Pay and pensions

Use this series of pages to understand your core legal responsibilities to your employees. For information about an employer’s responsibilities to its volunteers, read our guidance on involving volunteers.

This page is not a substitute for legal advice and doesn’t cover every aspect of employment law. For legal advice, contact an employment lawyer or human resources (HR) specialist.

Minimum pay

Under the National Minimum Wage Act 1998, workers have the right to be paid at least the level of the National Living Wage or National Minimum Wage.

It’s a good idea to have a pay policy. NCVO members can access our editable sample pay policy.

Unlawful deductions from pay

Employers must not deduct from an employee's pay unless the deduction is required or authorised by law, or by a relevant provision of the employee's contract. The only exception is where a worker has previously given written agreement or consent for the deduction to be made.

Itemised payslip

All employees have the right to an itemised payslip or pay statement, stating payments made and deductions.

Parental payments

Where eligible, employees are entitled to payments during leave for maternity, paternity, adoption, shared parental or parental bereavement.

Read our guidance on parental leave.

Redundancy pay

Employees with at least two years' service are entitled to redundancy payments. The amount depends on the individual's:

• pay
• age
• service.

These employees are entitled to this regardless of whether they’re on a permanent or a fixed term contract, as long as the definition of redundancy is met.

Statutory sick pay

All eligible employees are entitled to sick pay provided by their employer for up to 28 weeks.

Under the Pensions Act 2008, employers must automatically enrol all ‘eligible employees’ into a pension scheme.

‘Eligible employees’ are those aged between 22 and state pension age who earn above the pensions earnings limit set each year. You and the employee must contribute to the scheme, at minimum contribution rates set by law.

• GOV.UK has guidance to help you set up and manage a workplace pension scheme.
• The Pensions Regulator website has an online tool to help you work out your pensions obligations.