Employment and skills | nibusinessinfo.co.uk

Earnings-related qualification for statutory sick pay

Understanding statutory sick pay

In this guide:

What is statutory sick pay and who is entitled to it?

Employers' responsibilities to pay statutory sick pay to eligible employees and where to get further information.
Statutory sick pay (SSP) provides a measure of earnings replacement for employees who are off work through illness. Employers must pay this to their employees who satisfy all the qualifying conditions.

You do not have to pay SSP to your employee if you pay wages or occupational (contractual) sick pay to your employee for the same days that they would be entitled to SSP if it is more than, or the same as, the current rate of SSP.

Qualifying conditions for SSP

You must pay SSP to your employee if they satisfy all of the following conditions.

They must:

have notified you of their sickness within your own time limits or, if you haven't informed them in advance of any time limits, no later than seven days after the first day of sickness

be employed by you and have done some work for you under their contract

be sick for four or more days in a row, including weekends and bank holidays - this is known as the period of incapacity for work (PIW)

have average weekly earnings equal to or more than the lower earnings limit for National Insurance contribution (NIC) purposes - read about earnings-related qualification for statutory sick pay

be an employed earner, ie have earnings on which you are liable to pay employer's Class 1 NICs, or would be liable to pay but for their age or level of earnings

Part-time, temporary, agency, or casual workers may also be entitled to SSP, if they satisfy all of the qualifying conditions for payment.

In any one PIW, SSP is payable to the individual up to a maximum of 28 weeks.

Read Statutory Sick Pay: Overview | GOV.UK guidance.

See Labour Relations Agency (LRA) advice on managing sickness absence.
Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Actions

HMRC help and support for employing people

HMRC YouTube videos to help with tax issues

Also on this site

Staff records

Staff pay

Manage absence and sickness

Content category

Employment and skills
Source URL
/content/what-statutory-sick-pay-and-who-entitled-it

Links
Earnings-related qualification for statutory sick pay

How eligibility for SSP depends on an employee's average weekly earnings during a specified period.
To qualify for statutory sick pay (SSP), an employee must have average weekly earnings (AWE) at or above the lower earnings limit (LEL) - £123 a week in the 2024-25 tax year - regardless of whether they are required to pay National Insurance contributions.

You should calculate AWE by using a set period of time (the relevant period) prior to the start of the employee's 'period of incapacity for work'. The period must be at least eight weeks long and is marked by two pay dates:

date one - the last normal pay date before the employee's first complete day of sickness

date two - the last normal pay date falling not less than eight weeks before the pay date above

The relevant period is calculated from the day after date two up to and including date one.

Calculating average earnings for weekly paid employees

If your employee is paid once a week or in multiples of a week, eg fortnightly or every four weeks:

add together the gross earnings in the relevant period, including any bonuses and commissions

divide the total by the number of weeks in the period

Calculating average earnings for monthly paid employees

The payment for monthly paid employees is calculated on the same basis as weekly paid employees:

Add together the gross earnings during the period.

Divide the total by the number of months in the period. If this is not a whole number of months, round to the nearest whole number.

Multiply by 12.

Divide by 52.

For details on how to calculate average earnings, read GOV.UK guidance on SSP.

Action if your employee is not entitled to SSP

If your employee is not entitled to SSP but has been incapable of work for at least four days in a row, you should advise them to claim employment and support allowance (ESA) from the Jobs & Benefits office. You should also give them form SSP1 as soon as possible to help support a claim for ESA.
Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Also on this site

Staff records

Staff pay

Manage absence and sickness

Content category

Employment and skills
Source URL
/content/earnings-related-qualification-statutory-sick-pay

Links
When to start and stop statutory sick pay

How to define when you start and stop payment of statutory sick pay.
Within limits, you can set up your own rules about how your employees inform you when they are sick.

You should only consider paying statutory sick pay (SSP) once an employee has been sick for at least four calendar days in a row. This period of sickness is known as a period of incapacity for work (PIW) and may include weekends and bank holidays.

Linking periods

If a PIW starts within eight weeks of the end of a previous PIW, the periods are linked and count as one period of sickness.

Waiting days

The first three qualifying days in a PIW are called waiting days (WDs). SSP is not payable for WDs. Where PIWs are linked, and all three WDs have been served in the first PIW, there will be no WDs in any later linked spells of sickness.

If all three WDs have not been served in the first PIW, any remaining WDs must be served at the beginning of the next linked PIW.

Qualifying days

These are the employee's contractual or normal working days unless other days have been agreed upon with the workforce. SSP is paid for each qualifying day after the waiting days.

Payment of SSP during a phased return to work

If the employee has previously been off sick and you have agreed to a phased return to work, you must consider payment of the employee's normal wages for days worked and SSP for days not worked in the normal working week.

Stopping payment of SSP

SSP usually stops once an employee returns to work for their regular number of days and/or hours. You should calculate if any SSP is still owing to them for previous days of sickness - pay any outstanding money on their next normal pay day.

Stop paying SSP if your employee:

is still off sick after SSP has been paid for 28 weeks

has had linked periods of sickness that have spanned a period of three years - even if you haven't paid a total of 28 weeks' worth of SSP

You also stop paying SSP to an employee if she starts receiving statutory maternity pay (SMP) - or maternity allowance (MA) if she doesn't qualify for SMP. The employee would start receiving SMP or MA if she either:

Has chosen to start receiving SMP or MA on a particular date which also happens to be when she would be due SSP.

Is off sick for a pregnancy-related illness within four weeks of the start of her expected week of childbirth or the date she has chosen for her SMP to begin, whichever is earlier. In these circumstances, she stops working and starts to receive SMP or MA automatically.

If an employee is not entitled to SMP or MA, and is not already receiving SSP, she will be disqualified from receiving SSP for a period of 18 weeks.

Issuing the SSP1 form

If you stop paying an employee SSP and they are still off sick, you should advise them to make a claim for employment and support allowance (ESA) from their local Jobs & Benefits office. You must complete form SSP1 and send it to the employee immediately. Form SSP1 is used to support a claim for ESA.

If you know in advance that an employee will be off sick for more than 28 weeks, you should send the SSP1 form to them up to six weeks before the end of this 28-week period so that they can claim ESA without delay.

For more information on making and stopping SSP payments, Read GOV.UK guidance on SSP.
Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Also on this site

Staff records

Staff pay

Manage absence and sickness

Content category

Employment and skills
Source URL
/content/when-start-and-stop-statutory-sick-pay

Links
Calculate statutory sick pay

Work out how much statutory sick pay to pay employees who qualify for it.

If your employee satisfies the qualifying conditions for statutory sick pay (SSP), you should work out how much SSP is due. You should then pay it on the same day that you would normally pay them their wages for the same period.

For the qualifying conditions, see what is statutory sick pay and who gets it?

SSP is paid at a daily rate. Only qualifying days (QDs) count for paying SSP. For more information on QDs, see when to start and stop statutory sick pay. Remember that you do not pay SSP for the first three QDs - the waiting days.

SSP calculator

You can work out the daily rate for your employee by dividing the weekly rate by the number of QDs in that week. For SSP purposes, the week always begins on a Sunday. In 2024-25, the weekly rate is £116.75 and applies from 6 April 2024 to 5 April 2025.

Calculate your employee's statutory sick pay.

It is worth noting that although the weekly rate is always the same, the fewer days your employee normally works, the higher the rate of SSP that is payable per QD, ie the daily rate for an employee working a three-day week will be higher than that of an employee working a five-day week.

Maximum SSP

The maximum entitlement is 28 weeks in each period - or series of linked periods - of incapacity to work.

You can calculate when you have paid 28 weeks' worth of SSP by keeping a running total of all SSP paid in a period or linked periods of sickness. You can use the SSP2 form to record periods of sickness and payment of SSP.

Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Actions

HMRC webinars and videos on SSP

Also on this site

Staff records

Staff pay

Manage absence and sickness

Content category

Employment and skills

Source URL
/content/calculate-statutory-sick-pay

Links
Statutory sick pay forms and record-keeping

Employer forms for statutory sick pay including self-certification forms and keeping records of sickness absence.
There is no longer a need for employers to keep records of statutory sick pay (SSP) that has been paid. However, it is advisable to keep records of employee sickness absences.

Keeping records of sickness absence

You can choose how you keep records of your employees' sickness absence. HM Revenue & Customs (HMRC) may need to see these records if there is a dispute over payment of SSP.

The employer must ensure that retention and storage of such records are compliant with both data protection and GDPR. See staff records: your data protection obligations.

SSP record sheet

You can use the record sheet for SSP form (SSP2) to record details of an employee's sickness absences. You don't have to use this form, but it will help you keep accurate records which will ensure that you pay the correct amount of SSP.

Self certification form

The employee's statement of sickness form or self-certification form (SC2) is for employees to self-certify themselves as sick for the first seven days of sickness for SSP purposes. You can use your own self-certificate if you prefer.

Employee not entitlement to SSP

You must give the employee not entitled to SSP form (SSP1) to your employee to tell them why they cannot get SSP from you. Use and retain a copy of form SSP1 - or your own equivalent - when your employee has had the maximum amount of SSP and needs to claim Employment and Support Allowance. Fill in this form and send it to your employee if either:

they have been sick for four days in a row and are not entitled to SSP from you

their entitlement to SSP stops but they are still sick

Using HMRC's downloadable calculators

A set of HMRC's Basic PAYE Tools is available to download straight to your computer. In addition to calculators for SSP and other statutory payments, the tools include:

an employer database on which you can record your employees' details

a P11 calculator that will work out and record your employees' tax, National Insurance contributions, and student loan deductions every pay day with a linked P32 Employment Payment record that works out what you need to pay HMRC

interactive forms such as P11D working sheets

a Learning Zone - including interactive learning material on SSP
Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Actions

Statutory Sick Pay (SSP): employer guide | GOV.UK

Also on this site

Staff records

Staff pay

Manage absence and sickness

Content category

Employment and skills
Source URL
/content/statutory-sick-pay-forms-and-record-keeping

Links
Alternatives to paying statutory sick pay

What occupational sick pay schemes must offer.
You can opt out of the statutory sick pay (SSP) scheme if you have an occupational sick pay scheme that offers employees daily rates that are the same or better than SSP.

However, employees still have an underlying entitlement to SSP for the first 28 weeks in a period of incapacity for work (PIW).

Deciding on the terms of an occupational sick pay (OSP) scheme

A scheme run by an employer is usually known as an OSP scheme.

As an employer, you may wish to pay employees more than the statutory minimum. In this case, you will need to decide on the terms and conditions of the scheme.

It is up to you to decide whether or not you want your OSP scheme to be contractual. If you do make it contractual, you should include the details in each employee's contract and/or the company handbook.

However, even where there are no details of this in the employee's contract/company handbook, and you make enhanced payments over a period of time, the employee could regard this entitlement as contractual through custom and practice.

See Labour Relations Agency (LRA) guidance on preparing a written statement of main terms and conditions of employment.

What you need to do

With any OSP scheme, you should:

decide if either all employees qualify or only those with a minimum period of service - ensure any indirect discrimination can be objectively justified

decide on the maximum rate of OSP you will allow - many employers pay full basic pay for a certain period of time - you can 'top up' SSP to whatever amount you wish to pay

decide how long your highest level of pay will last, before either stopping or reducing these payments, eg from full pay to half pay

ensure that OSP does not exceed normal pay - it must also not be less than SSP - any payment can be inclusive of SSP

pay SSP during any periods that OSP is not payable during the first 28 weeks in a PIW

issue form SPP1 if a person has been sick for 28 weeks - even if OSP continues to be paid

Record-keeping under an OSP scheme

There is no longer a need to keep records of SSP paid but records that could be required by HMRC are absences from work. You can choose how to keep these records. HMRC may need to see these if there is a dispute over payment.

You will also need to keep sufficient records to complete form SSP1, so that your employee may claim employment and support allowance if necessary. This might happen if they had received their maximum 28 weeks' SSP or run out of their entitlement to OSP and were not entitled to SSP from you.
Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Also on this site

Staff records

Staff pay

Manage absence and sickness

Content category

Employment and skills
Source URL
/content/alternatives-paying-statutory-sick-pay

Links
Contractual issues and dismissal in relation to sick pay and sickness

Overpayment of sick pay and how to deal with dismissals for long-term sickness absence.
Whether you pay only statutory sick pay (SSP) or operate an occupational sick pay scheme, you must detail your rules on sick pay in each employee's written statement of employment particulars or refer them to an accessible and separate document eg company handbook, which gives these details.

You must give a written statement to all employees who work for you for one month or more. Read more on the written statement.

See Labour Relations Agency (LRA) guidance on preparing a written statement of main terms and conditions of employment.

Precedent in overpayment of SSP

If you (mistakenly) pay more than the SSP rate over a period of time, employees could regard the payments as contractual through 'custom and practice'.

If you then try to reduce payments to the SSP rate, the employee could claim:

unlawful deduction of wages

breach of contract

constructive dismissal - although they would have to resign first

Contact HMRC for further advice on SSP - see Statutory Sick Pay and leave.

Long-term sickness and dismissal

An employee's inability to do their job because of long-term sick leave can be a potentially fair reason for dismissal.

However, in the event of an unfair dismissal complaint, an industrial tribunal will expect you to have acted reasonably by:

consulting the employee and finding out as much as possible about their condition and the likely timescale for their recovery

seeking medical advice from an Occupational Health Physician or GP

considering all the alternatives to dismissal, such as changing the employee's role or hours of work

following the statutory procedures in relation to dismissal

The tribunal will take into account your business' size when deciding whether a dismissal was reasonable.

See how to manage absence and sickness and find out more about dismissing employees.

You should also consider whether or not the employee is disabled under the Disability Discrimination Act 1995 when considering dismissal on the grounds of long-term sickness. See how to prevent discrimination and value diversity.
Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Actions

Sickness absence | HSENI guidance

Also on this site

When workers leave your employment

The employment contract

Staff pay

Content category

Employment and skills
Source URL
/content/contractual-issues-and-dismissal-relation-sick-pay-and-sickness

Links

Read more about Earnings-related qualification for statutory sick pay

What is statutory sick pay and who is entitled to it?

Understanding statutory sick pay

In this guide:

What is statutory sick pay and who is entitled to it?

Employers' responsibilities to pay statutory sick pay to eligible employees and where to get further information.
Statutory sick pay (SSP) provides a measure of earnings replacement for employees who are off work through illness. Employers must pay this to their employees who satisfy all the qualifying conditions.

You do not have to pay SSP to your employee if you pay wages or occupational (contractual) sick pay to your employee for the same days that they would be entitled to SSP if it is more than, or the same as, the current rate of SSP.

Qualifying conditions for SSP

You must pay SSP to your employee if they satisfy all of the following conditions.

They must:

have notified you of their sickness within your own time limits or, if you haven't informed them in advance of any time limits, no later than seven days after the first day of sickness

be employed by you and have done some work for you under their contract

be sick for four or more days in a row, including weekends and bank holidays - this is known as the period of incapacity for work (PIW)

have average weekly earnings equal to or more than the lower earnings limit for National Insurance contribution (NIC) purposes - read about earnings-related qualification for statutory sick pay

be an employed earner, ie have earnings on which you are liable to pay employer's Class 1 NICs, or would be liable to pay but for their age or level of earnings

Part-time, temporary, agency, or casual workers may also be entitled to SSP, if they satisfy all of the qualifying conditions for payment.

In any one PIW, SSP is payable to the individual up to a maximum of 28 weeks.

Read Statutory Sick Pay: Overview | GOV.UK guidance.

