There may come a time when your employer refuses to pay staff wages or fails to pay them on time. If this happens, you may be wondering whether you could take legal action against your employer, whether it is illegal to not pay employees on time, and what are your rights.
In this guide, we explain British law on the matter and what it could mean for you.
Employer not paying wages on time
The date an employee gets paid takes on an important significance – everyone arranges payment of their direct debits and other bills around the day they get paid. So, if wages are paid late, this can pose a significant problem that is more than unhappy employees.
Wages not paid on time – legal consideration
Is it illegal for employers to not pay on time? The law on payment of wages is set out in the Employment Rights Act 1996: it covers the need to inform employees in their contract of employment, the date on which they will be paid, as well as other details such as how they will be paid etc. If you have no written contract, agreed verbal arrangements that have been taking place will count as a formal contract.
The Act also creates an entitlement for an employee to take their employer to an employment tribunal for an unlawful deduction of wages.
Technically, not paying employees on time is a deduction from wages. Payment one or two days late would solve that situation but this does not mean slight delays in receiving payment are acceptable. Your employer should always aim to ensure wages are distributed on time.
As the payment date is a contractual term, failure to adhere to this can be a breach of contract, which opens up employers to a different legal claim. Employees have the right to sue their employers if they feel there has been a breach in their employment contract. It should be noted that these claims can potentially result in compensation figures of up to £25,000 if it is found that there was a breach.
Reasons for salary not being paid on time
Delays in payment can come about for various reasons. If mistakes are made during the payroll process that will mean pay is to be delayed, your employer should clearly explain this to you and make every effort to rectify the situation by the payroll date or as soon as practically possible afterwards.
If this is down to another reason, such as a lack of funds, employees should be advised of the situation prior to the payment date so the employee can try to manage their funds for the extra period, although this may not be an option for many people. An employer not paying on time can create concerns about the future of your role. You employer should explain the position to you and offer reassurance that everything is being done to rectify the situation.
Ultimately, if this is an ongoing problem you may consider whether working for a company who operates like this is right for you. Most people need regular income and to know it’s coming when it’s supposed to.
If you are an employer or employee and need advice on the late payment of wages then give us a call on 01422 897673.
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