or give written proof.

Problems when you take time off

Your employer musn’t:

treat you unfairly for taking time off, for example refusing you training or promotion

dismiss you or choose you for redundancy because you asked for time off for a dependant

refuse you reasonable time off

You may be able to take a case to an Employment Tribunal.

Time off for family and dependants

Your rights

How much you get

Limits on time off

Pay

Exceptions

Compassionate leave

What's an emergency?

Illness, injury or assault

Having a baby

Disruption of care arrangements

You could get time off if:

involved in a fight

injured on a school trip

suspended from school

Taking time off

Problems when you take time off

Your employer musn’t:

refuse you reasonable time off


I need to take some time off to look after my daughter, who was involved in a car accident. My employer has granted me leave, but mentioned nothing about pay. Do they have to pay for my time off?

As an employee you’re allowed time off to deal with an emergency involving a dependant.

Time off for family and dependants

Your rights

A dependant could be a spouse, partner, child, grandchild, parent, or someone who depends on you for care.

How much you get

You’re allowed a reasonable amount of time off to deal with the emergency, but there’s no set amount of time as it depends on the situation.

Tell your employer as soon as possible how much time you’ll need so it can be agreed.

Limits on time off

There are no limits on how many times you can take time off for dependants. Your employer may want to talk to you if they think time off is affecting your work.

Pay

Your employer may pay you for time off to look after dependants but they don’t have to. Check your contract, company handbook or intranet site to see if there are rules about this.

Exceptions

You can’t have time off if you knew about a situation beforehand. For example you wouldn’t be covered if you wanted to take your child to hospital for an appointment. You might get parental leave instead.

Check your employment status to see if you’re classed as an ‘employee’.

Compassionate leave

If you aren’t given time off for dependants, your employer may allow you ‘compassionate leave’ - this can be paid or unpaid leave for emergency situations. Check your employment contract, company handbook or intranet for details about compassionate leave.

What's an emergency?

You could get time off when a dependant is involved in the following emergencies.

Illness, injury or assault

This includes mental or physical illnesses that don’t have to be life-threatening or need full-time care - it could be an existing condition that has worsened.

For example, if a dependant is mugged without being physically hurt, you could take time off to comfort or help them.

You can also take time off to arrange longer term care for a dependant.

Having a baby

You could take time off if a dependant goes into labour unexpectedly and they rely on you to take them to the hospital. You can’t take time off for dependants after the birth to care for the child, unless it’s an emergency. However, if you’re the child’s parent you could be entitled to paternity or parental leave.

Disruption of care arrangements

You could get time off if:

a child minder or carer doesn’t turn up to look after a dependant

a nursing home or nursery closes unexpectedly

If your child is involved in an incident during school time

You could get time off if your child has been:

involved in a fight

injured on a school trip

suspended from school

Taking time off

Tell your employer as soon as possible if you need time off. If it’s an emergency, you may not be able to do this before you leave work but you should let your employer know as soon as possible.

You don’t have to do this in writing or give written proof.

Problems when you take time off

Your employer musn’t:

treat you unfairly for taking time off, for example refusing you training or promotion

dismiss you or choose you for redundancy because you asked for time off for a dependant

refuse you reasonable time off

If you think you’ve been unfairly treated for taking time off for dependants, get advice from your staff or trade union representative or Acas.

You may be able to take a case to an Employment Tribunal.

Time off for family and dependants

Your rights

How much you get

Limits on time off

Pay

Exceptions

Compassionate leave

What's an emergency?

Illness, injury or assault

Having a baby

Disruption of care arrangements

You could get time off if:

a nursing home or nursery closes unexpectedly

You could get time off if your child has been:

involved in a fight

injured on a school trip

suspended from school

Taking time off

Problems when you take time off

Your employer musn’t:

refuse you reasonable time off

You may be able to take a case to an Employment Tribunal.

Time off for family and dependants

Your rights

How much you get

Limits on time off

Pay

Exceptions

Compassionate leave

What's an emergency?

Illness, injury or assault

Having a baby

Disruption of care arrangements

You could get time off if:

a nursing home or nursery closes unexpectedly

You could get time off if your child has been:

involved in a fight

injured on a school trip

suspended from school

Taking time off

Problems when you take time off

Your employer musn’t:

refuse you reasonable time off

You may be able to take a case to an Employment Tribunal.


I started a limited company and employed 5 employees. I registered for PAYE scheme. We were very busy and could not pay HMRC Will our account be closed ?

HMRC will close your PAYE scheme if you’re a new employer and you do not send a report to or pay HMRC in 120 days.

Running payroll

Overview

As an employer operating PAYE as part of your payroll, you need to complete certain tasks during each tax month. Tax months run from the 6th of one month to the 5th of the next.

You must tell HM Revenue and Customs (HMRC) if you’ve not paid any employees in a tax month.

On or before your employees’ payday

Every time you pay your employees, use your payroll software to:

Record their pay - include their salary or wages and any other pay.

Calculate deductions from their pay, like tax and National Insurance.

Calculate the employer’s National Insurance contribution that you’ll need to pay on their earnings above £184 a week.

Produce payslips for each employee (you can use different software if yours does not have this feature).

Report their pay and deductions to HMRC in a Full Payment Submission (FPS).

If you pay an employee less than £120 a week, you usually only need to record and report their pay (unless they have another job or receive a pension).

In the next tax month (starting on the 6th)

You can view what you owe from your FPS online from the 12th.

Claim any reduction on what you’ll owe HMRC (for example statutory pay) by sending an Employer Payment Summary (EPS) by the 19th.

View the balance of what you owe in your HMRC online account, within 2 days (or by the 14th if you sent the EPS before the 11th).

Pay HMRC by the 22nd (or the 19th if paying by post) - you may have to pay a penalty if you do not.

If you usually pay less than £1,500 per month, you may be able to pay quarterly instead of monthly. Contact the payment helpline to find out.

Late reporting

HMRC will send you a late filing notice if you’ve paid any employees and do not send an FPS or send one late. They can also charge you a penalty, unless you have a valid reason for reporting late.

Late, missing or incorrect payroll reports can also affect your employees’ income-related benefits, such as Universal Credit.

HMRC will close your PAYE scheme if you’re a new employer and you do not send a report to or pay HMRC in 120 days.

Employees' pay

Record your employees’ salary or wages in your payroll software. Include everyone you pay, even if they get less than £120 a week.

Recording other types of pay

Statutory pay

You may have to pay your employee:

Statutory Sick Pay (SSP)

statutory pay for parents (maternity, paternity, adoption, bereavement or shared parental pay)

You must record these in your software - they’re taxed like normal pay.

You can reclaim statutory pay for parents.

