Understanding your pay

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1. Overview

When you start work, your employer should tell you how much you鈥檒l be paid and how often. They should also tell you:

  • the day or date you鈥檒l be paid, for example each Friday or the last day of the month
  • how you鈥檒l be paid, for example cash, cheque or bank transfer

If you鈥檙e an employee or worker (not a contractor or freelancer), you have the right to a payslip. You can check your employment status if you鈥檙e not sure. Your payslip shows:

  • your earnings before and after any deductions
  • the amount of any deductions that may change each time you鈥檙e paid, for example tax and National Insurance
  • the number of hours you worked, if your pay varies depending on time worked

You might need to know how to work out your weekly pay if you have to claim payments for redundancy or compensation from your employer.

Part-time workers

If you鈥檙e a part-time worker, you must get at least the same hourly pay rate as a full-time worker doing a similar job.

2. Working out your pay

Knowing how to work out your weekly pay is important because it鈥檚 used to work out how much you should get for:

  • redundancy pay and pay during time off for job-hunting if you鈥檙e made redundant
  • pay during your notice period when leaving a job
  • holiday pay
  • guarantee pay for work - you get this if your employer cannot provide you with work, but your contract says they have to pay you anyway
  • compensation awarded by Employment Tribunals

What you鈥檙e entitled to depends on your work status.

You do not need to calculate your weekly pay, if you鈥檙e paid weekly and your pay does not vary.

If your pay varies or you鈥檙e not paid weekly, you have to use a 12-week period for working it out.

The 12-week period

You can work out your weekly pay by getting an average figure for a 12-week period. The particular 12 weeks you use varies depending on what you鈥檙e calculating your pay for.

Redundancy

Use the 12 weeks up to the day you got your redundancy notice to work out your redundancy pay.

Notice pay

Use the 12 weeks up to the first day of the notice period to work out what your notice pay should be.

Work this out using the 12 weeks leading up to your holiday.

Guarantee payments

Use the 12 weeks leading up to when your payment is due. If you no longer work for that employer, use the last 12 weeks of your employment with them.

If you鈥檝e worked for your employer for less than 12 weeks, you should be allowed to calculate your average weekly pay using:

  • the number of hours you would have worked
  • the hours of other workers doing a similar job for your employer

Working out your weekly figure

Add up the total amount of pay for the period and divide it by 12 to get the weekly figure. You do this even if you鈥檝e had to use a period of more than 12 weeks.

You can also include bonuses in your calculation.

Overtime

You can include overtime in your calculations if your contract says your employer has to pay it.

Work done for a previous employer

You can include pay for work done for a previous employer if you鈥檙e calculating your average weekly pay and you did not have a gap in employment when you changed jobs.

Get help with the calculations

If you need help working out a week鈥檚 pay, you can:

3. Pay calculations if you work shifts or get bonuses

If your pay or working hours vary from week to week, the calculations for working out your weekly pay are more complicated.

Bonuses and commission

Your pay could vary depending on the amount of work you do, because of:

  • bonuses
  • commission
  • 鈥榩iece work鈥� - you鈥檙e paid by the amount of work you do, rather than by the hour

The 12-week period

If you get bonuses, commission or piece work, you鈥檒l need to work out your average hourly rate over a 12-week period to work out your weekly pay.

Add up your total pay for the 12 weeks first. You can include overtime and bonuses. There are special calculations for bonuses.

Quarterly bonuses

You can include a proportion of your quarterly bonuses in your calculations.

  1. Divide the bonus amount by 13 (the number of weeks in a quarter of a year).

  2. Multiply this figure by 12 (the number of weeks your pay is averaged across).

Example

If you get a quarterly bonus of 拢260:

  • divide 拢260 by 13 weeks = 拢20
  • multiply 拢20 by 12 weeks = 拢240

You can include a bonus of 拢240 as part of your 12-week total.

Annual bonuses

If you get an annual bonus here鈥檚 what you need to do.

  1. Divide the bonus amount by 52 (the number of weeks in a year).

  2. Multiply this by 12.

Example

If you get an annual bonus of 拢5,200:

  • divide 拢5,200 by 52 weeks = 拢100 per week
  • multiply 拢100 by 12 weeks = 拢1,200

You can include a bonus of 拢1,200 as part of your 12-week total.

