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1.3 Motivating Staff & Legislation. Pay: The legal requirements The law affects many aspects of pay. Employers need to be aware of these requirements.

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Presentation on theme: "1.3 Motivating Staff & Legislation. Pay: The legal requirements The law affects many aspects of pay. Employers need to be aware of these requirements."— Presentation transcript:

1 1.3 Motivating Staff & Legislation

2 Pay: The legal requirements The law affects many aspects of pay. Employers need to be aware of these requirements. Unfortunately, they change often. You do not need to have a detailed understanding of each piece of legislation. However, it is helpful to have a working knowledge of the main legal areas, which are as follows:

3 Employers must: Pay employees in accordance with their contract of employment. The contract will cover areas such as time to be worked, amount of paid holidays, arrangements for pay reviews etc. The employment contract is the crucial legal document between an employer and employee Pay men and women equally for doing like work or work of equal value - in other words, not discriminate between men and women Ensure they meet the requirements of the Minimum Wage Act 1998 and pay at least the National Minimum Wage to eligible employees Not make deductions from wages without prior written agreement unless required or authorised by the employees’ contracts or by law (e.g. Income tax and National Insurance contributions) Give employees itemised pay statements showing: the gross amount of wages or salary; the amount and purpose of any variable or fixed deductions; net wages or salary payable; and, where the net amount is paid in different ways, the amount and method of each part payment Pay as appropriate, various statutory pay entitlements e.g. statutory sick pay; statutory maternity pay; redundancy pay. Various laws set out minimum payments for these entitlements.

4 Contract of employment

5 Working Time Regulations The basic rights and protections that the Regulations provide are: a limit of an average of 48 hours a week which a worker can be required to work (though workers can choose to work more if they want to). a limit of an average of 8 hours work in 24 which night workers can be required to work. a right for night workers to receive free health assessments. a right to 11 hours rest a day. a right to a day off each week. a right to an in-work rest break if the working day is longer than 6 hours. a right to 4 weeks paid leave per year.

6 Stop & Think What sort of problems might you expect as a manager if your staff are working too long? Slow work Boredom Lack of motivation Stress Absences Tiredness Accidents Mistakes and errors

7 Maternity Pay & Paternity Pay SMP provides women with some money to help them to take time off before and after the birth of a baby. SMP is paid by the employer. SMP is classed as earnings and your employer will deduct tax and National Insurance. All female employees are entitled to a minimum of 26 weeks Ordinary Maternity Leave regardless of how long they have worked for an employer. The 1 year's continuous employment period is not needed. Rights to paternity leave and pay were introduced in April 2003. Employees must satisfy the following conditions in order to qualify for paternity leave. Eligible employees can choose to take either one week or two consecutive weeks’ paternity leave, they must: have or expect to have responsibility for the child’s upbringing be the biological father of the child or the mother’s husband or partner have worked continuously for their employer for 26 weeks ending with the 15th week before the baby is due

8 Minimum Wage Who the minimum wage applies to: An employer must pay their workers a minimum amount as defined by law. This is called the National Minimum wage. There are three levels of minimum wage, and the rates from 1st October 2006 are: £5.35 per hour for workers aged 22 years and older A development rate of £4.45 per hour for workers aged 18 - 21 years inclusive £3.30 per hour which applies to all workers under the age of 18 who are no longer of compulsory school age. National Minimum Wage Helpline: 0845 6000678

9 Minimum Wage: What Employers Have to Do Employers have to keep records that show that they are paying the national minimum wage, although it is up to an employer what form these records take. Employees have a right to see their pay records and legal rights to the national minimum wage. The Inland Revenue enforces the legislation, and employers can be taken to an employment tribunal or to court if they fail to pay the minimum wage. There are financial penalties for failure to comply with national minimum wage legislation. Employers found not to be paying at least the minimum wage may be served an enforcement notice ordering them to make minimum wage payments and refund any underpayment. If this notice is ignored employers may face a penalty notice and a fine of £7.40 per worker for each day they do not comply.

10 Case Study Whitbread PLC Turn to pg, 58 in Evans-Pritchard et al Read and complete the case study questions You have 15 minutes

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