Expenses and benefits

Expenses or benefits like uniforms or company cars are reported separately at the end of the tax year. Check the rules to find out what counts as expenses and benefits, and what you should record in your software as normal pay.

Tips and other pay

Treat tips to your staff as normal pay if they’re paid into your till - this includes tips added to your customers’ card or cheque payments. The rules are different if tips are given straight to your employees by customers or paid into a tronc.

Other payments you may give your employee that you should record as normal pay include:

bonuses

commission

holiday pay (unless you pay it in advance or use a holiday pay scheme)

payments for time your employee has spent travelling

passenger payments, except the first 5 pence per mile

medical suspension payments, given to an employee you’ve suspended for health reasons

maternity suspension payments, given to an employee you’ve suspended for her, or her baby’s, health

guarantee payments, paid to an employee for a day they do not work (and not paid holiday)

office holders’ payments (honoraria), given to employees for providing a service, for example being your company’s sports-club secretary

payments that can be converted into cash, for example cheques, Savings Certificates or Premium Bonds

inducement payments (‘golden hello’ payments)

cash prizes for competitions you run

The rules are different for non-cash payments like shares or commodities, cash-in-hand or guarantee payments and employee incentive awards.

Deductions

Your payroll software will calculate how much tax and National Insurance to deduct from your employees’ pay. These deductions are worked out using each employee’s tax code and National Insurance category letter.

You may also need to deduct student loan repayments, pension contributions, Payroll Giving donations and child maintenance payments.

Student and Postgraduate loan repayments

Use your payroll software to record if your employee needs to make student loan repayments - both in your software and on payslips.

You’ll need to calculate and deduct how much they need to repay based on which plan they’re on. They repay:

9% of their income above £19,895 a year for Plan 1

9% of their income above £27,295 a year for Plan 2

9% of their income above £25,000 a year for Plan 4

6% of their income above £21,000 a year for Postgraduate loans

Pensions

Make pension deductions after you take off National Insurance. You normally make pension deductions before you take off tax - check with your workplace pension provider.

You’ll also need to pay any employer contributions into your employee’s pension.

A new law means all employers will have to provide and pay into a workplace pension scheme for their employees - this is called ‘automatic enrolment’.

Payroll Giving

Your employees can donate to charity directly from their pay before tax is deducted using Payroll Giving.

Register with a Payroll Giving agency to set up a scheme. They’ll let you know how to make deductions.

As well as the usual payroll records, you must also keep the agency contract, employee authorisation forms and details of payments to the agency.

Child maintenance

You may need to deduct child maintenance directly from a paying parent’s earnings or pension.

Payslips

You must give your employees and ‘workers’ a payslip on or before their payday.

What to include

Payslips must show:

pay before any deductions (‘gross’ wages)

deductions like tax and National Insurance

pay after deductions (‘net’ wages)

the number of hours worked, if the pay varies depending on time worked

Payslips can also include information like your employee’s National Insurance number and tax code, their rate of pay, and the total amount of pay and deductions so far in the tax year.

Producing payslips

You may be able to produce payslips using your payroll software, if it has this feature. You can use different software if it does not.

You can either print payslips to give to your employees, or you can send them electronically.

Employees have certain rights relating to payslips and what they must include.

Reporting to HMRC: FPS

Use your payroll software to send a Full Payment Submission (FPS) to tell HM Revenue and Customs (HMRC) about payments to your employees and what deductions you’ve made.

Include everyone you pay, even if they get less than £120 a week.

When to send your FPS

Send the FPS on or before your employees’ payday, even if you pay HMRC quarterly instead of monthly.

You must enter the usual date that you pay your employees, even if you pay them earlier or later. For example, if you pay your employees early because your usual payday falls on a Bank Holiday, you should still enter your regular payday.

Early reporting

You can send an FPS before your regular payday, for example if your payroll staff are going on holiday.

Do not report too early - you’ll need to send a corrected FPS to update HMRC if information changes, for example an employee leaves or changes tax code.

You cannot send reports for the new tax year before March.

Late reporting

There are some exceptions when you can send a late FPS.

Completing and sending an FPS

You’ll need to enter your PAYE reference and Accounts Office reference in your software. HMRC will have sent this to you after you registered as an employer.

To complete and send the FPS, follow your payroll software’s instructions.

HMRC has guidance on what to put in each field on an FPS, including:

employer information

employee information - only include employees you’ve paid

pay and deductions

National Insurance information

You can split your FPS into batches if it’s easier for you, for example one for employees and one for directors.

There are special rules for calculating deductions if your employee has more than one job with you.

After you’ve sent your FPS

In the next tax month (which starts on the 6th), you can:

view your FPS and how much tax and National Insurance you owe in your HMRC online account from the 12th

claim any reduction on what you’ll owe HMRC (for example statutory pay) by sending an Employer Payment Summary (EPS) by the 19th

pay HMRC the balance by the 22nd (or the 19th if paying by post)

If you need to make an extra payment to your employee, send an extra FPS before your next regular report (if your software has this feature).

If you made a mistake in your FPS

You should correct any errors in your FPS as soon as you find them.

Reporting extra information

You need to report more information on an FPS if:

it includes a new employee

an employee leaves

you start paying someone a workplace pension

it’s the last report of tax year

You may also need to report extra information about certain employee changes, for example they take a leave of absence or become a director.

There are special rules if you’re only reporting National Insurance, for example you’re an overseas employer that does not need to pay UK tax.

Reporting to HMRC: EPS

Use your payroll software to send an Employer Payment Summary (EPS) as well as a Full Payment Submission (FPS) if you:

reclaim statutory maternity, paternity, adoption, parental bereavement or shared parental payments - even if you got an advance payment from HM Revenue and Customs (HMRC) to cover them

claim the Employment Allowance - do this once each tax year

can reclaim Construction Industry Scheme (CIS) deductions as a limited company

claim National Insurance contributions holiday for previous tax years

pay the Apprenticeship Levy if you, or employers you’re connected to, have an annual pay bill of more than £3 million

Send an EPS instead of an FPS if you’ve not paid any employees in a tax month.

EPS deadlines

Send an EPS by the 19th of the following tax month for HMRC to apply any reduction (for example statutory pay) on what you’ll owe from your FPS.

The tax month starts on the 6th.

Sending an EPS

To complete and send the EPS, follow your payroll software’s instructions. HMRC has guidance on what to put in each field on an an EPS.

Use HMRC’s Basic PAYE Tools if your software cannot send EPS reports.

After you’ve sent your EPS

Once you’ve sent your EPS, you can:

view what you’ve claimed and the balance of what you owe on your HMRC online account within 2 days (or by the 14th if you sent the EPS before the 11th)

pay HMRC by the 22nd (or the 19th if paying by post).