See Labour Relations Agency (LRA) advice on managing sickness absence.
Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Actions

HMRC help and support for employing people

HMRC YouTube videos to help with tax issues

Also on this site

Staff records

Staff pay

Manage absence and sickness

Content category

Employment and skills
Source URL
/content/what-statutory-sick-pay-and-who-entitled-it

Links
Earnings-related qualification for statutory sick pay

How eligibility for SSP depends on an employee's average weekly earnings during a specified period.
To qualify for statutory sick pay (SSP), an employee must have average weekly earnings (AWE) at or above the lower earnings limit (LEL) - £123 a week in the 2024-25 tax year - regardless of whether they are required to pay National Insurance contributions.

You should calculate AWE by using a set period of time (the relevant period) prior to the start of the employee's 'period of incapacity for work'. The period must be at least eight weeks long and is marked by two pay dates:

date one - the last normal pay date before the employee's first complete day of sickness

date two - the last normal pay date falling not less than eight weeks before the pay date above

The relevant period is calculated from the day after date two up to and including date one.

Calculating average earnings for weekly paid employees

If your employee is paid once a week or in multiples of a week, eg fortnightly or every four weeks:

add together the gross earnings in the relevant period, including any bonuses and commissions

divide the total by the number of weeks in the period

Calculating average earnings for monthly paid employees

The payment for monthly paid employees is calculated on the same basis as weekly paid employees:

Add together the gross earnings during the period.

Divide the total by the number of months in the period. If this is not a whole number of months, round to the nearest whole number.

Multiply by 12.

Divide by 52.

For details on how to calculate average earnings, read GOV.UK guidance on SSP.

Action if your employee is not entitled to SSP

If your employee is not entitled to SSP but has been incapable of work for at least four days in a row, you should advise them to claim employment and support allowance (ESA) from the Jobs & Benefits office. You should also give them form SSP1 as soon as possible to help support a claim for ESA.
Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Also on this site

Staff records

Staff pay

Manage absence and sickness

Content category

Employment and skills
Source URL
/content/earnings-related-qualification-statutory-sick-pay

Links
When to start and stop statutory sick pay

How to define when you start and stop payment of statutory sick pay.
Within limits, you can set up your own rules about how your employees inform you when they are sick.

You should only consider paying statutory sick pay (SSP) once an employee has been sick for at least four calendar days in a row. This period of sickness is known as a period of incapacity for work (PIW) and may include weekends and bank holidays.

Linking periods

If a PIW starts within eight weeks of the end of a previous PIW, the periods are linked and count as one period of sickness.

Waiting days

The first three qualifying days in a PIW are called waiting days (WDs). SSP is not payable for WDs. Where PIWs are linked, and all three WDs have been served in the first PIW, there will be no WDs in any later linked spells of sickness.

If all three WDs have not been served in the first PIW, any remaining WDs must be served at the beginning of the next linked PIW.

Qualifying days

These are the employee's contractual or normal working days unless other days have been agreed upon with the workforce. SSP is paid for each qualifying day after the waiting days.

Payment of SSP during a phased return to work

If the employee has previously been off sick and you have agreed to a phased return to work, you must consider payment of the employee's normal wages for days worked and SSP for days not worked in the normal working week.

Stopping payment of SSP

SSP usually stops once an employee returns to work for their regular number of days and/or hours. You should calculate if any SSP is still owing to them for previous days of sickness - pay any outstanding money on their next normal pay day.

Stop paying SSP if your employee:

is still off sick after SSP has been paid for 28 weeks

has had linked periods of sickness that have spanned a period of three years - even if you haven't paid a total of 28 weeks' worth of SSP

You also stop paying SSP to an employee if she starts receiving statutory maternity pay (SMP) - or maternity allowance (MA) if she doesn't qualify for SMP. The employee would start receiving SMP or MA if she either:

Has chosen to start receiving SMP or MA on a particular date which also happens to be when she would be due SSP.

Is off sick for a pregnancy-related illness within four weeks of the start of her expected week of childbirth or the date she has chosen for her SMP to begin, whichever is earlier. In these circumstances, she stops working and starts to receive SMP or MA automatically.

If an employee is not entitled to SMP or MA, and is not already receiving SSP, she will be disqualified from receiving SSP for a period of 18 weeks.

Issuing the SSP1 form

If you stop paying an employee SSP and they are still off sick, you should advise them to make a claim for employment and support allowance (ESA) from their local Jobs & Benefits office. You must complete form SSP1 and send it to the employee immediately. Form SSP1 is used to support a claim for ESA.

If you know in advance that an employee will be off sick for more than 28 weeks, you should send the SSP1 form to them up to six weeks before the end of this 28-week period so that they can claim ESA without delay.

For more information on making and stopping SSP payments, Read GOV.UK guidance on SSP.
Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Also on this site

Staff records

Staff pay

Manage absence and sickness

Content category

Employment and skills
Source URL
/content/when-start-and-stop-statutory-sick-pay

Links
Calculate statutory sick pay

Work out how much statutory sick pay to pay employees who qualify for it.

If your employee satisfies the qualifying conditions for statutory sick pay (SSP), you should work out how much SSP is due. You should then pay it on the same day that you would normally pay them their wages for the same period.

For the qualifying conditions, see what is statutory sick pay and who gets it?

SSP is paid at a daily rate. Only qualifying days (QDs) count for paying SSP. For more information on QDs, see when to start and stop statutory sick pay. Remember that you do not pay SSP for the first three QDs - the waiting days.

SSP calculator

You can work out the daily rate for your employee by dividing the weekly rate by the number of QDs in that week. For SSP purposes, the week always begins on a Sunday. In 2024-25, the weekly rate is £116.75 and applies from 6 April 2024 to 5 April 2025.

Calculate your employee's statutory sick pay.

It is worth noting that although the weekly rate is always the same, the fewer days your employee normally works, the higher the rate of SSP that is payable per QD, ie the daily rate for an employee working a three-day week will be higher than that of an employee working a five-day week.

Maximum SSP

The maximum entitlement is 28 weeks in each period - or series of linked periods - of incapacity to work.

You can calculate when you have paid 28 weeks' worth of SSP by keeping a running total of all SSP paid in a period or linked periods of sickness. You can use the SSP2 form to record periods of sickness and payment of SSP.

Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Actions

HMRC webinars and videos on SSP

Also on this site

Staff records

Staff pay

Manage absence and sickness

Content category

Employment and skills

Source URL
/content/calculate-statutory-sick-pay

Links
Statutory sick pay forms and record-keeping

Employer forms for statutory sick pay including self-certification forms and keeping records of sickness absence.
There is no longer a need for employers to keep records of statutory sick pay (SSP) that has been paid. However, it is advisable to keep records of employee sickness absences.

Keeping records of sickness absence

You can choose how you keep records of your employees' sickness absence. HM Revenue & Customs (HMRC) may need to see these records if there is a dispute over payment of SSP.

The employer must ensure that retention and storage of such records are compliant with both data protection and GDPR. See staff records: your data protection obligations.

SSP record sheet

You can use the record sheet for SSP form (SSP2) to record details of an employee's sickness absences. You don't have to use this form, but it will help you keep accurate records which will ensure that you pay the correct amount of SSP.

Self certification form

The employee's statement of sickness form or self-certification form (SC2) is for employees to self-certify themselves as sick for the first seven days of sickness for SSP purposes. You can use your own self-certificate if you prefer.

Employee not entitlement to SSP

You must give the employee not entitled to SSP form (SSP1) to your employee to tell them why they cannot get SSP from you. Use and retain a copy of form SSP1 - or your own equivalent - when your employee has had the maximum amount of SSP and needs to claim Employment and Support Allowance. Fill in this form and send it to your employee if either:

they have been sick for four days in a row and are not entitled to SSP from you

their entitlement to SSP stops but they are still sick

Using HMRC's downloadable calculators

A set of HMRC's Basic PAYE Tools is available to download straight to your computer. In addition to calculators for SSP and other statutory payments, the tools include:

an employer database on which you can record your employees' details

a P11 calculator that will work out and record your employees' tax, National Insurance contributions, and student loan deductions every pay day with a linked P32 Employment Payment record that works out what you need to pay HMRC

interactive forms such as P11D working sheets

a Learning Zone - including interactive learning material on SSP
Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Actions

Statutory Sick Pay (SSP): employer guide | GOV.UK

Also on this site

Staff records

Staff pay

Manage absence and sickness

Content category

Employment and skills
Source URL
/content/statutory-sick-pay-forms-and-record-keeping

Links
Alternatives to paying statutory sick pay

What occupational sick pay schemes must offer.
You can opt out of the statutory sick pay (SSP) scheme if you have an occupational sick pay scheme that offers employees daily rates that are the same or better than SSP.

However, employees still have an underlying entitlement to SSP for the first 28 weeks in a period of incapacity for work (PIW).

Deciding on the terms of an occupational sick pay (OSP) scheme

A scheme run by an employer is usually known as an OSP scheme.

As an employer, you may wish to pay employees more than the statutory minimum. In this case, you will need to decide on the terms and conditions of the scheme.

It is up to you to decide whether or not you want your OSP scheme to be contractual. If you do make it contractual, you should include the details in each employee's contract and/or the company handbook.

However, even where there are no details of this in the employee's contract/company handbook, and you make enhanced payments over a period of time, the employee could regard this entitlement as contractual through custom and practice.

See Labour Relations Agency (LRA) guidance on preparing a written statement of main terms and conditions of employment.

What you need to do

With any OSP scheme, you should:

decide if either all employees qualify or only those with a minimum period of service - ensure any indirect discrimination can be objectively justified

decide on the maximum rate of OSP you will allow - many employers pay full basic pay for a certain period of time - you can 'top up' SSP to whatever amount you wish to pay

decide how long your highest level of pay will last, before either stopping or reducing these payments, eg from full pay to half pay

ensure that OSP does not exceed normal pay - it must also not be less than SSP - any payment can be inclusive of SSP

pay SSP during any periods that OSP is not payable during the first 28 weeks in a PIW

issue form SPP1 if a person has been sick for 28 weeks - even if OSP continues to be paid

Record-keeping under an OSP scheme

There is no longer a need to keep records of SSP paid but records that could be required by HMRC are absences from work. You can choose how to keep these records. HMRC may need to see these if there is a dispute over payment.

You will also need to keep sufficient records to complete form SSP1, so that your employee may claim employment and support allowance if necessary. This might happen if they had received their maximum 28 weeks' SSP or run out of their entitlement to OSP and were not entitled to SSP from you.
Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Also on this site

Staff records

Staff pay

Manage absence and sickness

Content category

Employment and skills
Source URL
/content/alternatives-paying-statutory-sick-pay

Links
Contractual issues and dismissal in relation to sick pay and sickness

Overpayment of sick pay and how to deal with dismissals for long-term sickness absence.
Whether you pay only statutory sick pay (SSP) or operate an occupational sick pay scheme, you must detail your rules on sick pay in each employee's written statement of employment particulars or refer them to an accessible and separate document eg company handbook, which gives these details.

You must give a written statement to all employees who work for you for one month or more. Read more on the written statement.

See Labour Relations Agency (LRA) guidance on preparing a written statement of main terms and conditions of employment.

Precedent in overpayment of SSP

If you (mistakenly) pay more than the SSP rate over a period of time, employees could regard the payments as contractual through 'custom and practice'.

If you then try to reduce payments to the SSP rate, the employee could claim:

unlawful deduction of wages

breach of contract

constructive dismissal - although they would have to resign first

Contact HMRC for further advice on SSP - see Statutory Sick Pay and leave.

Long-term sickness and dismissal

An employee's inability to do their job because of long-term sick leave can be a potentially fair reason for dismissal.

However, in the event of an unfair dismissal complaint, an industrial tribunal will expect you to have acted reasonably by:

consulting the employee and finding out as much as possible about their condition and the likely timescale for their recovery

seeking medical advice from an Occupational Health Physician or GP

considering all the alternatives to dismissal, such as changing the employee's role or hours of work

following the statutory procedures in relation to dismissal

The tribunal will take into account your business' size when deciding whether a dismissal was reasonable.

See how to manage absence and sickness and find out more about dismissing employees.

You should also consider whether or not the employee is disabled under the Disability Discrimination Act 1995 when considering dismissal on the grounds of long-term sickness. See how to prevent discrimination and value diversity.
Developed with

Labour Relations Agency

Help

HMRC Employer Helpline

Actions

Sickness absence | HSENI guidance

Also on this site

When workers leave your employment

The employment contract

Staff pay

Content category

Employment and skills
Source URL
/content/contractual-issues-and-dismissal-relation-sick-pay-and-sickness

Links

Read more about What is statutory sick pay and who is entitled to it?

Causes of high staff turnover

Control staff turnover

In this guide:

Causes of high staff turnover

The main factors that contribute to a high employee turnover and how to identify them in your business.

When you run a business, it is good practice to be aware of the factors that commonly lead to high staff turnover rates, so that you can take steps to reduce them before they escalate.

Pay is rarely the only reason why people leave their place of employment, although low pay levels are often a disincentive to stay in a job.

Consider how your business achieves in the following areas.

Staff recruitment and induction

Recruiting the right staff

Are you getting the recruitment process right? Does your recruitment process support you in attracting and finding employees that are suitable for advertised roles and fit in with your organisational values and culture? See advertising a job and interviewing candidates.

Staff induction

Do you have a formal onboarding process for new employees? How do you let new staff know where things are, what is expected of them, and what they and their colleagues are supposed to do? An effective induction programme will familiarise new staff with the organisational values and culture from day one and make them feel part of the team. See advantages of job inductions.

Employee value proposition

Do you have a high staff turnover and struggle to attract new talent? You should look at developing and promoting an employee value proposition that outlines everything you offer as an employer to your employees in return for their valued commitment and contribution to the business. This can include salary, benefits, work-life balance, working environment, company culture, and development opportunities. Clearly outlining your employee value proposition can be a very powerful way to set you apart from other employers and help you to effectively retain staff and attract top talent.

Contracts, pay and working environment

Employment contracts

Do the terms and conditions of your contracts encourage staff loyalty? See the employment contract.

Competitive pay rates

Are your pay rates in line with your industry and enable you to be competitive in retaining and attracting employees? Are your pay rates outlined in a fair and transparent system? See set the right pay rates.

Staff engagement

Do you encourage staff feedback or ideas? Engaging employees and asking for their opinions and advice makes them feel valued and invested in the success of your business. See staff feedback, ideas and forums.

Incentives and benefits

Are the incentives and benefits you offer relevant and attractive to your staff? Can staff choose the ones they want? See implement staff incentive schemes.

Work-life balance

Introducing appropriate and efficient employment practices to help employees achieve a better work-life balance brings several tangible benefits to your business. Taking steps to support and encourage staff to have a healthy work-life balance such as implementing a flexible working policy can be effective in retaining and attracting staff. See promote healthy work-life balance in your business.

Working location

Is your workplace environment safe and conducive to supporting staff to do their jobs easily and effectively? Are noise, lighting, and ventilation levels acceptable especially with staff that have a disability? Could staff work more effectively from work or a remote location? Would a hybrid working model lead to happier staff and increased productivity? See hybrid working: employer guidance.

Training and staff development

Motivation

How supportive and encouraging is your business to its employees? See what motivates employees.

Organisational culture

Do you actively promote a positive and inclusive business culture? Do your business values contribute to an organisational culture that staff can buy into and leads to positive business performance? See business values.

Training, skills, and development opportunities

Are you matching people to the right job roles? Are you making the best use of your employee's skills, experience, and competencies? Are you investing in your staff by giving them the time and opportunities to learn new skills? Is there the potential to provide appropriate promotional opportunities and mentoring or coaching to support this? See staff training and use mentoring to improve staff performance.

