Failing to pay wages for completed work is an unauthorised deduction from earnings. If the situation cannot be resolved, you have the right to file a claim with an employment tribunal.
Before filing any tribunal claim, the first step is to go through Acas Early Conciliation. Acas should contact your employer and inform them that pay must be paid on time.
Sometimes the intervention of an outside party, such as Acas, is all that is required to persuade your employer that wages must be paid as soon as possible.
If Acas conciliation fails to provide a satisfactory result, you may file an employment tribunal claim.
Can I pay my employees wages late?
No, it is not permissible to pay your employees’ wages late in the United Kingdom. Timely and consistent wage payments are a fundamental requirement outlined by UK employment regulations. Delays in wage payments can lead to financial hardships for employees and may result in legal consequences for employers.
Employers are obligated to adhere to established payroll schedules and ensure that their employees receive their wages on time. Timely wage payments are vital not only for financial stability but also for maintaining trust and good working relationships within the organization.
In cases where a legitimate reason for a delay may arise, employers must communicate clearly with their employees and adhere to the relevant UK employment laws to prevent potential legal issues and maintain a positive work environment.
What constitutes ‘wages’ for the purposes of late payment of employee wages? Wages are the most typical types of payment demanded in an employment tribunal or county court.
- Overtime Salary Bonuses are examples of commission one-time payouts.
- Pay for holidays
- SSP (Statutory Sick Pay)
- Statutory maternity, paternity and adoption pay
- Notice pay
Only in a county court can the following be sued for breach of contract:
- Pensions
- Allowances or gratuities related to retirement expenses
- Loans and wage advances
- Compensation for redundancy
- Benefits in kind (e.g. private health care, gym membership, life assurance)
Is it possible to pay my employees in cash?
Yes, you can pay your employees in cash as long as you make the necessary deductions for income tax and national insurance contributions. There is also a legal requirement to provide the employee with a wage slip each time they are paid, whether in paper form or electronically in the form of a pdf file.
What is the law on paying wages late?
The law on paying wages late in the United Kingdom is clear and stringent. Employers are legally obligated to ensure that their employees receive their wages on time, as outlined in the Employment Rights Act 1996. Failing to do so is a breach of employment regulations, and it can result in serious consequences.
Late wage payments can lead to financial hardships for employees, impacting their livelihoods. Employers who pay their employees late may face claims at an employment tribunal, financial penalties, and even criminal charges in severe cases.
It is crucial for employers to be aware of and comply with the legal requirements regarding timely wage payments to maintain a fair and harmonious working environment while avoiding legal complications.
Read more: Not being paid minimum wage
There are various illegal wage deductions, including:
- Wage payments are being made late.
- Bonuses that have not been paid
- Untaken holiday pay
- Unpaid or underpaid commission
Can I make my staff take a salary cut?
No, making staff take a salary cut can be a complex and legally regulated process. Employers are generally not permitted to unilaterally impose salary reductions on their employees without their consent. The legislation primarily governing this aspect is the Employment Rights Act 1996.
To implement a salary cut, employers should ideally engage in open and honest dialogue with employees and seek their agreement. If employees agree to the reduction in their terms and conditions, it should be formalized through a written agreement. In situations where employees do not consent, unilaterally reducing their salaries can constitute a breach of employment contracts, and employees may have grounds for legal action, including claims of constructive dismissal.
Employers should exercise caution and seek legal advice if considering salary cuts to ensure compliance with employment laws and maintain positive employee relations.
To claim unpaid wages the employee will need to show:
- Under the ‘early conciliation’ guidelines, they have notified the Advising, Conciliation and Arbitration Service (ACAS) of the late payment of salaries. Before an employee may take a claim to an employment tribunal they must show they have referred it to ACAS for early conciliation and secured a ‘Early Conciliation Certificate’. This service is provided by ACAS for free and is intended to foster conflict resolution without the necessity for an employment tribunal claim.
- They are a worker – according to the gov.uk website, a worker is someone who has a contract or other arrangement to provide work or services for a reward, the reward is for payment either in money or in kind, there is only a limited right to subcontract the work to another person, they must attend work even if they don’t want to, and their work is not part of their own limited company where the ’employer’ is the customer.
- Commission, salary, bonuses, holiday pay, statutory sick pay (SSP), statutory maternity, paternity, and adoption pay, and notice pay can all be claimed in an employment tribunal.
- The employee is entitled to the funds sought.
- You broken UK law by paying employees’ wages late.
While choosing whether to file a claim in an employment tribunal, an employee should also evaluate if the employer is experiencing financial difficulties that could lead to the company becoming bankrupt. It is because the company may have folded by the time the employment tribunal renders a ruling, meaning they would not receive any money even if they won.
Read more: Can employees issue a winding up petition for unpaid wages
What can I do if I am unable to pay my employees on time?
Companies should assess if the inability to pay employees’ wages is a short-term issue caused by something like a seasonal dip, or if the problems are part of bigger underlying concerns within the organisation. Perhaps there has been a general sales decline, bad debt, or the loss of a significant contract.
If you believe your firm is still feasible, there may be alternatives that can help you survive in the short run. If, on the other hand, your failure to meet your payroll commitment marks the beginning of your company’s insolvency, you should investigate the best strategy to close the business down.
Frequently asked questions
Employers in the UK are required by law to pay their employees at least the National Minimum Wage (NMW) or National Living Wage (NLW) depending on their age and other factors. Employers must also provide employees with a payslip and make payments on time, either weekly or monthly, as agreed with the employee.
The penalties for paying wages late in the UK can be severe. Employers can face fines of up to £20,000 per worker for failing to pay the NMW or NLW on time. They can also be named and shamed by the government, which publishes a list of employers who have failed to pay the minimum wage. In addition, employees have the right to take legal action against their employer if they have not been paid on time.
If an employee's wages are paid late in the UK, they should first speak to their employer to find out the reason for the delay and when they can expect to be paid. If the delay is due to a genuine mistake or technical issue, the employer should rectify the situation as soon as possible. If the employer refuses to pay or the delay is due to intentional acts, the employee may need to take legal action. This can involve filing a claim with the employment tribunal, seeking advice from a trade union, or contacting the Advisory, Conciliation and Arbitration Service (ACAS) for assistance. What are the legal requirements for paying employees in the UK?
What are the penalties for paying wages late in the UK?
What can an employee do if their wages are paid late in the UK?
Conclusion
Paying wages late without a valid reason is generally illegal and can have severe consequences for both employers and employees. Failure to do so can result in legal action, fines, and penalties for the employer.
For employees, late payment of wages can cause financial hardship, stress, and anxiety. It may also affect their credit score if they are unable to pay their bills on time, potentially leading to long-term financial consequences.
Late payment can also damage the employer-employee relationship, leading to decreased morale, productivity, and loyalty. It is important for employers to prioritise timely payment of wages to avoid negative legal and social consequences.
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.