If you made a mistake in your EPS

You should correct any errors in your EPS as soon as you find them.

If you do not pay any employees in a tax month

Do not send an FPS. Send an EPS by the 19th after the tax month you did not pay any employees. The tax month starts on the 6th.

HMRC has guidance on what to put in your EPS if you’ve not paid anyone.

If you do not send an EPS, HMRC may:

send you a notice through PAYE Online

estimate how much you should pay

give you a penalty

If you do not pay anyone for a longer period

You can tell HMRC up to a year in advance that you’ll not pay any employees. To do this, enter dates in the ‘Period of inactivity’ fields in your EPS.

Paying HMRC

Every month you have to pay HM Revenue and Customs (HMRC):

the tax and National Insurance (and any other deductions) you owe as reported on your Full Payment Submission (FPS) in the previous tax month

minus the reductions on any Employer Payment Summary (EPS) you sent before the 19th in the current tax month

Pay what you owe by the 22nd of the month (or the 19th if paying by post) - you may have to pay a penalty if you do not.

Viewing what you owe

View your HMRC online account to see the reports you’ve sent and to find out what you owe.

There are things you can check if your PAYE bill is not what you expected.

How to pay

You can pay your PAYE bill in a number of different ways.

Interest and penalties

HMRC will usually tell you if they think you’ve paid late - either in a letter or a notice through PAYE Online. You’ll be charged interest daily at the standard rate.

You may be charged a penalty if you do not pay on time or in full.

Sending an FPS after payday

If you send a late Full Payment Submission (FPS) without a valid reason, you may get:

an online penalty warning message for the first late FPS you send each month

a penalty for reporting late

When you can send a late FPS report

In certain situations you can send a Full Payment Submission (FPS) after you pay your employee.

Situation | When to report

Your employee does not give you a P45 and is either paid less than £120 a week or has worked with you for less than a week | Within 7 days of paying your employee

Your employees’ payday is on a non-banking day, for example weekend or bank holiday | On the next banking day - but enter the regular payment date in the ‘payment date’ field and select ‘Late reporting reason’ code G

You make an ad hoc payment outside of your regular payroll, for example you’re told after you’ve sent your FPS about a new starter or a missed overtime payment. (Payments made regularly outside your normal payroll run are not ad hoc) | In your next regular FPS or an additional FPS

You pay your employee an expense or benefit where you must pay National Insurance, but not Income Tax, through payroll. This depends on the benefit. | Within 14 days of the end of the tax month

You cannot calculate or report your employee’s pay in advance because it’s based on their work on the day, for example harvest workers paid based on how much they pick | Within 7 days of paying your employee

You make certain non-cash payments to your employee | As soon as possible within 14 days of the end of the tax month, or when you deduct tax and National Insurance (if earlier). For complex situations (for example when exercising share options) contact HMRC

You’ve not received your employer PAYE reference yet | As soon as possible after you receive your employer PAYE reference - select ‘Late reporting reason’ code G

Put the reason for reporting after payday on your FPS for each late submission. If you do not, or if HMRC disagrees with the reason or you do not send an FPS, they may send you an online penalty warning message and a penalty.

Viewing late FPS reports in your HMRC online account

If you send an FPS in the same tax month as you paid your employees, you can view the report in your HMRC online account from the 12th of the next tax month.

This is different if you send an FPS in the tax month after payday.

Late FPS sent (in tax month after payday) | HMRC online account updated

Between 6th and 11th | By the 14th

Between 12th and 19th | Within 2 days

On or after the 20th - and you did not send a FPS the previous tax month | Within 2 days

On or after the 20th - and you sent a FPS the previous tax month | By the 12th of the next tax month

Reporting employee changes

You need to report more information on a Full Payment Submission (FPS) if:

it includes a new employee

an employee leaves

you start paying someone a workplace pension

it’s the last report of the tax year

an employee changes their address

You may also need to tell HM Revenue and Customs (HMRC) if an employee:

becomes a director

reaches State Pension age

goes to work abroad

goes on jury service

dies

joins or leaves a contracted-out company pension

turns 16

is called up as a reservist

changes gender

Employee takes a leave of absence

Once your employee has started their leave of absence, put ‘Yes’ in the ‘Irregular payment pattern indicator’ in all FPS reports you send to HMRC until the employee returns.

Changing paydays

You can move your payday to a different day or change how often you pay your employees.

Moving your payday

If the new payday is in the same tax month or week, treat the first new payment as an extra payment for that period.

You do not need to do anything special when recording pay if the new payday is in a different tax month or week.

HM Revenue and Customs (HMRC) has guidance on how to calculate National Insurance for your employees after changing paydays.

Changing how often you pay your employees

You must contact the employer helpline if you pay employees less often so HMRC do not send you a non-filing notice through PAYE Online.

Most payroll software can automatically manage any changes to how often you pay your employees (for example from monthly to weekly) and work out deductions correctly.

Using Basic PAYE Tools

There are some limitations on when you can make these changes if you use HM Revenue and Customs’ (HMRC) Basic PAYE Tools.

Paying your employees more often

If you’ve not already paid your employees, use the new earnings period (in the ‘Pay frequency’ field) in your Full Payment Submission (FPS) when you next pay them.

If you’ve paid your employees, you can use the new earnings period from the next tax month.

Paying your employees less often

If a payment from your old pay period also takes place in your new pay period, calculate and deduct National Insurance on both. Do not deduct more National Insurance than would’ve been due on the combined total of both payments.

If an employee also joins your contracted-out pension scheme during this period, deduct National Insurance at the contracted-out rate on the total of both payments.

Deduct tax based on the new earnings period the next time you pay your employees.

Annual payroll scheme for PAYE

If you pay your employees only once a year, and all in the same tax month, you can register with HMRC as an ‘annual scheme’.

This means you send reports and make payments to HMRC annually. If you pay your employees on different days in the same tax month, you need to send an FPS on or before each payday. You do not need to send an Employer Payment Summary (EPS) for the months when you do not pay your employees.

To register, contact the employer helpline and tell them which month you pay your employees. You’ll need your 13-character Accounts Office reference number - this is on the letter HMRC sent you when you registered as an employer.

Changing when you pay your employees

If you change the month you pay your employees, send an FPS in the month that you want the new annual payment month to move to. If it’s later than the month you usually pay your employees, you’ll need to send an EPS for that month to tell HMRC you’re not paying anyone.

If you send more than one FPS in a year, HMRC will assume you no longer wish to operate as an annual scheme and send you a letter to confirm.


I am considering making an employee redundant due to the company facing financial issues. This employee has been working for the company for 2 years. What length of notice do I have to give?