Performance reviews

How often do you give your staff the opportunity to discuss their performance and get feedback on how they are doing and identify areas where they could improve? Setting measurable goals or key performance indicators clearly sets out what staff need to deliver on how their performance will be assessment by you. This helps staff to improve their productivity and performance. This also helps them to see how their efforts contribute to the success of your business. See agreeing performance objectives with staff.

Grievance procedures

Do your staff know how to register a grievance and are they making use of the procedure? See handling grievances.

Teamwork

Do you encourage common goals and discourage unhealthy individual rivalries? See advantages of effective teamwork.

Help

LRA Workplace Information Service

Actions

Employee turnover and retention | CIPD guidance

Also on this site

Set the right pay rates

Flexible working: the law and best practice

Support employee work-life balance

Implement staff incentive schemes

Content category

Employment and skills

Source URL
/content/causes-high-staff-turnover

Links
Calculate and monitor staff turnover

How to calculate, benchmark, and examine the causes and patterns of employee turnover.
Regular monitoring of staff turnover can show you why it is happening and enable you to control and forecast it.

Staff turnover calculation

You should measure your current staff turnover in percentage terms, following this simple two-step calculation:

Add together the number of staff working at the beginning of the time period and the number of staff working at the end of the period and divide by two. This will give you your average number of staff working within this time period - you will need this number for the next stage.

Work out the number of employees leaving over the time period, multiply by 100, and then divide by the average number of people working in that same period.

This staff turnover calculation formula will give you a percentage for your business, known as the separation rate that you can compare over time. You can also use this indicator to see how your business compares with staff turnover averages in your business industry for benchmarking purposes.

Employee stability index

To measure how experienced employees are being retained, you can calculate the employee stability index - number of workers with one year's service or more, divided by the number of workers with less than 12 months' service, multiplied by 100 = stability index percentage rate.

Employee turnover patterns

The characteristic pattern of employee turnover is high for new starters, then decreases the longer an employee works for you. This pattern will vary in any single organisation and can be shown graphically. It is known as the survival curve and can be extremely helpful in understanding the nature of employee turnover, but must always be used in conjunction with the employee turnover rate.

To create the survival curve, you must plot the number of leavers against the period for which they were working.

Examine the causes of staff turnover

To make a meaningful assessment of your current business position, try to identify the causes of employee turnover:

Consult regularly with staff

It is often effective to have consultations with individuals or groups of staff. Engaging with staff will help root out any underlying problems and causes of dissatisfaction within your business.

Exit interviews

Exit interviews are carried out by many businesses, can reveal common reasons why staff leave your employment and highlight any emerging patterns. See when an employee resigns.

Staff surveys

Regular staff surveys can often indicate general satisfaction levels, but remember to address any issues arising so that they know you take their views seriously. See staff feedback, ideas and forums.

Evaluate recruitment and selection processes

Analyse your recruitment and selection procedures to see if you can identify expectations or potential problems at an early stage. Alternatively, you may need to make the business' expectations clearer at the recruitment stage. See taking on staff.
Help

LRA Workplace Information Service

Actions

Employee retention and turnover | CIPD guidance

Also on this site

Staff motivation

Advertise a job vacancy

When workers leave your employment

Manage absence and sickness

Content category

Employment and skills
Source URL
/content/calculate-and-monitor-staff-turnover

Links
Cost of staff turnover

Financial and other costs that may arise when you have a large turnover of workers leaving your employment.
There are a number of costs associated with staff leaving your employment. The obvious ones are time and money to replace staff and cover workloads, but there are also some hidden costs of high staff turnover.

Staff turnover: financial and resource costs

When a member of staff leaves your employment, there may be costs associated with:

leaver administration tasks, eg exit interviews, and payroll changes

loss of experienced or skilled members of staff

covering a vacancy until it's filled, eg through the use of temporary staff or overtime payments

advertising for a replacement or using a recruitment agency

dealing with recruitment and selection tasks, eg checking applications, and organising and attending interviews

the induction and getting new recruits started

training and development of new staff

Staff turnover: hidden costs

High staff turnover may result in the following effects across your business:

other staff expressing a wish to leave

higher levels of stress-related absence as your remaining staff may need to take on the burden of additional workloads

missed deadlines or interruptions to workflow

a reduction in productivity, levels of customer service, or standards of quality

a drop in staff morale, particularly if the leaver was popular and good at their job

damage to the business reputation that can negatively impact your effectiveness in attracting future staff

Rising employee turnover often develops into a vicious cycle as low morale causes more workers to leave, which in turn reduces the morale of those who remain, and so on. Taking practical steps to reduce staff turnover will help your business avoid the costs associated with high employee turnover.
Actions

Employee retention and turnover | CIPD guidance

Also on this site

Staff motivation

Advertise a job vacancy

How to deal with stress

Job offers and staff inductions

Content category

Employment and skills
Source URL
/content/cost-staff-turnover

Links
Reduce staff turnover

How employers can take steps to reduce high staff turnover of new starters and long-term employees.
Reducing staff turnover helps to minimise the costs and negative impact of unwanted and unplanned resignations. You can help limit employee turnover via staff consultation, succession planning, performance management and staff incentivisation.

How to reduce staff turnover of new starters

You may find that your business experiences high staff turnover amongst new recruits. If this is the case you can reduce this by addressing the following:

Recruitment and selection process

ensure job adverts give an accurate description of the job role

selection tests can help identify suitable applicants

don't try to appoint overqualified staff as they are likely to become bored and leave

don't be rushed into appointing anyone just to fill the role

see taking on staff

Staff induction

develop an induction programme that gives a well-rounded feeling for the business as a whole

get staff members to feed into your induction programme - ask them what they would find useful to know if they were new to the business

encourage staff from different areas of the business to participate in the induction programme eg as part of the induction programme spending some time with new recruits explaining their team's function within the business

invite questions from new recruits during their induction and let them know if they have any concerns or something they are unsure about that they can come to you or any member of staff for help at any time

see induction programme: what to include

Job training

establish a training schedule that gradually introduces the new recruit to various tasks their role will require - don't overwhelm them with everything at once

use a buddy system where a new recruit is partnered with an existing member of staff - this can be useful for on the job learning

the line manager should monitor the new recruit's progress

see staff training

How to reduce staff turnover of longer-term employees

If your business suffers from the loss of employees that have been with you for a while then you may need to look at wider issues such as business culture, business organisational structure or management style. Engaged employees are less likely to leave an organisation. Some of the following methods may help reduce staff turnover in your business:

Management support

Staff that are supported by you will feel valued and motivated within their job roles.

Leadership

Show clear leadership so employees know what direction the business is going in and let staff know how they can contribute.

Business culture

Look to develop a culture within your business that can help foster a happy and productive workforce such as building trust, improving communication, valuing staff feedback and providing opportunities for staff development.

Share control

Give staff the power to make some decisions themselves rather than imposing control and restrictions. This can also help build trust and staff engagement.

Thank your staff

Ensure you thank your staff for a job well done to let them know they are valued and appreciated.

Staff feedback

Establish employee voice in your business enabling all staff to highlight concerns or suggest improvements with regular opportunities to feedback to senior management. See staff feedback, ideas and forums.

Pay rates

Check that your pay rates are fair and competitive, see set the right pay rates.

Equal opportunities

Make sure that opportunities for training, incentives and promotion are open to all staff.

Diversity

Encouraging diversity in your business can have a positive effect highlighting that differences are embraced and welcomed and that no one is discriminated against.

Communication

Clear communication and consultation within the business engages staff, reassures them and prevents suspicion and rumours.

Discipline and grievance

You should have proper disciplinary and grievance procedures in place and you should apply them properly and effectively.

Performance management

Link employee's personal objectives with overall organisational goals so that staff know how their role is important to the overall success of the business, see managing staff performance.

Training and development opportunities

Give employees control over their personal development and encourage ways in which they can develop eg through training or experiencing other roles within the business.

Job role diversity

Ensure the tasks your staff carry on a daily basis aren't mundane and repetitive. By introducing a variety of tasks you can maintain staff interest and motivation.

Working conditions

Do you provide suitable working conditions such as work spaces, kitchen facilities, toilets, rest areas?

Flexibility

Is there a need to reorganise working patterns, offer flexible working, job sharing or working from home?

Staff incentives

You may want to consider different incentives for staff including individual or team productivity bonuses, performance-related pay, non-financial incentives, eg healthcare provision, flexible working, additional leave, attractive pension arrangements. See employee value proposition.
Help

LRA Workplace Information Service

Actions

Employee retention and turnover | CIPD guidance

Also on this site

Staff feedback, ideas and forums

Lead and motivate your staff

Support employee work-life balance

Implement staff incentive schemes

Content category

Employment and skills
Source URL
/content/reduce-staff-turnover

Links
Reduce staff turnover by developing employee skills

How training and development helps to retain staff and skills by reducing rates of staff turnover.

There is a strong business case for developing your staff as it will help ensure that your business runs smoothly and with consistently good results. You should also be able to reduce high rates of staff turnover by training your managers to lead and motivate your staff.

Invest in staff training and development

Although helping staff develop their existing skills and learn new ones can cost your business time and money, training and development is crucial to improving your business' performance and can actually help minimise high rates of staff turnover.

This is especially the case if your staff see that what they are learning is relevant to them and the business, and they can readily put their new knowledge into practice.

It's important that your staff training and development policy is fair and clearly understood by your staff as early as possible in their employment. If they know that you will spend time training and developing them, they will feel valued and are more likely to continue working for you.

Training and development can be delivered by experienced workers through on-the-job training or from external sources such as training organisations or consultants. See staff training.

Leadership and people management

A positive business culture can influence the retention of staff and is often defined through leadership. You can foster leadership skills in your staff that will promote a culture they want to belong to.

People who feel good about their development and contribution to the business are likely to reflect this in their performance and how they interact with colleagues and customers. They help drive the business forward and develop other workers.

Finally, remember that good people management helps retain valuable staff. A poor relationship with a manager, who may be skilled in other areas, is one of the main reasons why workers decide to leave. Therefore, you may want to train your managers to coach and supervise other people.

See using mentoring to increase employee performance.

Help

LRA Workplace Information Service

Actions

Employee retention and turnover | CIPD guidance

Also on this site

Use mentoring to improve staff performance

Lead and motivate your staff

Staff training

Employer support programmes

Content category

Employment and skills

Source URL
/content/reduce-staff-turnover-developing-employee-skills

Links
Control staff turnover: checklist

Simple checklist to help employers identify and take action to reduce staff turnover rates.
Staff turnover can help introduce fresh ideas and skills into your business, but too high a level of employee turnover can be a sign of underlying problems that can ultimately have a negative effect on business performance.

You will be better prepared for dealing with leavers if you understand why employees leave, and if you structure a programme to manage staff effectively from the time they are recruited. Make sure you:

keep records of staff leavers

monitor your rate of staff turnover at regular intervals

benchmark your staff turnover rate against businesses in similar industries

identify and address issues facing new recruits and long-term workers

integrate new staff with an effective induction process

analyse your business culture

evaluate and refine your recruitment and selection process

review and benchmark your pay and benefits policy

assess your training, development and promotion policy

refine your appraisal process and management of individual/team performance

review your work-life balance arrangements - are your workers able to manage both their home and work commitments?

assess the management style of your business

formulate contingency plans for coping with leavers

create and regularly review succession plans

examine your staff and your managers' leadership styles

See reduce staff turnover.

Exit interviews and staff attitude surveys

A common way of discovering why employees leave or how current employees feel about your business is through exit interviews and staff attitude surveys.

When an employee leaves your employment, use an exit interview to ask them their reasons for leaving and what they think the positive and negative things are about your business. It may be difficult for an employee to express their honest reasons or opinions, but you can help them to be open by using some simple strategies, such as:

interview away from work space

do not use the employee's direct manager

guarantee confidentiality

explain why the interview is needed

assure the employee answers will not affect future references

You should objectively review any information you gather from the exit interview and use it as a foundation for making improvements to your business. This, in turn, could strengthen your business' name, helping to retain existing staff and attracting others to your business.

For an attitude survey, you can include all employees or select a sample for more in-depth interviews. If you use a questionnaire, make sure it is well-designed. Another method to consider is a confidential focus group supported by someone outside your business.

Make sure the survey is freely communicated to employees and acted on, otherwise, it may well be counterproductive.
Actions

Employee retention and turnover | CIPD guidance

Also on this site

Employee engagement

Staff feedback, ideas and forums

Support employee work-life balance

Managing staff performance

Content category

Employment and skills
Source URL
/content/control-staff-turnover-checklist

Links

Read more about Causes of high staff turnover

Identify work-life balance problems

Support employee work-life balance

In this guide:

Advantages of improved work-life balance

List of benefits that promoting a healthy work-life balance brings to your business and your staff.
Introducing employment policies, promoting a positive organisational culture, and offering practical support that encourages a healthier work-life balance for your employees can bring real benefits to your organisation and your staff.

Work-life balance advantages for employees

A good work-life balance can enable staff to feel more in control of their working life and lead to:

increased productivity

better time management

improved personal physical and mental health and wellbeing

reduction in sickness and absenteeism

a happier and less stressed workforce

staff feeling that their personal and/or family life is important to their employer

more valued and engaged staff

greater employee loyalty, commitment, and motivation

staff less likely to leave your employment

opportunities for career and personal growth

Work-life balance advantages for businesses

The benefits of a work-life balance initiative are not confined to just the workforce. Work-life policies and flexible working practices can also benefit your business as you can:

lower levels of absence, sickness, and stress

motivate and energise staff

identify more efficient working processes and practices

increase your business's productivity, outputs, and competitive advantage

boost staff morale

improve customer service

maximise flexibility to help you react to changing market conditions and meet customer demands more effectively - for example, shift work, part-time work, and flexitime can help you open longer without making your employees work longer hours

better meet seasonal peaks and troughs in your business

lead to a more committed and positive attitude in your staff

reduce staff turnover and therefore minimise recruitment costs - see control staff turnover

become recognised as a business that people want to work for and therefore help you attract top talent

See how Adventures Day Nursery introduced flexible and family-focused workplace policies.
Actions

Flexible working: the right to request and duty to consider | LRA guidance

Flexible working | Acas guidance

Also on this site

Flexible working: the law and best practice

Hours, rest breaks and the working week

Control staff turnover

Introducing flexible and family-focused workplace policies - Adventures Day Nursery

Content category

Employment and skills
Source URL
/content/advantages-improved-work-life-balance

Links
Identify work-life balance problems

Signs that can tell employers that their staff are suffering from a poor work-life balance.
As an employer, you might find it hard to judge whether you are supporting your employees' need to balance their work commitments with their home life. However, there are signs that employers can look out for that may indicate that staff have an unhealthy work-life balance.

How to recognise poor employee work-life balance

Tell-tale signs of poor work-life balance in your employees include:

deadlines not being met

targets or goals not being achieved

untidy workspaces

frequency of mistakes increasing

poor quality work

increase in customer complaints

decrease in productivity

staff not taking holidays or sufficient rest breaks

staff appearing exhausted and withdrawn

employees doing a lot of overtime

employees taking a lot of time off to deal with 'emergencies' involving children or other dependants

high levels of employee stress

increase in staff conflict

high rates of absenteeism or staff sickness

high levels of staff turnover

If you recognise a number of these symptoms affecting your staff and your business you may need to take action to create a healthy work-life balance in your workplace.
Actions

Flexible working: the right to request and duty to consider | LRA guidance

Flexible working | Acas guidance

Also on this site

Flexible working: the law and best practice

How to deal with stress

Manage absence and sickness

Introducing flexible and family-focused workplace policies - Adventures Day Nursery

Content category

Employment and skills
Source URL
/content/identify-work-life-balance-problems

Links
Create a healthy work-life balance

Practical ways that employers could improve the work-life balance of their staff.

