Consensus Employment Law

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Making Sense of Employment Law

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Pay is one of the most important factors in our working life. It's a sensitive subject - the way it's handled can have a big impact on morale and productivity. The challenge for most companies is to set consistent pay levels that give value for money while rewarding workers fairly.

All employees are entitled to an individual written pay statement at or before the time they are paid. The statement must show gross pay and take-home pay, with amounts and reasons for all variable deductions.

Fixed deductions must also be shown, with detailed amounts and reasons. Alternatively, fixed deductions can be shown as a total sum, provided a written statement of these items is given to each employee in advance - or at the time - of issue of the first pay statement showing the total sum.  After this, a statement should be given at least once a year.

A pay system is the basis on which an employee is rewarded by an employer for contributions, skill and performance. There are two main categories of pay system:

  • those where pay doesn't vary in relation to achievements/performance (basic rate schemes)
  • those where pay, or part pay, varies in relation to results/profits/performance (including the acquisition of skills or competencies).

Main Issues

Key points to a pay system:

  • Pay systems provide the foundation for financial reward systems
  • There are basic rate systems, where the worker receives a fixed rate per hour/week/month with no additional payment
  • There are systems related in whole or part to individual or group performance or profit
  • There are systems based in part on the worker gaining and using additional skills or competencies.
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