Hourly rate

Work out the average hourly rate by dividing the total amount you earned in 12-week period by the number of hours you worked.

Weekly rate

Multiply your hourly rate by the average number of hours you worked each week in the 12-week period, to get your weekly rate.

Shift or rota work

Your week鈥檚 pay will be the average number of hours you work at an average pay rate over a 12-week period.

Example

Your pay is 拢9 per hour and you work three 9-hour shifts, then you have 3 days off.

You鈥檙e paid 拢11 per hour at weekends. At the start of the 12-week period, your first day at work is a Monday. Here鈥檚 how you work out your pay.

  1. Work out how many hours you did over the 12-week period (42 x 9-hour shifts = 378 hours).

  2. Divide this by 12 to work out your average weekly hours: 378 divided by 12 = 31.5 hours.

  3. Calculate your pay for the weekday shifts. You鈥檇 have worked 30 weekday 9-hour shifts at 拢9 per hour. 30 shifts x 9 hours = 270 hours. Multiply this by 拢9 to get the total you were paid for your weekday shifts: 拢2,430.

  4. Divide 拢2,430 by 12 to get the weekly figure: 拢202.50.

  5. Calculate your pay for weekends. You鈥檇 have worked 12 weekend 9-hour shifts at 拢11 per hour. 12 shifts x 9 hours = 108 hours. Multiply this by 拢11 to get the weekend total: 拢1,188.

  6. Divide this by 12 to get the weekly figure: 拢99 per week.

  7. Add the weekday and weekend figures together: 拢202.50 + 拢99 = 拢301.50. This is your weekly rate.

Get help with the calculations

If you need help working out a week鈥檚 pay, you can:

4. Performance-related pay

Your employer should base your performance-related pay on clear, measurable targets - they should tell you about these.

There are 2 main types of performance pay:

  • short-term schemes, like bonus payments or sales commission
  • long-term schemes, like company shares

Non-payment of bonuses or commission

If you do not get a bonus or commission you鈥檙e owed and you think there鈥檚 been a mistake:

  • speak to your employer to see if there鈥檚 been a misunderstanding
  • ask them set out in writing how they鈥檝e calculated your pay
  • keep copies of any letters and notes of any meetings

If a bonus or commission is included in your contract, non-payment is a breach of contract. You can get help with making a complaint.

Non-payment of bonuses may also be covered legally under:

If you need help, you can:

5. Deductions from your pay

Your employer is not allowed to make deductions unless:

  • it鈥檚 required or allowed by law, for example National Insurance, income tax or student loan repayments
  • you agree in writing
  • your contract says they can
  • there鈥檚 a statutory payment due to a public authority
  • you have not worked due to taking part in a strike or industrial action
  • there鈥檚 been an earlier overpayment of wages or expenses
  • the court has told your employer to take debt payments

A deduction cannot normally reduce your pay below the National Minimum Wage even if you agree to it, except if the deduction is for:

  • tax or National Insurance
  • something you鈥檝e done and your contract says you鈥檙e liable for it, for example a shortfall in your till if you work in a shop
  • repayment of a loan or advance of wages
  • repayment of an accidental overpayment of wages
  • buying shares or share options in the business
  • accommodation provided by your employer
  • your own use, for example union subscriptions or pension contributions

If you work in retail - for example shops, restaurants

Your employer cannot take more than 10% from your gross pay (pay before tax and National Insurance) each pay period to cover any shortfalls.

Example

There鈥檚 a shortfall of 拢50 in your till and your employer wants to deduct this from your earnings.

You鈥檙e paid 拢250 gross per week. Your employer can take 10% of your gross earnings, which is 拢25.

They must only take 拢25 one week and then make another deduction from your next pay cheque for 拢25.

If you leave your job, they can take the full amount owed from your final pay.

If you have not been paid in full

Speak to your employer first to try to sort out the problem informally.

If this does not work, you can:

You have the right to go to an Employment Tribunal to get your money.

If you leave your job

Check your contract to see if your employer is allowed to withhold your pay. Normally you鈥檙e entitled to be paid everything you鈥檝e earned up to the point you finish.

If you鈥檙e forced to resign because your employer refuses to pay you, you may be able to make a constructive dismissal claim in an Employment Tribunal.