There are no hard-and-fast rules on what constitutes the ideal healthy work-life balance. The measure of what is acceptable in your organisation will depend on the operational requirements of your business and the needs of your employees.

How to support staff with a healthy work-life balance

Set clear working hours

You should ensure that all employees understand what the working hours are. If you employ flexibility in working hours outline how this should be managed and ensure that staff don't exceed the appropriate hours per week.

Clearly define job roles

When you clearly outline what goals or tasks your staff must complete and when these must be delivered, you'll have staff that know exactly what they must do and when in their job. Use the SMART system to set goals that are specific, measurable, achievable, realistic, and time-based. This gives staff a clear understanding of what they must deliver to achieve their targets. SMART targets can also contribute to employees maximising their working time and cutting out wasted hours on trivial or low-value tasks.

Make working processes more efficient

Examine the process staff go through to complete a task. Is the process over-complicated? Is there a more efficient way to complete the task to the same level of quality but with less time commitment? This will help you find where there may be time wastage within processes and help you streamline tasks.

Set an example for staff

Employers should set an example to their staff by taking their annual leave allowance, setting aside appropriate time for rest breaks, and switching off completely from emails and calls when outside of working hours. You could also introduce your kids or pets to staff during video calls. Staff will then take their lead from you to better manage their work-life balance.

Recognise and reward a job well done

By simply recognising and rewarding employees for a job well done your staff will feel appreciated. Outline to staff how their individual and team efforts contribute to the success of the business.

Communicate effectively

The only true way to find out if staff are struggling to manage their time is if you develop and nurture a culture that encourages open two-way communication from managers to staff and staff to managers. In a positive workplace culture that has open communication staff are more likely to flag issues at an early stage before they escalate.

Provide support and training

Employers and managers should provide staff with the equipment, training, and managerial support to help them carry out their jobs to the best of their ability. Consider providing staff with time management training to develop the skills to manage their time effectively. Ensure your managers receive the training they need to spot symptoms of poor work-life balance amongst staff and have the skills to address and manage this appropriately.

Consider flexible working options

Working arrangements that are more flexible can benefit your staff and your business. With flexible working, employees are able to manage the time and/or location of their work to fit in with other aspects of their lives. This can lead to an increased sense of trust and autonomy that can boost productivity. There are many types of flexible working that you could consider introducing such as flexi-time, hybrid working, part-time working, or job sharing.

All eligible employees have the right to request flexible working. Flexible working can also support neurodiversity amongst your workforce as people with different styles of working may find that flexibility to work at times and locations that suit them will help them be more productive.

Promote staff health and wellbeing

Employers should promote the physical, emotional, and mental wellbeing of their staff. Offer employees the opportunity to develop and shine their life skills by hosting staff wellbeing events or talks on topics such as healthy eating, time management, stress management, or financial planning. Encourage staff to escape their workspace completely when taking their breaks and suggest incorporating some form of exercise as part of that break.

Develop a culture that respects work-life balance

Develop and maintain an organisational culture that promotes a healthy work-life balance. Make it clear that emails sent on off-hours don't require immediate attention or a response. We all spend many hours each week working so take steps to make the work environment an enjoyable one. Allow staff to focus on tasks they enjoy doing and provide opportunities for staff to take on different roles. Providing a wide variety of tasks and roles can maximise staff interest and focus.

You could also have monthly informal catch-ups with staff where employees grab a cup of tea or coffee and chat with each other about non-work-related topics. In addition, you could host annual summer barbeques or Christmas fairs where staff can bring their families along.

See seven tips to improve work-life balance for employees.

Actions

Flexible working: the right to request and duty to consider | LRA guidance

Flexible working | Acas guidance

Also on this site

Flexible working: the law and best practice

Parental leave and time off for dependants

Allowing time off work

Introducing flexible and family-focused workplace policies - Adventures Day Nursery

Content category

Employment and skills

Source URL
/content/create-healthy-work-life-balance

Links
Work-life balance: Implement a flexible working policy

How employers can implement a flexible working policy to help promote a healthy work-life balance for their staff - includes a flexible working policy template.
Achieving a healthy work-life balance is not just a one-off exercise, but a long-term commitment to operating your business in a way that respects your employees' responsibilities outside of their work commitments. Workplace policies designed to help your staff achieve and maintain a healthy work-life balance need to be tailored to your business and your employees.

Outline workplace flexible working rules

Drawing up a clear workplace policy on flexible working can have a positive impact on management by making it clear the circumstances in which a request for flexible working will be considered and approved. This saves management time and means that inconsistencies in management decisions are removed. It can also help employees by explaining their rights around flexible working.

Develop a flexible working policy

When developing a flexible working policy for your business you should take the following into consideration:

Determine your core business requirements first to clearly outline what you want to achieve from your flexible working policy.

Ask all staff what they want from a flexible working policy and how it can be used to support employees with their jobs.

Consult with trade unions/staff associations on any flexible working proposals.

Consult all employees affected and agree upon selected flexible working policies, eg flexi-time, hybrid working, or job sharing.

Decide which of your employees will be covered by the scheme and ensure the flexible working scheme does not breach employees' rights or unfairly discriminate. The Labour Relations Agency (LRA) may be able to advise you on this. You can contact the LRA's Workplace Information Service on Tel 03300 555 300. See also flexible working: the right to request and duty to consider.

Draw up written procedures for implementation and evaluation of your flexible working policies, including regular reassessment.

Ensure support from senior management for flexible working.

Take the lead by demonstrating a commitment to work-life balance.

Explain any changes to staff and keep them updated on any regulatory changes, eg the right for parents to request flexible working.

Read more on flexible working: the law and best practice.

Flexible working policy template

You can use a template to get you started with writing a flexible working policy that fits your organisation:

The Equality Commission for Northern Ireland has developed a model policy and procedure template for employers on handling requests for flexible working (PDF, 1.07MB).

Acas flexible working policy template.

Flexible working request templates

Acas flexible request acknowledgement letter template.

Acas flexible working request outcome letter request.

Trailling flexible working

You may find it helpful to conduct a trial or pilot the flexible working scheme to see how effective and workable your new workplace policies are. Change the programme if this proves necessary and keep track of the progress of your business and your employees' work/life balance.

Measure the success of your flexible working policy

You can measure the success of your flexible working policies by gauging staff feedback and tracking employee performance, changes in the rate of absenteeism, rate of staff turnover and customer satisfaction. See staff feedback, ideas and forums, control staff turnover and how to manage absence and sickness.
Help

LRA Workplace Information Service

Actions

Flexible working | LRA guidance

Flexible working | Acas guidance

Also on this site

Flexible working: the law and best practice

Set up employment policies for your business

Introducing flexible and family-focused workplace policies - Adventures Day Nursery

Content category

Employment and skills
Source URL
/content/work-life-balance-implement-flexible-working-policy

Links
Seven tips to improve work-life balance for employees

Practical tips to help employers encourage a work-life balance amongst their staff.

A healthy work-life balance can lead to happier staff who are more energised and focused on doing their best work. A healthy work-life balance helps to increase productivity and staff retention, especially when your workers feel their employer also values their life outside of work.

Tips to encourage a healthy work-life balance for your staff

Here are seven practical steps employers can take to develop a workplace that encourages a healthy work-life balance for all their employees.

1. Develop an inclusive workplace

By developing a workplace culture that respects differences and values people, you'll have staff who bring their whole selves to work. This approach gives employees an environment where they feel comfortable to talk about life outside work. It will help employers understand what is important to their staff outside of work so they can support them with family commitments, hobbies, and other interests. See diversity, equality, and inclusion in the workplace.

2. Set realistic goals

Ensure staff know their targets and support them to achieve these. Set goals using the SMART system that makes targets specific, measurable, achievable, realistic, and time-based. Review employee performance regularly, including discussions to address potential problems, if they exist, so they can dealt with early. See agreeing performance objectives with staff.

3. Have regular conversations with employees

Encourage your employees to regularly meet with their line manager to discuss their progress, workloads, and challenges. These meetings can help to manage people and resources more effectively. It will also highlight potential issues such as burnout or conflict before challenges escalate. You could also provide staff with guidance or training on effective time management and prioritising tasks to help boost efficiency. See engaging with staff.

4. Explore flexible working options

Consider the benefits of flexible working if it helps your staff manage their work and home life commitments more effectively. Consider the various types of flexible working, such as remote or hybrid working, flexi-time, job sharing, and part-time working, to determine what benefits your business and your staff.

5. Holidays

You should ensure staff take their allocation of annual leave. Instruct staff to switch off from work when on leave by ensuring they don’t bring work phones or laptops on holiday. Employers can set a good example to their staff by taking their total allocation of holidays each year and assigning someone to manage things when they are on leave. See know how much holiday to give your staff.

6. Encourage regular breaks

Encourage staff to take regular breaks. Working for long periods on a single task can be tiring. Support employees in incorporating exercise into their breaks, especially if their job requires them to sit for long periods. Activity can help boost staff energy levels and increase productivity. See hours, rest breaks and the working week

7. Make work enjoyable

We all spend many hours each day working. So, with so much time invested in our job, employers should try to make it as enjoyable as possible for everyone. Encourage staff engagement and feedback to generate ideas on how you could make work and the workplace more fun. Identify opportunities for individuals and different teams to connect through work projects. You could also consider regular staff social events, external health and wellbeing talks, or charity fundraisers. See staff feedback, ideas, and forums.

For further details, see create a healthy work-life balance.

Also on this site

Employee engagement

Flexible working: the law and best practice

Employees working from home

Occupational health and welfare

Content category

Employment and skills

Source URL
/content/seven-tips-improve-work-life-balance-employees

Links
Support employee work-life balance

Introducing flexible and family-focused workplace policies - Adventures Day Nursery

How Adventures Day Nursery in Belfast has implemented family-friendly initiatives in the workplace.

Adventures Day Nursery is a private children's nursery in Belfast. The business opened in 2006 and since then has grown to employ over 25 full-time and part-time staff.

Maria McDonagh, Manager at Adventures Day Nursery, explains how they introduced family-friendly initiatives to help and support their employees.

Prioritise your policies

"During the last five years, we have introduced workplace initiatives to ensure our staff have the best possible work-life balance. We encourage employees to suggest workplace schemes that will benefit them.

Our challenge has been to implement rewarding initiatives that are low-cost. For example, we offer job-sharing and have implemented support so that pregnant employees have the option to transfer to lighter duties and shorter shifts. We also have an open-door policy so that management are available to staff at all times.

We have introduced initiatives to reduce stress and offer staff support on a personal level. We ensure we have adequate cover when employees need to take time off work at short notice. To help reduce financial pressures for our staff we enable them, if needed, to receive part of their salary in the middle of the month rather than having to wait until payday.

Our 'special leave' policy allows staff paid time off during a bereavement or family celebration. Employees may also take unpaid leave when needed. We also have a 'sunshine hours' policy - this allows staff to finish shifts early on a rotational basis whenever the weather is good."

Consult and communicate with staff

"A big challenge we have faced in implementing family-friendly initiatives has come from ensuring that our policies are fair to all our staff. Not all of our employees have dependent children, so we have made sure to have other initiatives that benefit and appeal to all workers.

Our staff are always involved in helping to create new initiatives. Schemes are proposed through our staff suggestion scheme, and at the monthly one-to-one meetings.

The rules for each initiative are discussed and agreed upon with all staff to ensure a high degree of fairness across all policies.

Also as a service provider, we must ensure our staff initiatives do not negatively affect the quality of service we provide to our customers. We minimise business risks by creating a supportive environment, where staff are happy to assist and support each other.

All staff are made aware of workplace initiatives at their induction programme, their monthly meetings, and through the monthly staff newsletters."

Review and update your policies

"We regularly review our policies to ensure that we are compliant with legislation. As the nursery manager, I attend seminars and conferences to ensure we maintain our legal responsibilities."

Measure success

"We use questionnaires and one-to-one meetings to get feedback from staff. These help us to identify the initiatives that have benefited the organisation. The measures we evaluate against the schemes include improved morale in the business, lowered sickness and absence rates, low staff turnover, and customer satisfaction.

We have also won awards for our commitment to supporting our staff, and for the service, we offer our customers."

Also on this site

Create a healthy work-life balance

Work-life balance: Implement a flexible working policy

Parental leave and time off for dependants

Case Study
Maria McDonagh

Content category

Employment and skills

Source URL
/content/introducing-flexible-and-family-focused-workplace-policies-adventures-day-nursery

Links

Read more about Identify work-life balance problems

Create a healthy work-life balance

Support employee work-life balance

In this guide:

Advantages of improved work-life balance

List of benefits that promoting a healthy work-life balance brings to your business and your staff.
Introducing employment policies, promoting a positive organisational culture, and offering practical support that encourages a healthier work-life balance for your employees can bring real benefits to your organisation and your staff.

Work-life balance advantages for employees

A good work-life balance can enable staff to feel more in control of their working life and lead to:

increased productivity

better time management

improved personal physical and mental health and wellbeing

reduction in sickness and absenteeism

a happier and less stressed workforce

staff feeling that their personal and/or family life is important to their employer

more valued and engaged staff

greater employee loyalty, commitment, and motivation

staff less likely to leave your employment

opportunities for career and personal growth

Work-life balance advantages for businesses

The benefits of a work-life balance initiative are not confined to just the workforce. Work-life policies and flexible working practices can also benefit your business as you can:

lower levels of absence, sickness, and stress

motivate and energise staff

identify more efficient working processes and practices

increase your business's productivity, outputs, and competitive advantage

boost staff morale

improve customer service

maximise flexibility to help you react to changing market conditions and meet customer demands more effectively - for example, shift work, part-time work, and flexitime can help you open longer without making your employees work longer hours

better meet seasonal peaks and troughs in your business

lead to a more committed and positive attitude in your staff

reduce staff turnover and therefore minimise recruitment costs - see control staff turnover

become recognised as a business that people want to work for and therefore help you attract top talent

See how Adventures Day Nursery introduced flexible and family-focused workplace policies.
Actions

Flexible working: the right to request and duty to consider | LRA guidance

Flexible working | Acas guidance

Also on this site

Flexible working: the law and best practice

Hours, rest breaks and the working week

Control staff turnover

Introducing flexible and family-focused workplace policies - Adventures Day Nursery

Content category

Employment and skills
Source URL
/content/advantages-improved-work-life-balance

Links
Identify work-life balance problems

Signs that can tell employers that their staff are suffering from a poor work-life balance.
As an employer, you might find it hard to judge whether you are supporting your employees' need to balance their work commitments with their home life. However, there are signs that employers can look out for that may indicate that staff have an unhealthy work-life balance.

How to recognise poor employee work-life balance

Tell-tale signs of poor work-life balance in your employees include:

deadlines not being met

targets or goals not being achieved

untidy workspaces

frequency of mistakes increasing

poor quality work

increase in customer complaints

decrease in productivity

staff not taking holidays or sufficient rest breaks

staff appearing exhausted and withdrawn

employees doing a lot of overtime

employees taking a lot of time off to deal with 'emergencies' involving children or other dependants

high levels of employee stress

increase in staff conflict

high rates of absenteeism or staff sickness

high levels of staff turnover

If you recognise a number of these symptoms affecting your staff and your business you may need to take action to create a healthy work-life balance in your workplace.
Actions

Flexible working: the right to request and duty to consider | LRA guidance

Flexible working | Acas guidance

Also on this site

Flexible working: the law and best practice

How to deal with stress

Manage absence and sickness

Introducing flexible and family-focused workplace policies - Adventures Day Nursery

Content category

Employment and skills
Source URL
/content/identify-work-life-balance-problems

Links
Create a healthy work-life balance

Practical ways that employers could improve the work-life balance of their staff.