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Making staff redundant

Overview

Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is:

changing what it does

doing things in a different way, for example using new machinery

changing location or closing down

If you’ve been impacted by coronavirus (COVID-19), you can get funding to continue to pay your employees instead of making them redundant. This is known as furloughing.

For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.

Redundancies can be compulsory or non-compulsory. If you do have to make redundancies you can get help from Jobcentre Plus.

Employee rights

Employees have certain rights and may be entitled to redundancy pay if they’re made redundant.

All employees under notice of redundancy have the right to:

reasonable time off to look for a new job or arrange training

not be unfairly selected for redundancy

You should always take steps to avoid redundancies before dismissing staff.

Alternative employment

Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.

Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.

Avoiding redundancies

You should take steps to avoid compulsory redundancies, for example by:

seeking applicants for voluntary redundancy or early retirement

seeking applications from existing staff to work flexibly

laying off self-employed contractors, freelancers etc

not using casual labour

restricting recruitment

reducing or banning overtime

filling vacancies elsewhere in the business with existing employees

short-time working or temporary lay-offs

Offers of alternative work

Even if you’ve selected someone for redundancy, you can still offer them alternative work.

For an offer to be valid:

it should be unconditional and in writing

it must be made before the employee’s current contract ends

it should show how the new job differs from the old

the job must actually be offered to the employee - they should not have to apply

the new job must start within 4 weeks of the old job ending

Employees who accept an offer of alternative work are allowed a 4-week trial period to see if the work is suitable. If you both agree that it is not, they can still claim redundancy pay.

The trial period can be longer than 4 weeks if you agree this in writing.

If you think the job is suitable but the employee refuses to take it, they might lose any redundancy pay entitlement.

Lay-offs and short-time working

You can lay off an employee (ask them to stay at home or take unpaid leave) when you temporarily cannot give them paid work - as long as the employment contract allows this.

Short-time working is when an employee works reduced hours or is paid less than half a week’s pay.

Laying off staff or short-time working can help avoid redundancies - but you have to agree this with staff first.

This could be in:

their employment contract

a national agreement for the industry

a collective agreement between you and a recognised trade union

National and collective agreements can only be enforced if they’re in the employee’s employment contract.

You may also be able to lay off an employee or put them on short-time working:

where you have clear evidence showing it’s been widely accepted in your organisation over a long period of time

if you agree with the employee to change their employment contract to allow them to be laid off or put on short-time working (this will not automatically give you the power to do this without their consent in the future)

Statutory guarantee payments

Employees are entitled to these if you do not provide them with a full day’s work during the time they’d normally be required to work.

The maximum payment is £30 a day for 5 days (£150) in any 3 months. If employees usually earn less than £30 a day, they’ll get their usual daily rate. For part-time workers, the rate is worked out proportionally.

Employees can claim a redundancy payment from you if the lay-off or short-time working runs for:

4 or more weeks in a row

6 or more weeks in a 13 week period, where no more than 3 are in a row

They must give you written notice in advance that they want to make a claim.

You do not have to pay if they’ll return to normal working hours within 4 weeks.

If you do not give guarantee pay to someone who’s entitled to it, they could take you to an employment tribunal.

There’s more advice on lay-offs and short-time working on the Acas (Advisory, Conciliation and Arbitration Service) website.

Non-compulsory redundancy

Voluntary redundancy

This is where you ask employees if they’d like to volunteer for redundancy.

You must have a fair and transparent selection process and tell employees they will not automatically be selected just because they applied.

Early retirement

This is where you offer employees incentives to retire early. It is used as an alternative to voluntary redundancy.

The offer must be made across the workforce - you cannot single out specific individuals.

You cannot force anyone into early retirement - it must be the employee’s choice.

Compulsory redundancy

If you decide you need to make compulsory redundancies, you must:

identify which employees will be made redundant

make sure you select people fairly - do not discriminate

Fair selection criteria

Fair reasons for selecting employees for redundancy include:

skills, qualifications and aptitude

standard of work and/or performance

attendance

disciplinary record

You can select employees based on their length of service (‘last in, first out’) but only if you can justify it. It could be indirect discrimination if it affects one group of people more than another.

Do not rely on length of service as your only selection criteria - this is likely to be age discrimination.

Unfair selection criteria

Some selection criteria are automatically unfair. You must not select an employee for redundancy based on any of the following reasons:

pregnancy, including all reasons relating to maternity

family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants

acting as an employee representative

acting as a trade union representative

joining or not joining a trade union

being a part-time or fixed-term employee

age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation

pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

You should always consult employees in a redundancy situation.

Redundancy consultations

If you do not consult employees in a redundancy situation, any redundancies you make will almost certainly be unfair and you could be taken to an employment tribunal.

You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.

There are no set rules to follow if there are fewer than 20 redundancies planned, but it’s good practice to fully consult employees and their representatives. An employment tribunal could decide that you’ve dismissed your staff unfairly if you do not.

Consultation does not have to end in agreement, but it must be carried out with a view to reaching it, including ways of avoiding or reducing the redundancies.

Collective consultation

Follow these steps.

You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.

Consult with trade union representatives or elected employee representatives - or with staff directly if there are none.

Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.

Respond to any requests for further information.

Give any affected staff termination notices showing the agreed leaving date.

Issue redundancy notices once the consultation is complete.

Notification

Notify RPS by filling in form HR1. Instructions on where to send it are on the form.

The deadline for notifying RPS depends on the number of proposed redundancies.

Number of proposed redundancies | When notification to RPS must be given

20 to 99 | 30 days before the first redundancy

100 or more | 45 days before the first redundancy

You can be fined an unlimited amount if you do not notify RPS.

Consultation

There’s no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.

Number of proposed redundancies | Minimum consultation period before dismissal

20 to 99 | 30 days

100 or more | 45 days

Information you must provide to representatives or staff

You must provide written details of:

the reasons for redundancies

the numbers and categories of employees involved

the numbers of employees in each category

how you plan to select employees for redundancy

how you’ll carry out redundancies

how you’ll work out redundancy payments

Further information

Download the guidance on how to manage collective redundancies from Advisory, Conciliation and Arbitration Service (Acas).

Giving staff notice

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Give staff at least the statutory notice period, based on how long they have worked.

Length of service | Notice you must give

1 month to 2 years | At least a week

2 years to 12 years | A week’s notice for every year employed

12 or more years | 12 weeks

You can allow staff to leave earlier than the planned leaving date (for example without notice) by offering payment in lieu of notice.

Notice pay

You must give staff notice pay - based on their pay rate and notice period - or make a payment in lieu of notice.

Your employee’s notice pay is based on the average they earned per week over the 12 weeks before their notice period starts.

