How and when do employees get paid in the UK?

How you get paid, and how often, depends on who you work for and the type of work you do. Some people get a monthly salary, some are paid weekly. And with the rise of the ‘gig economy’ more people are getting paid at other intervals.

It is important to understand what you should be getting, when, and how much should be deducted. This will allow you to check there have not been any mistakes, and help you budget correctly. It’s also important to know how to deal with any problems you have getting your correct payment on time.

In this article, we run through what you should expect and what your rights are if there are any problems with your pay.

How is pay worked out in the UK?

There are different ways that earnings are calculated depending on the type of work you do.

Salary

This is where you are entitled to a fixed amount each year, paid in regular equal amounts through the year, usually monthly. The number of hours you must work for this should be specified in your work contract. If you work more than your contracted hours, some employers offer extra payments for overtime.

Hourly

Here you get paid an amount for every hour you work. Therefore, your pay will go up and down, depending on how many hours you have worked for your employer.

Piecework

This is where you are paid a fee for each piece of work you do. Whilst still relatively unusual, it is becoming more common in the ‘gig economy’ where workers are classed as self-employed and get paid for each task they complete. For example, many food couriers work in this way. Whilst this type of work is more flexible and you may get paid more frequently, you may not get the same rights as employed workers such as sick pay or holiday pay

Are there any other types of pay in the UK?

In addition to standard pay, you may also be able to get other payments depending on the work that you do and what is specified in your contract: 

Commission may be paid in addition to a salary or on its own. It is usually a reward for meeting sales targets.

Tips are something you receive from a customer you have provided a service to, perhaps as a waiter or taxi driver. Some employers allow you to keep your own tips. Others may pool them and share them equally amongst staff. Companies should not keep tips for themselves.

Some companies pay bonuses. They may depend on your own performance, or perhaps on the company’s performance. They are often paid annually, for example at Christmas or the end of the financial year.

How often should I expect to get paid?

How often you get paid should be specified in your employment contract. It is usually either monthly or weekly.

People on a salary are often paid monthly. Those paid an hourly rate may find they are paid more frequently.

How do people receive their wages in the UK?

These days most employers credit your pay directly in to your bank account.  You will normally be asked to provide your bank account details when you start work at a new company. 

Gone are the days of employers giving their staff cash in envelopes at the end of the week, although a few employers may still choose to pay you by either cash or cheque.

Working hours and pay protections for UK workers

Workers in the UK have certain rights to make sure they are treated fairly by employers.

Two of the most important are maximum working hours and minimum wage. 

Working Hours

Your working week shouldn’t exceed a maximum of 48 hours. This rule is to ensure employees aren’t overworked and get enough rest between shifts. This maximum is an average, usually calculated over a 17-week period. You can agree to opt out of these regulations, but your employer can’t make you opt out or sack you unfairly if you choose not to.

National Minimum Wage and Living Wage:

There is the minimum amount of pay per hour, before deductions, that you should receive by law from your employer. For people under 23 this is called the National Minimum Wage and for those 23 and over it is called the National Living Wage. At the time of writing (August 2022), the minimum hourly amounts you should receive are:

There are some exemptions to the minimum wage, for example, those who are classed as self-employed.

Understanding deductions from your pay

Most people are paid under the Pay As You Earn (PAYE) tax system. This means that tax is deducted from your pay before you receive it. 

There are three main deductions are you likely to see on your payslip:

Tax

This is the Income Tax paid under PAYE. Your tax code, which HMRC provides each year, determines how much tax is deducted from your pay.

National Insurance

This is another tax based on the amount you earn. The National Insurance you pay is important for ensuring you qualify for some benefits and your full state pension.

Pension

Most employers provide a workplace pension which both you and they pay into. Assuming you have not opted out of it, the amount you put in is deducted from your pay.

There may be some other deductions from your pay such as student loan repayments, but you should be aware of these before they happen.

It’s important to make sure you understand what deductions should be coming from your pay. For example, it’s worth understanding your tax code to make sure your tax deductions are correct.

HMRC have a mobile app where you can see your tax code and NI number, an estimate of the tax you need to pay, income, and benefits received. Within the app, you can make a self-assessment payment, track any interactions you have with HMRC, claim refunds, and much more. For more information visit the HRMC website. 

Problems getting paid

If you have any problems with your pay, for example, it hasn’t arrived on time, or you haven’t received as much as you should have, you should normally contact your employer in the first instance. This would usually either be your manager or your company’s HR department.

Most employers will correct any mistakes, and they should do it immediately. There shouldn’t be a need to wait until the next payday.

If your employer will not correct any problems quickly, it is a good idea to seek independent advice. Citizen’s Advice is a good place to start.