There are no hard-and-fast rules on what constitutes the ideal healthy work-life balance. The measure of what is acceptable in your organisation will depend on the operational requirements of your business and the needs of your employees.

How to support staff with a healthy work-life balance

Set clear working hours

You should ensure that all employees understand what the working hours are. If you employ flexibility in working hours outline how this should be managed and ensure that staff don't exceed the appropriate hours per week.

Clearly define job roles

When you clearly outline what goals or tasks your staff must complete and when these must be delivered, you'll have staff that know exactly what they must do and when in their job. Use the SMART system to set goals that are specific, measurable, achievable, realistic, and time-based. This gives staff a clear understanding of what they must deliver to achieve their targets. SMART targets can also contribute to employees maximising their working time and cutting out wasted hours on trivial or low-value tasks.

Make working processes more efficient

Examine the process staff go through to complete a task. Is the process over-complicated? Is there a more efficient way to complete the task to the same level of quality but with less time commitment? This will help you find where there may be time wastage within processes and help you streamline tasks.

Set an example for staff

Employers should set an example to their staff by taking their annual leave allowance, setting aside appropriate time for rest breaks, and switching off completely from emails and calls when outside of working hours. You could also introduce your kids or pets to staff during video calls. Staff will then take their lead from you to better manage their work-life balance.

Recognise and reward a job well done

By simply recognising and rewarding employees for a job well done your staff will feel appreciated. Outline to staff how their individual and team efforts contribute to the success of the business.

Communicate effectively

The only true way to find out if staff are struggling to manage their time is if you develop and nurture a culture that encourages open two-way communication from managers to staff and staff to managers. In a positive workplace culture that has open communication staff are more likely to flag issues at an early stage before they escalate.

Provide support and training

Employers and managers should provide staff with the equipment, training, and managerial support to help them carry out their jobs to the best of their ability. Consider providing staff with time management training to develop the skills to manage their time effectively. Ensure your managers receive the training they need to spot symptoms of poor work-life balance amongst staff and have the skills to address and manage this appropriately.

Consider flexible working options

Working arrangements that are more flexible can benefit your staff and your business. With flexible working, employees are able to manage the time and/or location of their work to fit in with other aspects of their lives. This can lead to an increased sense of trust and autonomy that can boost productivity. There are many types of flexible working that you could consider introducing such as flexi-time, hybrid working, part-time working, or job sharing.

All eligible employees have the right to request flexible working. Flexible working can also support neurodiversity amongst your workforce as people with different styles of working may find that flexibility to work at times and locations that suit them will help them be more productive.

Promote staff health and wellbeing

Employers should promote the physical, emotional, and mental wellbeing of their staff. Offer employees the opportunity to develop and shine their life skills by hosting staff wellbeing events or talks on topics such as healthy eating, time management, stress management, or financial planning. Encourage staff to escape their workspace completely when taking their breaks and suggest incorporating some form of exercise as part of that break.

Develop a culture that respects work-life balance

Develop and maintain an organisational culture that promotes a healthy work-life balance. Make it clear that emails sent on off-hours don't require immediate attention or a response. We all spend many hours each week working so take steps to make the work environment an enjoyable one. Allow staff to focus on tasks they enjoy doing and provide opportunities for staff to take on different roles. Providing a wide variety of tasks and roles can maximise staff interest and focus.

You could also have monthly informal catch-ups with staff where employees grab a cup of tea or coffee and chat with each other about non-work-related topics. In addition, you could host annual summer barbeques or Christmas fairs where staff can bring their families along.

See seven tips to improve work-life balance for employees.

Actions

Flexible working: the right to request and duty to consider | LRA guidance

Flexible working | Acas guidance

Also on this site

Flexible working: the law and best practice

Parental leave and time off for dependants

Allowing time off work

Introducing flexible and family-focused workplace policies - Adventures Day Nursery

Content category

Employment and skills

Source URL
/content/create-healthy-work-life-balance

Links
Work-life balance: Implement a flexible working policy

How employers can implement a flexible working policy to help promote a healthy work-life balance for their staff - includes a flexible working policy template.
Achieving a healthy work-life balance is not just a one-off exercise, but a long-term commitment to operating your business in a way that respects your employees' responsibilities outside of their work commitments. Workplace policies designed to help your staff achieve and maintain a healthy work-life balance need to be tailored to your business and your employees.

Outline workplace flexible working rules

Drawing up a clear workplace policy on flexible working can have a positive impact on management by making it clear the circumstances in which a request for flexible working will be considered and approved. This saves management time and means that inconsistencies in management decisions are removed. It can also help employees by explaining their rights around flexible working.

Develop a flexible working policy

When developing a flexible working policy for your business you should take the following into consideration:

Determine your core business requirements first to clearly outline what you want to achieve from your flexible working policy.

Ask all staff what they want from a flexible working policy and how it can be used to support employees with their jobs.

Consult with trade unions/staff associations on any flexible working proposals.

Consult all employees affected and agree upon selected flexible working policies, eg flexi-time, hybrid working, or job sharing.

Decide which of your employees will be covered by the scheme and ensure the flexible working scheme does not breach employees' rights or unfairly discriminate. The Labour Relations Agency (LRA) may be able to advise you on this. You can contact the LRA's Workplace Information Service on Tel 03300 555 300. See also flexible working: the right to request and duty to consider.

Draw up written procedures for implementation and evaluation of your flexible working policies, including regular reassessment.

Ensure support from senior management for flexible working.

Take the lead by demonstrating a commitment to work-life balance.

Explain any changes to staff and keep them updated on any regulatory changes, eg the right for parents to request flexible working.

Read more on flexible working: the law and best practice.

Flexible working policy template

You can use a template to get you started with writing a flexible working policy that fits your organisation:

The Equality Commission for Northern Ireland has developed a model policy and procedure template for employers on handling requests for flexible working (PDF, 1.07MB).

Acas flexible working policy template.

Flexible working request templates

Acas flexible request acknowledgement letter template.

Acas flexible working request outcome letter request.

Trailling flexible working

You may find it helpful to conduct a trial or pilot the flexible working scheme to see how effective and workable your new workplace policies are. Change the programme if this proves necessary and keep track of the progress of your business and your employees' work/life balance.

Measure the success of your flexible working policy

You can measure the success of your flexible working policies by gauging staff feedback and tracking employee performance, changes in the rate of absenteeism, rate of staff turnover and customer satisfaction. See staff feedback, ideas and forums, control staff turnover and how to manage absence and sickness.
Help

LRA Workplace Information Service

Actions

Flexible working | LRA guidance

Flexible working | Acas guidance

Also on this site

Flexible working: the law and best practice

Set up employment policies for your business

Introducing flexible and family-focused workplace policies - Adventures Day Nursery

Content category

Employment and skills
Source URL
/content/work-life-balance-implement-flexible-working-policy

Links
Seven tips to improve work-life balance for employees

Practical tips to help employers encourage a work-life balance amongst their staff.

A healthy work-life balance can lead to happier staff who are more energised and focused on doing their best work. A healthy work-life balance helps to increase productivity and staff retention, especially when your workers feel their employer also values their life outside of work.

Tips to encourage a healthy work-life balance for your staff

Here are seven practical steps employers can take to develop a workplace that encourages a healthy work-life balance for all their employees.

1. Develop an inclusive workplace

By developing a workplace culture that respects differences and values people, you'll have staff who bring their whole selves to work. This approach gives employees an environment where they feel comfortable to talk about life outside work. It will help employers understand what is important to their staff outside of work so they can support them with family commitments, hobbies, and other interests. See diversity, equality, and inclusion in the workplace.

2. Set realistic goals

Ensure staff know their targets and support them to achieve these. Set goals using the SMART system that makes targets specific, measurable, achievable, realistic, and time-based. Review employee performance regularly, including discussions to address potential problems, if they exist, so they can dealt with early. See agreeing performance objectives with staff.

3. Have regular conversations with employees

Encourage your employees to regularly meet with their line manager to discuss their progress, workloads, and challenges. These meetings can help to manage people and resources more effectively. It will also highlight potential issues such as burnout or conflict before challenges escalate. You could also provide staff with guidance or training on effective time management and prioritising tasks to help boost efficiency. See engaging with staff.

4. Explore flexible working options

Consider the benefits of flexible working if it helps your staff manage their work and home life commitments more effectively. Consider the various types of flexible working, such as remote or hybrid working, flexi-time, job sharing, and part-time working, to determine what benefits your business and your staff.

5. Holidays

You should ensure staff take their allocation of annual leave. Instruct staff to switch off from work when on leave by ensuring they don’t bring work phones or laptops on holiday. Employers can set a good example to their staff by taking their total allocation of holidays each year and assigning someone to manage things when they are on leave. See know how much holiday to give your staff.

6. Encourage regular breaks

Encourage staff to take regular breaks. Working for long periods on a single task can be tiring. Support employees in incorporating exercise into their breaks, especially if their job requires them to sit for long periods. Activity can help boost staff energy levels and increase productivity. See hours, rest breaks and the working week

7. Make work enjoyable

We all spend many hours each day working. So, with so much time invested in our job, employers should try to make it as enjoyable as possible for everyone. Encourage staff engagement and feedback to generate ideas on how you could make work and the workplace more fun. Identify opportunities for individuals and different teams to connect through work projects. You could also consider regular staff social events, external health and wellbeing talks, or charity fundraisers. See staff feedback, ideas, and forums.

For further details, see create a healthy work-life balance.

Also on this site

Employee engagement

Flexible working: the law and best practice

Employees working from home

Occupational health and welfare

Content category

Employment and skills

Source URL
/content/seven-tips-improve-work-life-balance-employees

Links
Support employee work-life balance

Introducing flexible and family-focused workplace policies - Adventures Day Nursery

How Adventures Day Nursery in Belfast has implemented family-friendly initiatives in the workplace.

Adventures Day Nursery is a private children's nursery in Belfast. The business opened in 2006 and since then has grown to employ over 25 full-time and part-time staff.

Maria McDonagh, Manager at Adventures Day Nursery, explains how they introduced family-friendly initiatives to help and support their employees.

Prioritise your policies

"During the last five years, we have introduced workplace initiatives to ensure our staff have the best possible work-life balance. We encourage employees to suggest workplace schemes that will benefit them.

Our challenge has been to implement rewarding initiatives that are low-cost. For example, we offer job-sharing and have implemented support so that pregnant employees have the option to transfer to lighter duties and shorter shifts. We also have an open-door policy so that management are available to staff at all times.

We have introduced initiatives to reduce stress and offer staff support on a personal level. We ensure we have adequate cover when employees need to take time off work at short notice. To help reduce financial pressures for our staff we enable them, if needed, to receive part of their salary in the middle of the month rather than having to wait until payday.

Our 'special leave' policy allows staff paid time off during a bereavement or family celebration. Employees may also take unpaid leave when needed. We also have a 'sunshine hours' policy - this allows staff to finish shifts early on a rotational basis whenever the weather is good."

Consult and communicate with staff

"A big challenge we have faced in implementing family-friendly initiatives has come from ensuring that our policies are fair to all our staff. Not all of our employees have dependent children, so we have made sure to have other initiatives that benefit and appeal to all workers.

Our staff are always involved in helping to create new initiatives. Schemes are proposed through our staff suggestion scheme, and at the monthly one-to-one meetings.

The rules for each initiative are discussed and agreed upon with all staff to ensure a high degree of fairness across all policies.

Also as a service provider, we must ensure our staff initiatives do not negatively affect the quality of service we provide to our customers. We minimise business risks by creating a supportive environment, where staff are happy to assist and support each other.

All staff are made aware of workplace initiatives at their induction programme, their monthly meetings, and through the monthly staff newsletters."

Review and update your policies

"We regularly review our policies to ensure that we are compliant with legislation. As the nursery manager, I attend seminars and conferences to ensure we maintain our legal responsibilities."

Measure success

"We use questionnaires and one-to-one meetings to get feedback from staff. These help us to identify the initiatives that have benefited the organisation. The measures we evaluate against the schemes include improved morale in the business, lowered sickness and absence rates, low staff turnover, and customer satisfaction.

We have also won awards for our commitment to supporting our staff, and for the service, we offer our customers."

Also on this site

Create a healthy work-life balance

Work-life balance: Implement a flexible working policy

Parental leave and time off for dependants

Case Study
Maria McDonagh

Content category

Employment and skills

Source URL
/content/introducing-flexible-and-family-focused-workplace-policies-adventures-day-nursery

Links

Read more about Create a healthy work-life balance

Commission, bonuses, tips and gratuities

Set the right pay rates

In this guide:

Advantages and disadvantages of pay-rate systems

Advantages and disadvantages of the various pay-rate systems and finding the most suitable one for your business.
When you select a pay-rate system, you are choosing how you will reward your workers.

Basic-rate systems

Basic-rate systems pay workers a fixed amount on an hourly, weekly, or monthly basis.

These are simple to operate but do not offer many incentives to workers.

Variable or incentive schemes

Variable or incentive schemes are where all or part of a worker's pay is based on performance, skills, results, and/or profits. They could be more expensive if your workers are highly motivated and successful but can also help increase profits.

Incentive schemes can help to generate in workers a long-term interest in the success of the organisation.

They can be based on individual performance, group performance, or a combination of both:

An individual incentive scheme can help to motivate your workers. However, they may become demotivated if they find that their pay isn't as high as they expected it to be.

A group incentive scheme can encourage team working and a sense of contribution. However, they could also result in unequal performances and extra payments being seen as the norm.

Pay and wages guidance from Acas.

Examples of incentives for workers

Pay is not the only factor that can motivate workers. The following other incentives can also play a part:

non-contributory pension schemes

company cars

assistance towards childcare

achieving qualifications

good work-life balance

Choosing a system

You will need to find the right system or combination of systems to suit your business. Always weigh up the pros and cons of each.

Whichever system you choose, you should try to make it as transparent as possible. This is so that everyone knows how their pay is calculated and how they might get a bonus or any other type of pay enhancement.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Set up a basic record-keeping system

Implement staff incentive schemes

Staff pay

Prevent discrimination and value diversity

Content category

Employment and skills
Source URL
/content/advantages-and-disadvantages-pay-rate-systems

Links
Setting up a new pay-rate system

What to consider when setting up or changing a pay-rate system.
It will almost certainly cost you time and money to set up a new pay-rate system, or even change an existing one.

Getting started

In the first instance, it could be helpful to set up a checklist detailing the steps you plan to take. Remember to:

plan the process for selecting or adapting a system

involve workers, both full-time and part-time

get expert advice if needed

agree changes with workers' representatives, if any (or with workers individually where there are no representatives)

evaluate the good and bad points of your existing system, if you have one

decide what the objectives of the system need to be, eg increased productivity

consider the most suitable pay differentials and links for your business

think about how workers might be able to earn increases to their basic pay, eg through annual increases, bonuses, or other payments based on performance assessment

communicate progress regularly to all workers

look out for potential pitfalls, such as changes to pay differentials and scope for discrimination

make sure the system is properly maintained

review the system's performance

ensure women returning from maternity leave get any pay rises occurring in their absence

Pay and wages guidance from Acas.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Performance-related pay | nidirect guidance

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Set up a basic record-keeping system

Implement staff incentive schemes

Set up employee share schemes

Content category

Employment and skills
Source URL
/content/setting-new-pay-rate-system

Links
Making pay comparisons

Make pay comparisons with other businesses to ensure your pay rates are competitive.
To make sure you are getting your pay rates right, consider checking whether or not your rates are competitive with other comparable businesses in your industry and region.