If your employee earned less than usual because you used the Coronavirus Job Retention Scheme to put them ‘on furlough’, you must work out their notice payments based on what they would have earned normally.

Pay in lieu of notice

If you have included a payment in lieu of notice clause in the employment contract, you can end your staff’s employment with no notice. This lets you make a payment to cover the notice period they would have worked.

These payments must have tax and National Insurance deducted.

When you make payments in lieu of notice, you still have to pay staff the basic pay they would have got during the notice period. You also have to pay pension, private health care insurance or other contributions if it’s in the employee’s contract.

Redundancy pay

Employees you make redundant might be entitled to redundancy pay - this is called a ‘statutory redundancy payment’.

To be eligible, an individual must:

be an employee working under a contract of employment

have at least 2 years’ continuous service

have been dismissed, laid off or put on short-time working - those who opted for early retirement do not qualify

You must make the payment when you dismiss the employee, or soon after.

A redundant employee also has the right to a written statement setting out the amount of redundancy payment and how you worked it out.

Statutory redundancy pay rates

These are based on an employee’s age and length of employment and are counted back from the date of dismissal.

Employees get:

1.5 weeks’ pay for each full year of employment after their 41st birthday

a week’s pay for each full year of employment after their 22nd birthday

half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years.

Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice.

If your employee earned less than usual because you used the Coronavirus Job Retention Scheme to put them ‘on furlough’, you must work out their redundancy payments based on what they would have earned normally.

Weekly pay is capped at £544. The maximum amount of statutory redundancy pay is £16,320.

Statutory redundancy pay rates may be different in Northern Ireland.

You can give your staff extra redundancy pay if you want to, or have a qualifying period of less than 2 years.

You can use the redundancy pay calculator to work out payments.

If you do not pay

If you fail to pay redundancy pay or if an employee disagrees with the amount, they have 3 months from the date their employment ended to make a claim for payment to an employment tribunal.

If an employee does not claim in time, a tribunal still has 6 months to decide whether or not they should get a payment.

If you have financial difficulties

If your business would become insolvent as a result of making the statutory redundancy payments, the Insolvency Service’s Redundancy Payments Service (RPS) may be able to help.

You’d have to repay any debt as soon as possible. Email the Redundancy Payments Service for more information. Include all of the following in your email:

your name

whether you’re the employer

whether you should be the main point of contact

the name of your business

your business address

number of redundancies

Tax

Employees who’ve been made redundant only pay tax on payments over £30,000. They do not pay any National Insurance.

Tax and National Insurance are deducted from other termination payments, for example payment in lieu of holiday or notice.

Getting help

If you have to make redundancies, Jobcentre Plus can give you and your employees support and advice through its Rapid Response Service.

Support could include:

helping people facing redundancy to write CVs and find jobs

providing general information about benefits

helping people to find the right training and learn new skills

helping with costs like travel to work expenses

Jobcentre Plus may also provide on-site support for large scale redundancies.

In Scotland, Rapid Response Service support is delivered through Partnership Action for Continuing Employment (PACE) - there’s more information on the Skills Development Scotland website.

In Wales, the service is delivered by the ReAct scheme.

Acas has an online redundancy helpline.

How to get help

To find out how your business can use the Rapid Response Service, email rrs.enquiries@dwp.gov.uk and include:

your contact details

the town(s) your business is based in (including postcodes)

the location(s) of the redundancies

Give staff at least the statutory notice period, based on how long they have worked.

Making staff redundant

Overview

Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is:

changing what it does

doing things in a different way, for example using new machinery

changing location or closing down

For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.

Redundancies can be compulsory or non-compulsory. If you do have to make redundancies you can get help from Jobcentre Plus.

Employee rights

Employees have certain rights and may be entitled to redundancy pay if they’re made redundant.

All employees under notice of redundancy have the right to:

reasonable time off to look for a new job or arrange training

not be unfairly selected for redundancy

You should always take steps to avoid redundancies before dismissing staff.

Alternative employment

Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.

Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.

Avoiding redundancies

You should take steps to avoid compulsory redundancies, for example by:

seeking applicants for voluntary redundancy or early retirement

seeking applications from existing staff to work flexibly

laying off self-employed contractors, freelancers etc

not using casual labour

restricting recruitment

reducing or banning overtime

filling vacancies elsewhere in the business with existing employees

short-time working or temporary lay-offs

Offers of alternative work

Even if you’ve selected someone for redundancy, you can still offer them alternative work.

For an offer to be valid:

it should be unconditional and in writing

it must be made before the employee’s current contract ends

it should show how the new job differs from the old

the job must actually be offered to the employee - they should not have to apply

the new job must start within 4 weeks of the old job ending

The trial period can be longer than 4 weeks if you agree this in writing.

If you think the job is suitable but the employee refuses to take it, they might lose any redundancy pay entitlement.

Lay-offs and short-time working

Short-time working is when an employee works reduced hours or is paid less than half a week’s pay.

Laying off staff or short-time working can help avoid redundancies - but you have to agree this with staff first.

This could be in:

their employment contract

a national agreement for the industry

a collective agreement between you and a recognised trade union

National and collective agreements can only be enforced if they’re in the employee’s employment contract.

You may also be able to lay off an employee or put them on short-time working:

where you have clear evidence showing it’s been widely accepted in your organisation over a long period of time

Statutory guarantee payments

Employees are entitled to these if you do not provide them with a full day’s work during the time they’d normally be required to work.

Employees can claim a redundancy payment from you if the lay-off or short-time working runs for:

4 or more weeks in a row

6 or more weeks in a 13 week period, where no more than 3 are in a row

They must give you written notice in advance that they want to make a claim.

You do not have to pay if they’ll return to normal working hours within 4 weeks.

If you do not give guarantee pay to someone who’s entitled to it, they could take you to an employment tribunal.

There’s more advice on lay-offs and short-time working on the Acas (Advisory, Conciliation and Arbitration Service) website.

Non-compulsory redundancy

Voluntary redundancy

This is where you ask employees if they’d like to volunteer for redundancy.

You must have a fair and transparent selection process and tell employees they will not automatically be selected just because they applied.

Early retirement

This is where you offer employees incentives to retire early. It is used as an alternative to voluntary redundancy.

The offer must be made across the workforce - you cannot single out specific individuals.

You cannot force anyone into early retirement - it must be the employee’s choice.

Compulsory redundancy

If you decide you need to make compulsory redundancies, you must:

identify which employees will be made redundant

make sure you select people fairly - do not discriminate

Fair selection criteria

Fair reasons for selecting employees for redundancy include:

skills, qualifications and aptitude

standard of work and/or performance

attendance

disciplinary record

Do not rely on length of service as your only selection criteria - this is likely to be age discrimination.

