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Employee wage rights
Obviously when you employ someone you expect to pay them a regular wage. However they have more rights than simply receiving a wage from you when they are working. This guide explains some of the other things you will need to take into consideration when employing staff.
Background
Most small businesses do not realise how much legislation exists for employing and managing the employment of staff. Usually by the time they are faced with the realities it is too late. However, there is no point in trying to hide from the fact that your employees do have rights beyond receiving weekly or monthly remuneration. Some of the main ones are listed and summarised below. There are however many more that you will come across in your role as employer.
Holiday pay
Each employee you take on is entitled to holiday pay. This equates to 4.8 weeks per year. To calculate an individual's entitlement you multiply the number of days they work per week by 4.8. This does include statutory holidays i.e. bank holidays. The maximum paid holiday entitlement per annum is 28.
Statutory Sick Pay (SSP)
The first thing to mention here is that an employee is only entitled to SSP if they earn over the national insurance lower earnings level limit. If this is the case then the entitlement is £75.40 per week for the year 2008/09. You pay this in the same way as you would normally pay the employee's wages. You are responsible for administering the scheme. You need to decide if the employee is entitled to it and then make the payments and keep a record of this payment. More information on this can be found on HMRC website.
Statutory Maternity (SMP) and Paternity Pay (SPP)
If you have an employee that falls pregnant then providing they have worked for you for a set amount of time you are required to pay them SMP. This replaces their existing wages and is liable for tax and national insurance. They need to have worked for you for 26 weeks before the 15th week before the baby is due, earn more than the lower earnings limit and have provided you with the proper paperwork. There are set amounts you need to pay your employee which are worked out on the number of weeks she is off work. If your total NI bill for the year is less than £45,000 you are entitled to reclaim 104.5% of the SMP payment which covers employers NICs.
SPP is payable to the husband or partner of the mother of the child. The conditions for payment entitlement are the same as those for SMP. The total allowed off is either 1 or 2 weeks.
Childcare vouchers
An employee can be provided with childcare vouchers up to £55 per week and are exempt from employer national insurance. This means by providing these for your staff you could be saving £373 per annum on National Insurance. For the employee the £55 per week is exempt from both tax and national insurance and therefore saves them money as well. This is one entitlement that you should be marketing to all your employees.
Summary
This guide has been a brief overview to the circumstances affecting you as an employer. There are many more schemes that relate to different parts of employment and incidents that can happen to your employees. You should spend some time on the HMRC website familiarising yourself with some of the circumstances in which you might find yourself.
Further information
As mentioned above there is a great deal of information on www.hmrc.gov.uk and you will also find more fact-sheets available on www.businesslink.gov.uk
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