Benchmarking pay

Comparisons can be made with other businesses by region, industry, or other factors, such as business size through benchmarking.

A number of organisations provide benchmarking information on rates of pay and payment systems.

Regional differences in pay

Almost every worker is entitled to be paid at least the National Minimum Wage or National Living Wage. The minimum wage rates vary according to age but not location, ie they are the same regardless of where you are in the UK.

Read more on the National Minimum Wage and National Living Wage.

However, for jobs and industries that pay higher than the National Minimum Wage, there are often regional differences in pay rates. Often these can occur because of, for example:

local problems in hiring and keeping workers

higher living costs specific to particular areas

Differences in pay across industries

Different factors also influence pay in different industry sectors. Examples include the need for specialist skills or experience, whether the right workers are available, the demand for the products or services, job location, and the nature of the work.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Pay and wages | LRA guidance

Also on this site

National Minimum Wage and National Living Wage

Managing staff performance

Content category

Employment and skills
Source URL
/content/making-pay-comparisons

Links
Equal pay for work of equal value

The Equal Pay Act (Northern Ireland) 1970 (as amended) provides for equal pay between women and men in the same employment.
The law says that men and women are entitled to equal pay for work of equal value.

Pay in this context includes contractual benefits, eg bonuses and pension contributions, as well as basic wages or salary.

The Equal Pay Act (Northern Ireland) 1970 (as amended) provides for equal pay between women and men in the same employment.

It does so by giving a woman the right to equality in the terms of her contract of employment where she is employed on:

like work to that of a man

work rated as equivalent to that of a man

work of equal value to that of a man

Read more on equal pay - the law and best practice.

Equal pay claims

Workers who believe they haven't received equal pay may lodge a complaint to an industrial tribunal. In the course of an equal pay claim, you may be called upon to explain and justify your pay practices and arrangements.

An equal pay complaint can be decided by an industrial tribunal, or, if both parties agree, can be determined by an arbitrator under the statutory arbitration scheme. Read more about the Labour Relations Agency (LRA) Arbitration Scheme.

For their tribunal claim to be successful, a worker will need to compare their pay to that of someone of the opposite sex (a 'comparator').

There are laws in place to deal with large and complex equal-value cases. The laws aim to streamline the system and reduce delays. There are also restrictions on when an industrial tribunal/arbitrator may choose not to consider an equal-value claim.

Read more about tribunal claims.

Ensuring equal pay

To ensure that you are paying your workers fairly, you could undertake a job evaluation. This compares the skills and competencies that each type of job requires. With this information, you can determine which jobs are of equal value.

The evaluation must analyse a job by pre-set factors that apply to all the jobs under evaluation rather than looking at each job in isolation. Avoid basic errors such as assuming jobs that are being done part-time are of lesser value.

With regular reviews of your pay system, you can build and maintain a robust, fair pay system that stands up to scrutiny and is less susceptible to claims for equal pay.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Prevent discrimination and value diversity

Employment-related tribunal claims: LRA Arbitration Scheme

Content category

Employment and skills
Source URL
/content/equal-pay-work-equal-value

Links
Advantages of reviewing pay rates and systems

Regularly reviewing the effectiveness and fairness of pay rates and systems can benefit your business.
You should review your pay systems on an ongoing basis. It is also important to check, at least annually, that your pay rates are competitive.

Advantages of pay reviews

If you regularly review your pay systems, you can check whether or not you are achieving objectives such as cost control, teamwork, and increased productivity.

Other benefits of regular reviews are that you can:

address the effect of factors such as regional changes, industry developments, or skills shortages

incorporate the impact of new machinery or technology on your business, such as new skills requirements and new roles

review hiring and training policies - see advertising a job and interviewing candidates

prepare for changes required by legislation such as revisions to national minimum wage rates

review feedback from your workers on whether your pay rates and systems are fair and act as incentives

incorporate changes in employment contracts

act on decisions from collective bargaining - see how to work effectively with trade unions

ensure you stay connected with people on a break, eg those on maternity or adoption leave

find and close any loopholes that might otherwise have led to claims of pay discrimination on the grounds of eg gender, race, status as a part-time worker

Harmonisation

You may wish to consider reducing differences in pay structure between categories of employees.

This process - called harmonisation - can often be beneficial and be utilised throughout your business.

Where this is likely to result in a reduction in an employee's pay, you must seek agreement to the change in the first instance. You should also be aware though that harmonisation in a situation where there has been a TUPE transfer will almost certainly be unlawful.

See how to change an employee's terms of employment.

Consulting your workforce when reviewing pay

You may consider involving workers' representatives in your pay reviews. This encourages feedback and helps you to hear of any problems they are facing.

Alternatively, you could set up a pay review committee, which may or may not include workers' representatives, that meets regularly to consider pay-related issues.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Inform and consult your employees

National Minimum Wage and National Living Wage

Content category

Employment and skills
Source URL
/content/advantages-reviewing-pay-rates-and-systems

Links
Commission, bonuses, tips and gratuities

Dealing with commission, tips, gratuities, and bonus payments.
When you choose a pay system for your business that pays - or partly pays - by results, you will need to consider what form those payments will take.

Commission

Commission is a payment based on the individual worker's or team's performance. It is common among sales workers to provide an incentive to sell. Because they earn commission, they often have lower basic salaries than other workers.

Some workers are paid by commission only. If you choose purely commission-based pay or pay which is part basic pay, part commission, you must ensure that a worker is always paid at least the national minimum wage.

Bonuses

Bonuses are generally linked to performance.

They can be based on one or more performance measures such as the financial results of a business, team, and/or individual.

Tips and gratuities

Tips and gratuities are commonly paid to workers in the hotel and catering trade. There are some circumstances when tips and gratuities can count towards the national minimum wage. For further advice on this, you may wish to contact HM Revenue and Customs (HMRC).

These payments can be distributed to workers in a number of ways:

directly from customers

as a share of a pooling arrangement

as a share of service charges paid by customers to the employer

Most money payments that are similar to salaries or wages must have income tax and National Insurance contributions deducted. See pay: employer obligations.

If you choose any of these methods of payment, you should also make sure that the system boosts performance and effective teamwork and does not lead to harmful rivalry between workers.

National Minimum Wage: code of best practice on service charges, tips, gratuities and cover charges.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Pay and wages | LRA guidance

Also on this site

National Minimum Wage and National Living Wage

Content category

Employment and skills
Source URL
/content/commission-bonuses-tips-and-gratuities

Links

Read more about Commission, bonuses, tips and gratuities

Advantages of reviewing pay rates and systems

Set the right pay rates

In this guide:

Advantages and disadvantages of pay-rate systems

Advantages and disadvantages of the various pay-rate systems and finding the most suitable one for your business.
When you select a pay-rate system, you are choosing how you will reward your workers.

Basic-rate systems

Basic-rate systems pay workers a fixed amount on an hourly, weekly, or monthly basis.

These are simple to operate but do not offer many incentives to workers.

Variable or incentive schemes

Variable or incentive schemes are where all or part of a worker's pay is based on performance, skills, results, and/or profits. They could be more expensive if your workers are highly motivated and successful but can also help increase profits.

Incentive schemes can help to generate in workers a long-term interest in the success of the organisation.

They can be based on individual performance, group performance, or a combination of both:

An individual incentive scheme can help to motivate your workers. However, they may become demotivated if they find that their pay isn't as high as they expected it to be.

A group incentive scheme can encourage team working and a sense of contribution. However, they could also result in unequal performances and extra payments being seen as the norm.

Pay and wages guidance from Acas.

Examples of incentives for workers

Pay is not the only factor that can motivate workers. The following other incentives can also play a part:

non-contributory pension schemes

company cars

assistance towards childcare

achieving qualifications

good work-life balance

Choosing a system

You will need to find the right system or combination of systems to suit your business. Always weigh up the pros and cons of each.

Whichever system you choose, you should try to make it as transparent as possible. This is so that everyone knows how their pay is calculated and how they might get a bonus or any other type of pay enhancement.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Set up a basic record-keeping system

Implement staff incentive schemes

Staff pay

Prevent discrimination and value diversity

Content category

Employment and skills
Source URL
/content/advantages-and-disadvantages-pay-rate-systems

Links
Setting up a new pay-rate system

What to consider when setting up or changing a pay-rate system.
It will almost certainly cost you time and money to set up a new pay-rate system, or even change an existing one.

Getting started

In the first instance, it could be helpful to set up a checklist detailing the steps you plan to take. Remember to:

plan the process for selecting or adapting a system

involve workers, both full-time and part-time

get expert advice if needed

agree changes with workers' representatives, if any (or with workers individually where there are no representatives)

evaluate the good and bad points of your existing system, if you have one

decide what the objectives of the system need to be, eg increased productivity

consider the most suitable pay differentials and links for your business

think about how workers might be able to earn increases to their basic pay, eg through annual increases, bonuses, or other payments based on performance assessment

communicate progress regularly to all workers

look out for potential pitfalls, such as changes to pay differentials and scope for discrimination

make sure the system is properly maintained

review the system's performance

ensure women returning from maternity leave get any pay rises occurring in their absence

Pay and wages guidance from Acas.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Performance-related pay | nidirect guidance

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Set up a basic record-keeping system

Implement staff incentive schemes

Set up employee share schemes

Content category

Employment and skills
Source URL
/content/setting-new-pay-rate-system

Links
Making pay comparisons

Make pay comparisons with other businesses to ensure your pay rates are competitive.
To make sure you are getting your pay rates right, consider checking whether or not your rates are competitive with other comparable businesses in your industry and region.

Benchmarking pay

Comparisons can be made with other businesses by region, industry, or other factors, such as business size through benchmarking.

A number of organisations provide benchmarking information on rates of pay and payment systems.

Regional differences in pay

Almost every worker is entitled to be paid at least the National Minimum Wage or National Living Wage. The minimum wage rates vary according to age but not location, ie they are the same regardless of where you are in the UK.

Read more on the National Minimum Wage and National Living Wage.

However, for jobs and industries that pay higher than the National Minimum Wage, there are often regional differences in pay rates. Often these can occur because of, for example:

local problems in hiring and keeping workers

higher living costs specific to particular areas

Differences in pay across industries

Different factors also influence pay in different industry sectors. Examples include the need for specialist skills or experience, whether the right workers are available, the demand for the products or services, job location, and the nature of the work.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Pay and wages | LRA guidance

Also on this site

National Minimum Wage and National Living Wage

Managing staff performance

Content category

Employment and skills
Source URL
/content/making-pay-comparisons

Links
Equal pay for work of equal value

The Equal Pay Act (Northern Ireland) 1970 (as amended) provides for equal pay between women and men in the same employment.
The law says that men and women are entitled to equal pay for work of equal value.

Pay in this context includes contractual benefits, eg bonuses and pension contributions, as well as basic wages or salary.

The Equal Pay Act (Northern Ireland) 1970 (as amended) provides for equal pay between women and men in the same employment.

It does so by giving a woman the right to equality in the terms of her contract of employment where she is employed on:

like work to that of a man

work rated as equivalent to that of a man

work of equal value to that of a man

Read more on equal pay - the law and best practice.

Equal pay claims

Workers who believe they haven't received equal pay may lodge a complaint to an industrial tribunal. In the course of an equal pay claim, you may be called upon to explain and justify your pay practices and arrangements.

An equal pay complaint can be decided by an industrial tribunal, or, if both parties agree, can be determined by an arbitrator under the statutory arbitration scheme. Read more about the Labour Relations Agency (LRA) Arbitration Scheme.

For their tribunal claim to be successful, a worker will need to compare their pay to that of someone of the opposite sex (a 'comparator').

There are laws in place to deal with large and complex equal-value cases. The laws aim to streamline the system and reduce delays. There are also restrictions on when an industrial tribunal/arbitrator may choose not to consider an equal-value claim.

Read more about tribunal claims.

Ensuring equal pay

To ensure that you are paying your workers fairly, you could undertake a job evaluation. This compares the skills and competencies that each type of job requires. With this information, you can determine which jobs are of equal value.

The evaluation must analyse a job by pre-set factors that apply to all the jobs under evaluation rather than looking at each job in isolation. Avoid basic errors such as assuming jobs that are being done part-time are of lesser value.

With regular reviews of your pay system, you can build and maintain a robust, fair pay system that stands up to scrutiny and is less susceptible to claims for equal pay.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Prevent discrimination and value diversity

Employment-related tribunal claims: LRA Arbitration Scheme

Content category

Employment and skills
Source URL
/content/equal-pay-work-equal-value

Links
Advantages of reviewing pay rates and systems

Regularly reviewing the effectiveness and fairness of pay rates and systems can benefit your business.
You should review your pay systems on an ongoing basis. It is also important to check, at least annually, that your pay rates are competitive.

Advantages of pay reviews

If you regularly review your pay systems, you can check whether or not you are achieving objectives such as cost control, teamwork, and increased productivity.

Other benefits of regular reviews are that you can:

address the effect of factors such as regional changes, industry developments, or skills shortages

incorporate the impact of new machinery or technology on your business, such as new skills requirements and new roles

review hiring and training policies - see advertising a job and interviewing candidates

prepare for changes required by legislation such as revisions to national minimum wage rates

review feedback from your workers on whether your pay rates and systems are fair and act as incentives

incorporate changes in employment contracts

act on decisions from collective bargaining - see how to work effectively with trade unions

ensure you stay connected with people on a break, eg those on maternity or adoption leave

find and close any loopholes that might otherwise have led to claims of pay discrimination on the grounds of eg gender, race, status as a part-time worker

Harmonisation

You may wish to consider reducing differences in pay structure between categories of employees.

This process - called harmonisation - can often be beneficial and be utilised throughout your business.

Where this is likely to result in a reduction in an employee's pay, you must seek agreement to the change in the first instance. You should also be aware though that harmonisation in a situation where there has been a TUPE transfer will almost certainly be unlawful.

See how to change an employee's terms of employment.

Consulting your workforce when reviewing pay

You may consider involving workers' representatives in your pay reviews. This encourages feedback and helps you to hear of any problems they are facing.

Alternatively, you could set up a pay review committee, which may or may not include workers' representatives, that meets regularly to consider pay-related issues.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Inform and consult your employees

National Minimum Wage and National Living Wage

Content category

Employment and skills
Source URL
/content/advantages-reviewing-pay-rates-and-systems

Links
Commission, bonuses, tips and gratuities

Dealing with commission, tips, gratuities, and bonus payments.
When you choose a pay system for your business that pays - or partly pays - by results, you will need to consider what form those payments will take.

Commission

Commission is a payment based on the individual worker's or team's performance. It is common among sales workers to provide an incentive to sell. Because they earn commission, they often have lower basic salaries than other workers.

Some workers are paid by commission only. If you choose purely commission-based pay or pay which is part basic pay, part commission, you must ensure that a worker is always paid at least the national minimum wage.

Bonuses

Bonuses are generally linked to performance.

They can be based on one or more performance measures such as the financial results of a business, team, and/or individual.

Tips and gratuities

Tips and gratuities are commonly paid to workers in the hotel and catering trade. There are some circumstances when tips and gratuities can count towards the national minimum wage. For further advice on this, you may wish to contact HM Revenue and Customs (HMRC).

