Employments Right Act

The Employment Rights Act 1996 requires that certain terms and conditions must be set out in a single document which can be a written contract of employment or a statement of the main terms and conditions of employment.

The written terms and conditions will contain both contractual and statutory rights, that is, both those protected by law and those negotiated directly between the employer and the employee or representative.

Please contact us should you require any assistance regarding contacts of employment etc.

Employee Payslips

The act also states that all employees, including those working part-time and temporarily, are entitled to receive a written payslip on or before their pay day.

In practice however, most employers give much more information than the basic statutory requirements. For instance, it is obviously good practice to analyse gross pay to show:

• Basic pay
• Overtime (hours and rate)
• Bonus, commission, etc
• Special allowances
• Sick pay (including Statutory Sick Pay)
• Parental pay (including Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay)
• Holiday pay

It is also usual to show the period covered by the payment, and the date of payment, the National insurance number and PAYE tax code.

Employers paying Working Tax Credits should note that the Tax Credits Act requires the amount paid to be a clearly identifiable separate amount on the payslip.

Employers deducting premiums for stakeholder pensions must show the deduction clearly on the payslip.

Check your net pay using our payslip calculator.

Employee Forms

Your new employee should either present you with a form P45 (assuming they were previously employed elsewhere), or sign a P46 which can be downloaded from the HM Revenue & Customs website. If you employ a holiday-work student, use form P38(S) to enable you to pay them without deducting tax as long as their earnings don’t exceed their personal tax allowance.

National Insurance Contributions

If you have income from more than one job, or if you have self employment income as well as being employed, you should take care to ensure that you do not pay more in national insurance contributions than you need to.

The prescribed annual maximum normal contribution for an individual is 53 weeks at the standard primary (employee) Class 1 contribution rate between the earnings threshold and the upper earnings limit. For 2008/09 this works out to be £3,876.95. There is also an additional 1% payable on earnings in excess of the upper earnings limit.

If you think there is a chance of your exceeding this limit, you can apply for deferment of contributions on the ’surplus’ employments and/or self employment. The Deferment Group recommends that application should be made before the start of the tax year, but will accept applications up to 14 February during the tax year.