Unfair selection criteria

Some selection criteria are automatically unfair. You must not select an employee for redundancy based on any of the following reasons:

pregnancy, including all reasons relating to maternity

family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants

acting as an employee representative

acting as a trade union representative

joining or not joining a trade union

being a part-time or fixed-term employee

age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation

pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

You should always consult employees in a redundancy situation.

Redundancy consultations

You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.

Collective consultation

Follow these steps.

You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.

Consult with trade union representatives or elected employee representatives - or with staff directly if there are none.

Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.

Respond to any requests for further information.

Give any affected staff termination notices showing the agreed leaving date.

Issue redundancy notices once the consultation is complete.

Notification

Notify RPS by filling in form HR1. Instructions on where to send it are on the form.

The deadline for notifying RPS depends on the number of proposed redundancies.

Number of proposed redundancies | When notification to RPS must be given

20 to 99 | 30 days before the first redundancy

100 or more | 45 days before the first redundancy

You can be fined an unlimited amount if you do not notify RPS.

Consultation

There’s no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.

Number of proposed redundancies | Minimum consultation period before dismissal

20 to 99 | 30 days

100 or more | 45 days

Information you must provide to representatives or staff

You must provide written details of:

the reasons for redundancies

the numbers and categories of employees involved

the numbers of employees in each category

how you plan to select employees for redundancy

how you’ll carry out redundancies

how you’ll work out redundancy payments

Further information

Download the guidance on how to manage collective redundancies from Advisory, Conciliation and Arbitration Service (Acas).

Giving staff notice

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Give staff at least the statutory notice period, based on how long they have worked.

Length of service | Notice you must give

1 month to 2 years | At least a week

2 years to 12 years | A week’s notice for every year employed

12 or more years | 12 weeks

You can allow staff to leave earlier than the planned leaving date (for example without notice) by offering payment in lieu of notice.

Notice pay

You must give staff notice pay - based on their pay rate and notice period - or make a payment in lieu of notice.

Your employee’s notice pay is based on the average they earned per week over the 12 weeks before their notice period starts.

Pay in lieu of notice

These payments must have tax and National Insurance deducted.

Redundancy pay

Employees you make redundant might be entitled to redundancy pay - this is called a ‘statutory redundancy payment’.

To be eligible, an individual must:

be an employee working under a contract of employment

have at least 2 years’ continuous service

have been dismissed, laid off or put on short-time working - those who opted for early retirement do not qualify

You must make the payment when you dismiss the employee, or soon after.

A redundant employee also has the right to a written statement setting out the amount of redundancy payment and how you worked it out.

Statutory redundancy pay rates

These are based on an employee’s age and length of employment and are counted back from the date of dismissal.

Employees get:

1.5 weeks’ pay for each full year of employment after their 41st birthday

a week’s pay for each full year of employment after their 22nd birthday

half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years.

Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice.

Weekly pay is capped at £544. The maximum amount of statutory redundancy pay is £16,320.

Statutory redundancy pay rates may be different in Northern Ireland.

You can give your staff extra redundancy pay if you want to, or have a qualifying period of less than 2 years.

You can use the redundancy pay calculator to work out payments.

If you do not pay

If an employee does not claim in time, a tribunal still has 6 months to decide whether or not they should get a payment.

If you have financial difficulties

You’d have to repay any debt as soon as possible. Email the Redundancy Payments Service for more information. Include all of the following in your email:

your name

whether you’re the employer

whether you should be the main point of contact

the name of your business

your business address

number of redundancies

Tax

Employees who’ve been made redundant only pay tax on payments over £30,000. They do not pay any National Insurance.

Tax and National Insurance are deducted from other termination payments, for example payment in lieu of holiday or notice.

Getting help

If you have to make redundancies, Jobcentre Plus can give you and your employees support and advice through its Rapid Response Service.

Support could include:

helping people facing redundancy to write CVs and find jobs

providing general information about benefits

helping people to find the right training and learn new skills

helping with costs like travel to work expenses

Jobcentre Plus may also provide on-site support for large scale redundancies.

In Wales, the service is delivered by the ReAct scheme.

Acas has an online redundancy helpline.

How to get help

To find out how your business can use the Rapid Response Service, email rrs.enquiries@dwp.gov.uk and include:

your contact details

the town(s) your business is based in (including postcodes)

the location(s) of the redundancies

Length of service | Notice you must give

Making staff redundant

Overview

Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is:

changing what it does

doing things in a different way, for example using new machinery

changing location or closing down

For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.

Redundancies can be compulsory or non-compulsory. If you do have to make redundancies you can get help from Jobcentre Plus.

Employee rights

Employees have certain rights and may be entitled to redundancy pay if they’re made redundant.

All employees under notice of redundancy have the right to:

reasonable time off to look for a new job or arrange training

not be unfairly selected for redundancy

You should always take steps to avoid redundancies before dismissing staff.

Alternative employment

Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.

Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.

Avoiding redundancies

You should take steps to avoid compulsory redundancies, for example by:

seeking applicants for voluntary redundancy or early retirement

seeking applications from existing staff to work flexibly

laying off self-employed contractors, freelancers etc

not using casual labour

restricting recruitment

reducing or banning overtime

filling vacancies elsewhere in the business with existing employees

short-time working or temporary lay-offs

Offers of alternative work

Even if you’ve selected someone for redundancy, you can still offer them alternative work.

For an offer to be valid:

it should be unconditional and in writing

it must be made before the employee’s current contract ends

it should show how the new job differs from the old

the job must actually be offered to the employee - they should not have to apply

the new job must start within 4 weeks of the old job ending

The trial period can be longer than 4 weeks if you agree this in writing.

If you think the job is suitable but the employee refuses to take it, they might lose any redundancy pay entitlement.

Lay-offs and short-time working

Short-time working is when an employee works reduced hours or is paid less than half a week’s pay.

Laying off staff or short-time working can help avoid redundancies - but you have to agree this with staff first.

This could be in:

their employment contract

a national agreement for the industry

a collective agreement between you and a recognised trade union

National and collective agreements can only be enforced if they’re in the employee’s employment contract.

You may also be able to lay off an employee or put them on short-time working:

where you have clear evidence showing it’s been widely accepted in your organisation over a long period of time

Statutory guarantee payments

Employees are entitled to these if you do not provide them with a full day’s work during the time they’d normally be required to work.

Employees can claim a redundancy payment from you if the lay-off or short-time working runs for:

4 or more weeks in a row

6 or more weeks in a 13 week period, where no more than 3 are in a row

They must give you written notice in advance that they want to make a claim.

You do not have to pay if they’ll return to normal working hours within 4 weeks.