These payments can be distributed to workers in a number of ways:

directly from customers

as a share of a pooling arrangement

as a share of service charges paid by customers to the employer

Most money payments that are similar to salaries or wages must have income tax and National Insurance contributions deducted. See pay: employer obligations.

If you choose any of these methods of payment, you should also make sure that the system boosts performance and effective teamwork and does not lead to harmful rivalry between workers.

National Minimum Wage: code of best practice on service charges, tips, gratuities and cover charges.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Pay and wages | LRA guidance

Also on this site

National Minimum Wage and National Living Wage

Content category

Employment and skills
Source URL
/content/commission-bonuses-tips-and-gratuities

Links

Read more about Advantages of reviewing pay rates and systems

Equal pay for work of equal value

Set the right pay rates

In this guide:

Advantages and disadvantages of pay-rate systems

Advantages and disadvantages of the various pay-rate systems and finding the most suitable one for your business.
When you select a pay-rate system, you are choosing how you will reward your workers.

Basic-rate systems

Basic-rate systems pay workers a fixed amount on an hourly, weekly, or monthly basis.

These are simple to operate but do not offer many incentives to workers.

Variable or incentive schemes

Variable or incentive schemes are where all or part of a worker's pay is based on performance, skills, results, and/or profits. They could be more expensive if your workers are highly motivated and successful but can also help increase profits.

Incentive schemes can help to generate in workers a long-term interest in the success of the organisation.

They can be based on individual performance, group performance, or a combination of both:

An individual incentive scheme can help to motivate your workers. However, they may become demotivated if they find that their pay isn't as high as they expected it to be.

A group incentive scheme can encourage team working and a sense of contribution. However, they could also result in unequal performances and extra payments being seen as the norm.

Pay and wages guidance from Acas.

Examples of incentives for workers

Pay is not the only factor that can motivate workers. The following other incentives can also play a part:

non-contributory pension schemes

company cars

assistance towards childcare

achieving qualifications

good work-life balance

Choosing a system

You will need to find the right system or combination of systems to suit your business. Always weigh up the pros and cons of each.

Whichever system you choose, you should try to make it as transparent as possible. This is so that everyone knows how their pay is calculated and how they might get a bonus or any other type of pay enhancement.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Set up a basic record-keeping system

Implement staff incentive schemes

Staff pay

Prevent discrimination and value diversity

Content category

Employment and skills
Source URL
/content/advantages-and-disadvantages-pay-rate-systems

Links
Setting up a new pay-rate system

What to consider when setting up or changing a pay-rate system.
It will almost certainly cost you time and money to set up a new pay-rate system, or even change an existing one.

Getting started

In the first instance, it could be helpful to set up a checklist detailing the steps you plan to take. Remember to:

plan the process for selecting or adapting a system

involve workers, both full-time and part-time

get expert advice if needed

agree changes with workers' representatives, if any (or with workers individually where there are no representatives)

evaluate the good and bad points of your existing system, if you have one

decide what the objectives of the system need to be, eg increased productivity

consider the most suitable pay differentials and links for your business

think about how workers might be able to earn increases to their basic pay, eg through annual increases, bonuses, or other payments based on performance assessment

communicate progress regularly to all workers

look out for potential pitfalls, such as changes to pay differentials and scope for discrimination

make sure the system is properly maintained

review the system's performance

ensure women returning from maternity leave get any pay rises occurring in their absence

Pay and wages guidance from Acas.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Performance-related pay | nidirect guidance

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Set up a basic record-keeping system

Implement staff incentive schemes

Set up employee share schemes

Content category

Employment and skills
Source URL
/content/setting-new-pay-rate-system

Links
Making pay comparisons

Make pay comparisons with other businesses to ensure your pay rates are competitive.
To make sure you are getting your pay rates right, consider checking whether or not your rates are competitive with other comparable businesses in your industry and region.

Benchmarking pay

Comparisons can be made with other businesses by region, industry, or other factors, such as business size through benchmarking.

A number of organisations provide benchmarking information on rates of pay and payment systems.

Regional differences in pay

Almost every worker is entitled to be paid at least the National Minimum Wage or National Living Wage. The minimum wage rates vary according to age but not location, ie they are the same regardless of where you are in the UK.

Read more on the National Minimum Wage and National Living Wage.

However, for jobs and industries that pay higher than the National Minimum Wage, there are often regional differences in pay rates. Often these can occur because of, for example:

local problems in hiring and keeping workers

higher living costs specific to particular areas

Differences in pay across industries

Different factors also influence pay in different industry sectors. Examples include the need for specialist skills or experience, whether the right workers are available, the demand for the products or services, job location, and the nature of the work.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Pay and wages | LRA guidance

Also on this site

National Minimum Wage and National Living Wage

Managing staff performance

Content category

Employment and skills
Source URL
/content/making-pay-comparisons

Links
Equal pay for work of equal value

The Equal Pay Act (Northern Ireland) 1970 (as amended) provides for equal pay between women and men in the same employment.
The law says that men and women are entitled to equal pay for work of equal value.

Pay in this context includes contractual benefits, eg bonuses and pension contributions, as well as basic wages or salary.

The Equal Pay Act (Northern Ireland) 1970 (as amended) provides for equal pay between women and men in the same employment.

It does so by giving a woman the right to equality in the terms of her contract of employment where she is employed on:

like work to that of a man

work rated as equivalent to that of a man

work of equal value to that of a man

Read more on equal pay - the law and best practice.

Equal pay claims

Workers who believe they haven't received equal pay may lodge a complaint to an industrial tribunal. In the course of an equal pay claim, you may be called upon to explain and justify your pay practices and arrangements.

An equal pay complaint can be decided by an industrial tribunal, or, if both parties agree, can be determined by an arbitrator under the statutory arbitration scheme. Read more about the Labour Relations Agency (LRA) Arbitration Scheme.

For their tribunal claim to be successful, a worker will need to compare their pay to that of someone of the opposite sex (a 'comparator').

There are laws in place to deal with large and complex equal-value cases. The laws aim to streamline the system and reduce delays. There are also restrictions on when an industrial tribunal/arbitrator may choose not to consider an equal-value claim.

Read more about tribunal claims.

Ensuring equal pay

To ensure that you are paying your workers fairly, you could undertake a job evaluation. This compares the skills and competencies that each type of job requires. With this information, you can determine which jobs are of equal value.

The evaluation must analyse a job by pre-set factors that apply to all the jobs under evaluation rather than looking at each job in isolation. Avoid basic errors such as assuming jobs that are being done part-time are of lesser value.

With regular reviews of your pay system, you can build and maintain a robust, fair pay system that stands up to scrutiny and is less susceptible to claims for equal pay.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Prevent discrimination and value diversity

Employment-related tribunal claims: LRA Arbitration Scheme

Content category

Employment and skills
Source URL
/content/equal-pay-work-equal-value

Links
Advantages of reviewing pay rates and systems

Regularly reviewing the effectiveness and fairness of pay rates and systems can benefit your business.
You should review your pay systems on an ongoing basis. It is also important to check, at least annually, that your pay rates are competitive.

Advantages of pay reviews

If you regularly review your pay systems, you can check whether or not you are achieving objectives such as cost control, teamwork, and increased productivity.

Other benefits of regular reviews are that you can:

address the effect of factors such as regional changes, industry developments, or skills shortages

incorporate the impact of new machinery or technology on your business, such as new skills requirements and new roles

review hiring and training policies - see advertising a job and interviewing candidates

prepare for changes required by legislation such as revisions to national minimum wage rates

review feedback from your workers on whether your pay rates and systems are fair and act as incentives

incorporate changes in employment contracts

act on decisions from collective bargaining - see how to work effectively with trade unions

ensure you stay connected with people on a break, eg those on maternity or adoption leave

find and close any loopholes that might otherwise have led to claims of pay discrimination on the grounds of eg gender, race, status as a part-time worker

Harmonisation

You may wish to consider reducing differences in pay structure between categories of employees.

This process - called harmonisation - can often be beneficial and be utilised throughout your business.

Where this is likely to result in a reduction in an employee's pay, you must seek agreement to the change in the first instance. You should also be aware though that harmonisation in a situation where there has been a TUPE transfer will almost certainly be unlawful.

See how to change an employee's terms of employment.

Consulting your workforce when reviewing pay

You may consider involving workers' representatives in your pay reviews. This encourages feedback and helps you to hear of any problems they are facing.

Alternatively, you could set up a pay review committee, which may or may not include workers' representatives, that meets regularly to consider pay-related issues.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Inform and consult your employees

National Minimum Wage and National Living Wage

Content category

Employment and skills
Source URL
/content/advantages-reviewing-pay-rates-and-systems

Links
Commission, bonuses, tips and gratuities

Dealing with commission, tips, gratuities, and bonus payments.
When you choose a pay system for your business that pays - or partly pays - by results, you will need to consider what form those payments will take.

Commission

Commission is a payment based on the individual worker's or team's performance. It is common among sales workers to provide an incentive to sell. Because they earn commission, they often have lower basic salaries than other workers.

Some workers are paid by commission only. If you choose purely commission-based pay or pay which is part basic pay, part commission, you must ensure that a worker is always paid at least the national minimum wage.

Bonuses

Bonuses are generally linked to performance.

They can be based on one or more performance measures such as the financial results of a business, team, and/or individual.

Tips and gratuities

Tips and gratuities are commonly paid to workers in the hotel and catering trade. There are some circumstances when tips and gratuities can count towards the national minimum wage. For further advice on this, you may wish to contact HM Revenue and Customs (HMRC).

These payments can be distributed to workers in a number of ways:

directly from customers

as a share of a pooling arrangement

as a share of service charges paid by customers to the employer

Most money payments that are similar to salaries or wages must have income tax and National Insurance contributions deducted. See pay: employer obligations.

If you choose any of these methods of payment, you should also make sure that the system boosts performance and effective teamwork and does not lead to harmful rivalry between workers.

National Minimum Wage: code of best practice on service charges, tips, gratuities and cover charges.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Pay and wages | LRA guidance

Also on this site

National Minimum Wage and National Living Wage

Content category

Employment and skills
Source URL
/content/commission-bonuses-tips-and-gratuities

Links

Read more about Equal pay for work of equal value

Making pay comparisons

Set the right pay rates

In this guide:

Advantages and disadvantages of pay-rate systems

Advantages and disadvantages of the various pay-rate systems and finding the most suitable one for your business.
When you select a pay-rate system, you are choosing how you will reward your workers.

Basic-rate systems

Basic-rate systems pay workers a fixed amount on an hourly, weekly, or monthly basis.

These are simple to operate but do not offer many incentives to workers.

Variable or incentive schemes

Variable or incentive schemes are where all or part of a worker's pay is based on performance, skills, results, and/or profits. They could be more expensive if your workers are highly motivated and successful but can also help increase profits.

Incentive schemes can help to generate in workers a long-term interest in the success of the organisation.

They can be based on individual performance, group performance, or a combination of both:

An individual incentive scheme can help to motivate your workers. However, they may become demotivated if they find that their pay isn't as high as they expected it to be.

A group incentive scheme can encourage team working and a sense of contribution. However, they could also result in unequal performances and extra payments being seen as the norm.

Pay and wages guidance from Acas.

Examples of incentives for workers

Pay is not the only factor that can motivate workers. The following other incentives can also play a part:

non-contributory pension schemes

company cars

assistance towards childcare

achieving qualifications

good work-life balance

Choosing a system

You will need to find the right system or combination of systems to suit your business. Always weigh up the pros and cons of each.

Whichever system you choose, you should try to make it as transparent as possible. This is so that everyone knows how their pay is calculated and how they might get a bonus or any other type of pay enhancement.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Set up a basic record-keeping system

Implement staff incentive schemes

Staff pay

Prevent discrimination and value diversity

Content category

Employment and skills
Source URL
/content/advantages-and-disadvantages-pay-rate-systems

Links
Setting up a new pay-rate system

What to consider when setting up or changing a pay-rate system.
It will almost certainly cost you time and money to set up a new pay-rate system, or even change an existing one.

Getting started

In the first instance, it could be helpful to set up a checklist detailing the steps you plan to take. Remember to:

plan the process for selecting or adapting a system

involve workers, both full-time and part-time

get expert advice if needed

agree changes with workers' representatives, if any (or with workers individually where there are no representatives)

evaluate the good and bad points of your existing system, if you have one

decide what the objectives of the system need to be, eg increased productivity

consider the most suitable pay differentials and links for your business

think about how workers might be able to earn increases to their basic pay, eg through annual increases, bonuses, or other payments based on performance assessment

communicate progress regularly to all workers

look out for potential pitfalls, such as changes to pay differentials and scope for discrimination

make sure the system is properly maintained

review the system's performance

ensure women returning from maternity leave get any pay rises occurring in their absence

Pay and wages guidance from Acas.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Performance-related pay | nidirect guidance

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Set up a basic record-keeping system

Implement staff incentive schemes

Set up employee share schemes

Content category

Employment and skills
Source URL
/content/setting-new-pay-rate-system

Links
Making pay comparisons

Make pay comparisons with other businesses to ensure your pay rates are competitive.
To make sure you are getting your pay rates right, consider checking whether or not your rates are competitive with other comparable businesses in your industry and region.

Benchmarking pay

Comparisons can be made with other businesses by region, industry, or other factors, such as business size through benchmarking.

A number of organisations provide benchmarking information on rates of pay and payment systems.

Regional differences in pay

Almost every worker is entitled to be paid at least the National Minimum Wage or National Living Wage. The minimum wage rates vary according to age but not location, ie they are the same regardless of where you are in the UK.

Read more on the National Minimum Wage and National Living Wage.

However, for jobs and industries that pay higher than the National Minimum Wage, there are often regional differences in pay rates. Often these can occur because of, for example:

local problems in hiring and keeping workers

higher living costs specific to particular areas

Differences in pay across industries

Different factors also influence pay in different industry sectors. Examples include the need for specialist skills or experience, whether the right workers are available, the demand for the products or services, job location, and the nature of the work.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Pay and wages | LRA guidance

Also on this site

National Minimum Wage and National Living Wage

Managing staff performance

Content category

Employment and skills
Source URL
/content/making-pay-comparisons

Links
Equal pay for work of equal value

The Equal Pay Act (Northern Ireland) 1970 (as amended) provides for equal pay between women and men in the same employment.
The law says that men and women are entitled to equal pay for work of equal value.

Pay in this context includes contractual benefits, eg bonuses and pension contributions, as well as basic wages or salary.

The Equal Pay Act (Northern Ireland) 1970 (as amended) provides for equal pay between women and men in the same employment.

It does so by giving a woman the right to equality in the terms of her contract of employment where she is employed on:

like work to that of a man

work rated as equivalent to that of a man

work of equal value to that of a man

Read more on equal pay - the law and best practice.

Equal pay claims

Workers who believe they haven't received equal pay may lodge a complaint to an industrial tribunal. In the course of an equal pay claim, you may be called upon to explain and justify your pay practices and arrangements.

An equal pay complaint can be decided by an industrial tribunal, or, if both parties agree, can be determined by an arbitrator under the statutory arbitration scheme. Read more about the Labour Relations Agency (LRA) Arbitration Scheme.

For their tribunal claim to be successful, a worker will need to compare their pay to that of someone of the opposite sex (a 'comparator').

There are laws in place to deal with large and complex equal-value cases. The laws aim to streamline the system and reduce delays. There are also restrictions on when an industrial tribunal/arbitrator may choose not to consider an equal-value claim.

Read more about tribunal claims.

Ensuring equal pay

To ensure that you are paying your workers fairly, you could undertake a job evaluation. This compares the skills and competencies that each type of job requires. With this information, you can determine which jobs are of equal value.

