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Labour Law Compliance in the UK
Compliance with the HMRC in the UK is compulsory. Ensure your business is compliant with our handy guide.
What Is Compliance?
In the UK, Her Majesty’s Revenue and Customs (HMRC) have regulations in place to ensure the proper treatment of employees by employers. They seek to achieve a culture of compliance with employment law, by informing employers and employees of their respective responsibilities and rights.
Compliance is compulsory for businesses and employers are responsible for keeping records and ensuring they honour these regulations. Lately, we have seen
a clear push to ‘name and shame’ businesses that fail to comply with these regulations, with a large number being publicly named for underpaying employees the national minimum wage and national living wage.
To avoid hefty fines, not to mention negative publicity, businesses need to ensure they remain compliant.
The maintenance of statutory records is a key element of this. Accurate records ensure that employees are being protected. They also protect the employer from false accusations. Inspections are becoming more and more commonplace, with inspectors sometimes visiting businesses unannounced. Employers are required by law to keep their employee records at the place of employment and an inspector will assume this is where they’re located. Time and attendance software, like Bizimply’s, ensures businesses accurately track hours worked and breaks taken, preventing
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What Are The Most Common Violations?
The most frequent cases of underpaying were identified as deducting pay for uniforms, not paying for overtime and failing to reimburse employees travelling between jobs. Retail and hospitality businesses top the list for being most guilty of failing to comply, with other reasons for underpaying including using tips to top up pay and docking wages to fund Christmas parties. These industries have a trickier time keeping accurate records, due to the complicated nature of tracking seasonal, temporary, part-time and full-time staff hours, so could benefit most from time and attendance systems.
7 Things Employers Must Do To Remain Compliant
1. Ensure all of your team are paid fairly.
Employers have a duty to be aware of, and comply with the different national minimum and living wage rates. Failure to comply puts employers at risk of not only paying back arrears to staff but also being fined heavily. The national minimum and living wage depends largely on the employees’ age, but those over 25 are entitled to £9.50 an hour for minimum and living wages since 1st April 2022.
2. Make sure your team are working the proper hours.
The maximum weekly work time is 48 hours and this can be spread out over
4 months (6 months for seasonal workers). The minimum weekly work time is generated as 25% of the available/required time an employee gives, which must be guaranteed income for that worker. ‘Work’ constitutes job-related training, time spent travelling between jobs if travelling is part of the job, work/business lunches, time spent abroad, paid overtime, unpaid overtime you ask staff to do, time spent on call at the workplace, any time that is treated as working time under a contract, and travel between home and work at the start and end of the working day if no fixed place of work exists.
3. Make sure your team are taking the correct breaks.
Workers over 18 are entitled to 3 types of breaks – rest breaks at work, daily rest and weekly rest. For rest breaks at work in the UK, workers are entitled to one 20-minute uninterrupted rest break during their workday (which doesn’t have to be paid, depending on their contract). For daily rest, workers are entitled to 11 hours rest between working days. For weekly rest, workers have the right to either 24 hours without any work each week or an uninterrupted 48 hour rest period each fortnight.
With HMRC sending a strong message that compliance abuse will not go unnoticed, software like Bizimply can really help keep businesses in line with labour laws.
4. Make sure your team are getting the correct holiday pay and leave.
Almost all workers are entitled to 5.6 weeks paid holidays or annual leave per year. Part-time workers get less paid holidays than full-time workers. They’re entitled to at least 5.6 weeks paid holiday but this amounts to fewer than 28 days because they work fewer hours per week.
Workers have the right to get paid for leave, accrue holiday entitlement during maternity, paternity and adoption leave, build off holiday entitlement while off work sick, and request holiday at the same time as sick leave. In the UK, employers can include public holidays as part of statutory annual leave.
5. Make sure you follow correct procedures for young team members.
Those under 16 are considered children and employers cannot employ them in regular full-time jobs. These under 18-aged workers are entitled to at least £4.81 per hour. Employers need to record and report this pay as part of running payroll.
6. Make sure you follow correct procedures for night workers.
Special considerations need to be made for night workers (considered those whose shift has at least 3 hours occurring between the night-time hours of 11pm – 6am in the UK. Normally, a night worker should not work more than an average of 8 hours in a 24 hour period, with the average calculated over either a 2 month period or longer, if it is part of a collective agreement.)
7. Make sure you are following the correct procedure for Sunday work.
Having to work on Sunday depends whether it is mentioned in an employee’s employment contract or written statement of terms and conditions. An employer cannot make an employee work on Sunday if they hadn’t previously agreed to it or agreed to the change of contract in writing. On the other hand, employers aren’t required to pay staff more on Sunday if it wasn’t previously agreed as part of their contract.
What Are The Consequences For Compliance Violations?
The consequences for not abiding by compliance laws range from notice letters to penalties or prosecution. For example, at the end of 2020, food retailer Tesco were faced with a fine from the HMRC as they failed to pay workers £5,096,946.13. HMRC aim to secure compliance with employment rights legislation through inspection and prosecution services. Their inspection services have the power to carry out employment rights
Compliance inspections in relation to multiple legislation. Inspections are either carried out to investigate a specific complaint (employees are able to file claims against employers), or else a team of inspectors may carry out random or targeted inspections in a particular sector (retail and hospitality industries wouldn’t
be unheard of, as businesses in these industries have been known to breach regulations). To comply with these laws, an employer must keep detailed records for 3 years, of start and finishing times, daily and weekly hours worked, and employee leave.
For 3 years, employers must keep records of start and finishing times, daily and weekly hours worked, and employee leave.
“Bizimply has provided transparency across the business and between staff. Managers can log in no matter where they are. They can see who clocked in, who was late, who was early and who is on break. Without being on the premises.”
What Records Must Be Kept In the UK?
- Employee pay as well as any deductions made.
- Employee leave and sick absences.
- Employee contract and authorisation forms.
- Payroll – everyone an employer pays
(even if the amount is less than £113 a week). - Reports and payments made to HMRC
- Tax code notices
- Taxable expense or benefits
- Weekly working time including night work.
- Employees who have agreed to work more than 48 hours a week (how many hours they actually worked doesn’t need to be recorded).
- Employers don’t have to keep a running total of how much time employees work on average each week, and they need only make occasional checks of workers who work standard hours and who are unlikely to reach the average 48-hour limit. Additional details like terms and conditions of employment and personal employee details are not required in the UK but are seen as good practice.
Compliance Checklist
Interested to see how Bizimply can help you stay compliant in your business. From managing employee documents and storing them safely, to ensuring your staff are paid correctly and on time. Reach out below and book a free business consultation 👇🏻