If you do not give guarantee pay to someone who’s entitled to it, they could take you to an employment tribunal.

There’s more advice on lay-offs and short-time working on the Acas (Advisory, Conciliation and Arbitration Service) website.

Non-compulsory redundancy

Voluntary redundancy

This is where you ask employees if they’d like to volunteer for redundancy.

You must have a fair and transparent selection process and tell employees they will not automatically be selected just because they applied.

Early retirement

This is where you offer employees incentives to retire early. It is used as an alternative to voluntary redundancy.

The offer must be made across the workforce - you cannot single out specific individuals.

You cannot force anyone into early retirement - it must be the employee’s choice.

Compulsory redundancy

If you decide you need to make compulsory redundancies, you must:

identify which employees will be made redundant

make sure you select people fairly - do not discriminate

Fair selection criteria

Fair reasons for selecting employees for redundancy include:

skills, qualifications and aptitude

standard of work and/or performance

attendance

disciplinary record

Do not rely on length of service as your only selection criteria - this is likely to be age discrimination.

Unfair selection criteria

Some selection criteria are automatically unfair. You must not select an employee for redundancy based on any of the following reasons:

pregnancy, including all reasons relating to maternity

family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants

acting as an employee representative

acting as a trade union representative

joining or not joining a trade union

being a part-time or fixed-term employee

age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation

pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

You should always consult employees in a redundancy situation.

Redundancy consultations

You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.

Collective consultation

Follow these steps.

You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.

Consult with trade union representatives or elected employee representatives - or with staff directly if there are none.

Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.

Respond to any requests for further information.

Give any affected staff termination notices showing the agreed leaving date.

Issue redundancy notices once the consultation is complete.

Notification

Notify RPS by filling in form HR1. Instructions on where to send it are on the form.

The deadline for notifying RPS depends on the number of proposed redundancies.

Number of proposed redundancies | When notification to RPS must be given

20 to 99 | 30 days before the first redundancy

100 or more | 45 days before the first redundancy

You can be fined an unlimited amount if you do not notify RPS.

Consultation

There’s no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.

Number of proposed redundancies | Minimum consultation period before dismissal

20 to 99 | 30 days

100 or more | 45 days

Information you must provide to representatives or staff

You must provide written details of:

the reasons for redundancies

the numbers and categories of employees involved

the numbers of employees in each category

how you plan to select employees for redundancy

how you’ll carry out redundancies

how you’ll work out redundancy payments

Further information

Download the guidance on how to manage collective redundancies from Advisory, Conciliation and Arbitration Service (Acas).

Giving staff notice

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Give staff at least the statutory notice period, based on how long they have worked.

Length of service | Notice you must give

1 month to 2 years | At least a week

2 years to 12 years | A week’s notice for every year employed

12 or more years | 12 weeks

You can allow staff to leave earlier than the planned leaving date (for example without notice) by offering payment in lieu of notice.

Notice pay

You must give staff notice pay - based on their pay rate and notice period - or make a payment in lieu of notice.

Your employee’s notice pay is based on the average they earned per week over the 12 weeks before their notice period starts.

Pay in lieu of notice

These payments must have tax and National Insurance deducted.

Redundancy pay

Employees you make redundant might be entitled to redundancy pay - this is called a ‘statutory redundancy payment’.

To be eligible, an individual must:

be an employee working under a contract of employment

have at least 2 years’ continuous service

have been dismissed, laid off or put on short-time working - those who opted for early retirement do not qualify

You must make the payment when you dismiss the employee, or soon after.

A redundant employee also has the right to a written statement setting out the amount of redundancy payment and how you worked it out.

Statutory redundancy pay rates

These are based on an employee’s age and length of employment and are counted back from the date of dismissal.

Employees get:

1.5 weeks’ pay for each full year of employment after their 41st birthday

a week’s pay for each full year of employment after their 22nd birthday

half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years.

Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice.

Weekly pay is capped at £544. The maximum amount of statutory redundancy pay is £16,320.

Statutory redundancy pay rates may be different in Northern Ireland.

You can give your staff extra redundancy pay if you want to, or have a qualifying period of less than 2 years.

You can use the redundancy pay calculator to work out payments.

If you do not pay

If an employee does not claim in time, a tribunal still has 6 months to decide whether or not they should get a payment.

If you have financial difficulties

You’d have to repay any debt as soon as possible. Email the Redundancy Payments Service for more information. Include all of the following in your email:

your name

whether you’re the employer

whether you should be the main point of contact

the name of your business

your business address

number of redundancies

Tax

Employees who’ve been made redundant only pay tax on payments over £30,000. They do not pay any National Insurance.

Tax and National Insurance are deducted from other termination payments, for example payment in lieu of holiday or notice.

Getting help

If you have to make redundancies, Jobcentre Plus can give you and your employees support and advice through its Rapid Response Service.

Support could include:

helping people facing redundancy to write CVs and find jobs

providing general information about benefits

helping people to find the right training and learn new skills

helping with costs like travel to work expenses

Jobcentre Plus may also provide on-site support for large scale redundancies.

In Wales, the service is delivered by the ReAct scheme.

Acas has an online redundancy helpline.

How to get help

To find out how your business can use the Rapid Response Service, email rrs.enquiries@dwp.gov.uk and include:

your contact details

the town(s) your business is based in (including postcodes)

the location(s) of the redundancies

2 years to 12 years | A week’s notice for every year employed

Making staff redundant

Overview

Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is:

changing what it does

doing things in a different way, for example using new machinery

changing location or closing down

For a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.

Redundancies can be compulsory or non-compulsory. If you do have to make redundancies you can get help from Jobcentre Plus.

Employee rights

Employees have certain rights and may be entitled to redundancy pay if they’re made redundant.

All employees under notice of redundancy have the right to:

reasonable time off to look for a new job or arrange training

not be unfairly selected for redundancy

You should always take steps to avoid redundancies before dismissing staff.

Alternative employment

Employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant.

Employees can try out an alternative role for 4 weeks (or more if agreed in writing) without giving up their right to redundancy pay.

Avoiding redundancies

You should take steps to avoid compulsory redundancies, for example by:

seeking applicants for voluntary redundancy or early retirement

seeking applications from existing staff to work flexibly

laying off self-employed contractors, freelancers etc

not using casual labour

restricting recruitment

reducing or banning overtime

filling vacancies elsewhere in the business with existing employees

short-time working or temporary lay-offs

Offers of alternative work

Even if you’ve selected someone for redundancy, you can still offer them alternative work.