The evaluation must analyse a job by pre-set factors that apply to all the jobs under evaluation rather than looking at each job in isolation. Avoid basic errors such as assuming jobs that are being done part-time are of lesser value.

With regular reviews of your pay system, you can build and maintain a robust, fair pay system that stands up to scrutiny and is less susceptible to claims for equal pay.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Prevent discrimination and value diversity

Employment-related tribunal claims: LRA Arbitration Scheme

Content category

Employment and skills
Source URL
/content/equal-pay-work-equal-value

Links
Advantages of reviewing pay rates and systems

Regularly reviewing the effectiveness and fairness of pay rates and systems can benefit your business.
You should review your pay systems on an ongoing basis. It is also important to check, at least annually, that your pay rates are competitive.

Advantages of pay reviews

If you regularly review your pay systems, you can check whether or not you are achieving objectives such as cost control, teamwork, and increased productivity.

Other benefits of regular reviews are that you can:

address the effect of factors such as regional changes, industry developments, or skills shortages

incorporate the impact of new machinery or technology on your business, such as new skills requirements and new roles

review hiring and training policies - see advertising a job and interviewing candidates

prepare for changes required by legislation such as revisions to national minimum wage rates

review feedback from your workers on whether your pay rates and systems are fair and act as incentives

incorporate changes in employment contracts

act on decisions from collective bargaining - see how to work effectively with trade unions

ensure you stay connected with people on a break, eg those on maternity or adoption leave

find and close any loopholes that might otherwise have led to claims of pay discrimination on the grounds of eg gender, race, status as a part-time worker

Harmonisation

You may wish to consider reducing differences in pay structure between categories of employees.

This process - called harmonisation - can often be beneficial and be utilised throughout your business.

Where this is likely to result in a reduction in an employee's pay, you must seek agreement to the change in the first instance. You should also be aware though that harmonisation in a situation where there has been a TUPE transfer will almost certainly be unlawful.

See how to change an employee's terms of employment.

Consulting your workforce when reviewing pay

You may consider involving workers' representatives in your pay reviews. This encourages feedback and helps you to hear of any problems they are facing.

Alternatively, you could set up a pay review committee, which may or may not include workers' representatives, that meets regularly to consider pay-related issues.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Inform and consult your employees

National Minimum Wage and National Living Wage

Content category

Employment and skills
Source URL
/content/advantages-reviewing-pay-rates-and-systems

Links
Commission, bonuses, tips and gratuities

Dealing with commission, tips, gratuities, and bonus payments.
When you choose a pay system for your business that pays - or partly pays - by results, you will need to consider what form those payments will take.

Commission

Commission is a payment based on the individual worker's or team's performance. It is common among sales workers to provide an incentive to sell. Because they earn commission, they often have lower basic salaries than other workers.

Some workers are paid by commission only. If you choose purely commission-based pay or pay which is part basic pay, part commission, you must ensure that a worker is always paid at least the national minimum wage.

Bonuses

Bonuses are generally linked to performance.

They can be based on one or more performance measures such as the financial results of a business, team, and/or individual.

Tips and gratuities

Tips and gratuities are commonly paid to workers in the hotel and catering trade. There are some circumstances when tips and gratuities can count towards the national minimum wage. For further advice on this, you may wish to contact HM Revenue and Customs (HMRC).

These payments can be distributed to workers in a number of ways:

directly from customers

as a share of a pooling arrangement

as a share of service charges paid by customers to the employer

Most money payments that are similar to salaries or wages must have income tax and National Insurance contributions deducted. See pay: employer obligations.

If you choose any of these methods of payment, you should also make sure that the system boosts performance and effective teamwork and does not lead to harmful rivalry between workers.

National Minimum Wage: code of best practice on service charges, tips, gratuities and cover charges.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Pay and wages | LRA guidance

Also on this site

National Minimum Wage and National Living Wage

Content category

Employment and skills
Source URL
/content/commission-bonuses-tips-and-gratuities

Links

Read more about Making pay comparisons

Setting up a new pay-rate system

Set the right pay rates

In this guide:

Advantages and disadvantages of pay-rate systems

Advantages and disadvantages of the various pay-rate systems and finding the most suitable one for your business.
When you select a pay-rate system, you are choosing how you will reward your workers.

Basic-rate systems

Basic-rate systems pay workers a fixed amount on an hourly, weekly, or monthly basis.

These are simple to operate but do not offer many incentives to workers.

Variable or incentive schemes

Variable or incentive schemes are where all or part of a worker's pay is based on performance, skills, results, and/or profits. They could be more expensive if your workers are highly motivated and successful but can also help increase profits.

Incentive schemes can help to generate in workers a long-term interest in the success of the organisation.

They can be based on individual performance, group performance, or a combination of both:

An individual incentive scheme can help to motivate your workers. However, they may become demotivated if they find that their pay isn't as high as they expected it to be.

A group incentive scheme can encourage team working and a sense of contribution. However, they could also result in unequal performances and extra payments being seen as the norm.

Pay and wages guidance from Acas.

Examples of incentives for workers

Pay is not the only factor that can motivate workers. The following other incentives can also play a part:

non-contributory pension schemes

company cars

assistance towards childcare

achieving qualifications

good work-life balance

Choosing a system

You will need to find the right system or combination of systems to suit your business. Always weigh up the pros and cons of each.

Whichever system you choose, you should try to make it as transparent as possible. This is so that everyone knows how their pay is calculated and how they might get a bonus or any other type of pay enhancement.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Set up a basic record-keeping system

Implement staff incentive schemes

Staff pay

Prevent discrimination and value diversity

Content category

Employment and skills
Source URL
/content/advantages-and-disadvantages-pay-rate-systems

Links
Setting up a new pay-rate system

What to consider when setting up or changing a pay-rate system.
It will almost certainly cost you time and money to set up a new pay-rate system, or even change an existing one.

Getting started

In the first instance, it could be helpful to set up a checklist detailing the steps you plan to take. Remember to:

plan the process for selecting or adapting a system

involve workers, both full-time and part-time

get expert advice if needed

agree changes with workers' representatives, if any (or with workers individually where there are no representatives)

evaluate the good and bad points of your existing system, if you have one

decide what the objectives of the system need to be, eg increased productivity

consider the most suitable pay differentials and links for your business

think about how workers might be able to earn increases to their basic pay, eg through annual increases, bonuses, or other payments based on performance assessment

communicate progress regularly to all workers

look out for potential pitfalls, such as changes to pay differentials and scope for discrimination

make sure the system is properly maintained

review the system's performance

ensure women returning from maternity leave get any pay rises occurring in their absence

Pay and wages guidance from Acas.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Performance-related pay | nidirect guidance

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Set up a basic record-keeping system

Implement staff incentive schemes

Set up employee share schemes

Content category

Employment and skills
Source URL
/content/setting-new-pay-rate-system

Links
Making pay comparisons

Make pay comparisons with other businesses to ensure your pay rates are competitive.
To make sure you are getting your pay rates right, consider checking whether or not your rates are competitive with other comparable businesses in your industry and region.

Benchmarking pay

Comparisons can be made with other businesses by region, industry, or other factors, such as business size through benchmarking.

A number of organisations provide benchmarking information on rates of pay and payment systems.

Regional differences in pay

Almost every worker is entitled to be paid at least the National Minimum Wage or National Living Wage. The minimum wage rates vary according to age but not location, ie they are the same regardless of where you are in the UK.

Read more on the National Minimum Wage and National Living Wage.

However, for jobs and industries that pay higher than the National Minimum Wage, there are often regional differences in pay rates. Often these can occur because of, for example:

local problems in hiring and keeping workers

higher living costs specific to particular areas

Differences in pay across industries

Different factors also influence pay in different industry sectors. Examples include the need for specialist skills or experience, whether the right workers are available, the demand for the products or services, job location, and the nature of the work.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Pay and wages | LRA guidance

Also on this site

National Minimum Wage and National Living Wage

Managing staff performance

Content category

Employment and skills
Source URL
/content/making-pay-comparisons

Links
Equal pay for work of equal value

The Equal Pay Act (Northern Ireland) 1970 (as amended) provides for equal pay between women and men in the same employment.
The law says that men and women are entitled to equal pay for work of equal value.

Pay in this context includes contractual benefits, eg bonuses and pension contributions, as well as basic wages or salary.

The Equal Pay Act (Northern Ireland) 1970 (as amended) provides for equal pay between women and men in the same employment.

It does so by giving a woman the right to equality in the terms of her contract of employment where she is employed on:

like work to that of a man

work rated as equivalent to that of a man

work of equal value to that of a man

Read more on equal pay - the law and best practice.

Equal pay claims

Workers who believe they haven't received equal pay may lodge a complaint to an industrial tribunal. In the course of an equal pay claim, you may be called upon to explain and justify your pay practices and arrangements.

An equal pay complaint can be decided by an industrial tribunal, or, if both parties agree, can be determined by an arbitrator under the statutory arbitration scheme. Read more about the Labour Relations Agency (LRA) Arbitration Scheme.

For their tribunal claim to be successful, a worker will need to compare their pay to that of someone of the opposite sex (a 'comparator').

There are laws in place to deal with large and complex equal-value cases. The laws aim to streamline the system and reduce delays. There are also restrictions on when an industrial tribunal/arbitrator may choose not to consider an equal-value claim.

Read more about tribunal claims.

Ensuring equal pay

To ensure that you are paying your workers fairly, you could undertake a job evaluation. This compares the skills and competencies that each type of job requires. With this information, you can determine which jobs are of equal value.

The evaluation must analyse a job by pre-set factors that apply to all the jobs under evaluation rather than looking at each job in isolation. Avoid basic errors such as assuming jobs that are being done part-time are of lesser value.

With regular reviews of your pay system, you can build and maintain a robust, fair pay system that stands up to scrutiny and is less susceptible to claims for equal pay.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Prevent discrimination and value diversity

Employment-related tribunal claims: LRA Arbitration Scheme

Content category

Employment and skills
Source URL
/content/equal-pay-work-equal-value

Links
Advantages of reviewing pay rates and systems

Regularly reviewing the effectiveness and fairness of pay rates and systems can benefit your business.
You should review your pay systems on an ongoing basis. It is also important to check, at least annually, that your pay rates are competitive.

Advantages of pay reviews

If you regularly review your pay systems, you can check whether or not you are achieving objectives such as cost control, teamwork, and increased productivity.

Other benefits of regular reviews are that you can:

address the effect of factors such as regional changes, industry developments, or skills shortages

incorporate the impact of new machinery or technology on your business, such as new skills requirements and new roles

review hiring and training policies - see advertising a job and interviewing candidates

prepare for changes required by legislation such as revisions to national minimum wage rates

review feedback from your workers on whether your pay rates and systems are fair and act as incentives

incorporate changes in employment contracts

act on decisions from collective bargaining - see how to work effectively with trade unions

ensure you stay connected with people on a break, eg those on maternity or adoption leave

find and close any loopholes that might otherwise have led to claims of pay discrimination on the grounds of eg gender, race, status as a part-time worker

Harmonisation

You may wish to consider reducing differences in pay structure between categories of employees.

This process - called harmonisation - can often be beneficial and be utilised throughout your business.

Where this is likely to result in a reduction in an employee's pay, you must seek agreement to the change in the first instance. You should also be aware though that harmonisation in a situation where there has been a TUPE transfer will almost certainly be unlawful.

See how to change an employee's terms of employment.

Consulting your workforce when reviewing pay

You may consider involving workers' representatives in your pay reviews. This encourages feedback and helps you to hear of any problems they are facing.

Alternatively, you could set up a pay review committee, which may or may not include workers' representatives, that meets regularly to consider pay-related issues.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Equality Commission's Code of Practice on Equal Pay (PDF, 538K)

Pay and wages | LRA guidance

Also on this site

Inform and consult your employees

National Minimum Wage and National Living Wage

Content category

Employment and skills
Source URL
/content/advantages-reviewing-pay-rates-and-systems

Links
Commission, bonuses, tips and gratuities

Dealing with commission, tips, gratuities, and bonus payments.
When you choose a pay system for your business that pays - or partly pays - by results, you will need to consider what form those payments will take.

Commission

Commission is a payment based on the individual worker's or team's performance. It is common among sales workers to provide an incentive to sell. Because they earn commission, they often have lower basic salaries than other workers.

Some workers are paid by commission only. If you choose purely commission-based pay or pay which is part basic pay, part commission, you must ensure that a worker is always paid at least the national minimum wage.

Bonuses

Bonuses are generally linked to performance.

They can be based on one or more performance measures such as the financial results of a business, team, and/or individual.

Tips and gratuities

Tips and gratuities are commonly paid to workers in the hotel and catering trade. There are some circumstances when tips and gratuities can count towards the national minimum wage. For further advice on this, you may wish to contact HM Revenue and Customs (HMRC).

These payments can be distributed to workers in a number of ways:

directly from customers

as a share of a pooling arrangement

as a share of service charges paid by customers to the employer

Most money payments that are similar to salaries or wages must have income tax and National Insurance contributions deducted. See pay: employer obligations.

If you choose any of these methods of payment, you should also make sure that the system boosts performance and effective teamwork and does not lead to harmful rivalry between workers.

National Minimum Wage: code of best practice on service charges, tips, gratuities and cover charges.
Developed with

Labour Relations Agency

Help

LRA Workplace Information Service

Actions

Pay and wages | LRA guidance

Also on this site

National Minimum Wage and National Living Wage

Content category

Employment and skills
Source URL
/content/commission-bonuses-tips-and-gratuities

Links

Read more about Setting up a new pay-rate system

Subscribe to Employment and skills

Earnings-related qualification for statutory sick pay

Understanding statutory sick pay

What is statutory sick pay and who is entitled to it?

Qualifying conditions for SSP

Source URL

Links

Earnings-related qualification for statutory sick pay

Calculating average earnings for weekly paid employees

Calculating average earnings for monthly paid employees

Action if your employee is not entitled to SSP

Source URL

Links

When to start and stop statutory sick pay

Linking periods

Waiting days

Qualifying days

Payment of SSP during a phased return to work

Stopping payment of SSP

Issuing the SSP1 form

Source URL

Links

Calculate statutory sick pay

SSP calculator

Maximum SSP

Source URL

Links

Statutory sick pay forms and record-keeping

Keeping records of sickness absence

SSP record sheet

Self certification form

Employee not entitlement to SSP

Using HMRC's downloadable calculators

Source URL

Links

Alternatives to paying statutory sick pay

Deciding on the terms of an occupational sick pay (OSP) scheme

What you need to do

Record-keeping under an OSP scheme

Source URL

Links

Contractual issues and dismissal in relation to sick pay and sickness

Precedent in overpayment of SSP

Long-term sickness and dismissal

Source URL

Links

What is statutory sick pay and who is entitled to it?

Understanding statutory sick pay

What is statutory sick pay and who is entitled to it?

Qualifying conditions for SSP

Source URL

Links

Earnings-related qualification for statutory sick pay

Calculating average earnings for weekly paid employees

Calculating average earnings for monthly paid employees

Action if your employee is not entitled to SSP

Source URL

Links

When to start and stop statutory sick pay

Linking periods

Waiting days

Qualifying days

Payment of SSP during a phased return to work

Stopping payment of SSP

Issuing the SSP1 form

Source URL

Links

Calculate statutory sick pay

SSP calculator

Maximum SSP

Source URL

Links

Statutory sick pay forms and record-keeping

Keeping records of sickness absence

SSP record sheet

Self certification form

Employee not entitlement to SSP

Using HMRC's downloadable calculators

Source URL

Links

Alternatives to paying statutory sick pay