For an offer to be valid:

it should be unconditional and in writing

it must be made before the employee’s current contract ends

it should show how the new job differs from the old

the job must actually be offered to the employee - they should not have to apply

the new job must start within 4 weeks of the old job ending

The trial period can be longer than 4 weeks if you agree this in writing.

If you think the job is suitable but the employee refuses to take it, they might lose any redundancy pay entitlement.

Lay-offs and short-time working

Short-time working is when an employee works reduced hours or is paid less than half a week’s pay.

Laying off staff or short-time working can help avoid redundancies - but you have to agree this with staff first.

This could be in:

their employment contract

a national agreement for the industry

a collective agreement between you and a recognised trade union

National and collective agreements can only be enforced if they’re in the employee’s employment contract.

You may also be able to lay off an employee or put them on short-time working:

where you have clear evidence showing it’s been widely accepted in your organisation over a long period of time

Statutory guarantee payments

Employees are entitled to these if you do not provide them with a full day’s work during the time they’d normally be required to work.

Employees can claim a redundancy payment from you if the lay-off or short-time working runs for:

4 or more weeks in a row

6 or more weeks in a 13 week period, where no more than 3 are in a row

They must give you written notice in advance that they want to make a claim.

You do not have to pay if they’ll return to normal working hours within 4 weeks.

If you do not give guarantee pay to someone who’s entitled to it, they could take you to an employment tribunal.

There’s more advice on lay-offs and short-time working on the Acas (Advisory, Conciliation and Arbitration Service) website.

Non-compulsory redundancy

Voluntary redundancy

This is where you ask employees if they’d like to volunteer for redundancy.

You must have a fair and transparent selection process and tell employees they will not automatically be selected just because they applied.

Early retirement

This is where you offer employees incentives to retire early. It is used as an alternative to voluntary redundancy.

The offer must be made across the workforce - you cannot single out specific individuals.

You cannot force anyone into early retirement - it must be the employee’s choice.

Compulsory redundancy

If you decide you need to make compulsory redundancies, you must:

identify which employees will be made redundant

make sure you select people fairly - do not discriminate

Fair selection criteria

Fair reasons for selecting employees for redundancy include:

skills, qualifications and aptitude

standard of work and/or performance

attendance

disciplinary record

Do not rely on length of service as your only selection criteria - this is likely to be age discrimination.

Unfair selection criteria

Some selection criteria are automatically unfair. You must not select an employee for redundancy based on any of the following reasons:

pregnancy, including all reasons relating to maternity

family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants

acting as an employee representative

acting as a trade union representative

joining or not joining a trade union

being a part-time or fixed-term employee

age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation

pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

You should always consult employees in a redundancy situation.

Redundancy consultations

You must follow ‘collective consultation’ rules if you’re making 20 or more employees redundant within any 90-day period at a single establishment.

Collective consultation

Follow these steps.

You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.

Consult with trade union representatives or elected employee representatives - or with staff directly if there are none.

Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.

Respond to any requests for further information.

Give any affected staff termination notices showing the agreed leaving date.

Issue redundancy notices once the consultation is complete.

Notification

Notify RPS by filling in form HR1. Instructions on where to send it are on the form.

The deadline for notifying RPS depends on the number of proposed redundancies.

Number of proposed redundancies | When notification to RPS must be given

20 to 99 | 30 days before the first redundancy

100 or more | 45 days before the first redundancy

You can be fined an unlimited amount if you do not notify RPS.

Consultation

There’s no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.

Number of proposed redundancies | Minimum consultation period before dismissal

20 to 99 | 30 days

100 or more | 45 days

Information you must provide to representatives or staff

You must provide written details of:

the reasons for redundancies

the numbers and categories of employees involved

the numbers of employees in each category

how you plan to select employees for redundancy

how you’ll carry out redundancies

how you’ll work out redundancy payments

Further information

Download the guidance on how to manage collective redundancies from Advisory, Conciliation and Arbitration Service (Acas).

Giving staff notice

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Give staff at least the statutory notice period, based on how long they have worked.

Length of service | Notice you must give

1 month to 2 years | At least a week

2 years to 12 years | A week’s notice for every year employed

12 or more years | 12 weeks

You can allow staff to leave earlier than the planned leaving date (for example without notice) by offering payment in lieu of notice.

Notice pay

You must give staff notice pay - based on their pay rate and notice period - or make a payment in lieu of notice.

Your employee’s notice pay is based on the average they earned per week over the 12 weeks before their notice period starts.

Pay in lieu of notice

These payments must have tax and National Insurance deducted.

Redundancy pay

Employees you make redundant might be entitled to redundancy pay - this is called a ‘statutory redundancy payment’.

To be eligible, an individual must:

be an employee working under a contract of employment

have at least 2 years’ continuous service

have been dismissed, laid off or put on short-time working - those who opted for early retirement do not qualify

You must make the payment when you dismiss the employee, or soon after.

A redundant employee also has the right to a written statement setting out the amount of redundancy payment and how you worked it out.

Statutory redundancy pay rates

These are based on an employee’s age and length of employment and are counted back from the date of dismissal.

Employees get:

1.5 weeks’ pay for each full year of employment after their 41st birthday

a week’s pay for each full year of employment after their 22nd birthday

half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years.

Your employee’s weekly pay is the average they earned per week over the 12 weeks before the day they got their redundancy notice.

Weekly pay is capped at £544. The maximum amount of statutory redundancy pay is £16,320.

Statutory redundancy pay rates may be different in Northern Ireland.

You can give your staff extra redundancy pay if you want to, or have a qualifying period of less than 2 years.

You can use the redundancy pay calculator to work out payments.

If you do not pay

If an employee does not claim in time, a tribunal still has 6 months to decide whether or not they should get a payment.

If you have financial difficulties

You’d have to repay any debt as soon as possible. Email the Redundancy Payments Service for more information. Include all of the following in your email:

your name

whether you’re the employer

whether you should be the main point of contact

the name of your business

your business address

number of redundancies

Tax

Employees who’ve been made redundant only pay tax on payments over £30,000. They do not pay any National Insurance.

Tax and National Insurance are deducted from other termination payments, for example payment in lieu of holiday or notice.

Getting help

If you have to make redundancies, Jobcentre Plus can give you and your employees support and advice through its Rapid Response Service.

Support could include:

helping people facing redundancy to write CVs and find jobs

providing general information about benefits

helping people to find the right training and learn new skills

helping with costs like travel to work expenses

Jobcentre Plus may also provide on-site support for large scale redundancies.

In Wales, the service is delivered by the ReAct scheme.

Acas has an online redundancy helpline.

How to get help

To find out how your business can use the Rapid Response Service, email rrs.enquiries@dwp.gov.uk and include:

your contact details

the town(s) your business is based in (including postcodes)

the location(s) of the redundancies