What to do if you fail to pay employees' wages on time
Paying your employees in a correct and timely fashion is a fundamental responsibility. However, mistakes and unforeseen circumstances can occur.
James Rowland
Commercial Director James leads Account Management, Sales and Marketing at Neathouse Partners.Date
15 May 2019Updated
01 October 2024Table of contents
Related articles
Tags
As an employer, paying your employees in a correct and timely fashion is a fundamental responsibility. However, mistakes and unforeseen circumstances can occur, leaving you unable to complete this part of the payroll process as agreed. Wages not paid on time is one of the most common complaints of the modern worker, and employers must take it upon themselves to handle this situation in the right manner.
Here’s all you need to know about the legalities and practicalities of not paying staff wages on time.
Wages Not Paid On Time: Why It’s A Problem
A slight delay in paying wages may not seem a big deal to the business. After all, the company faces delayed payments on revenue throughout the year without major repercussions. Unfortunately, the situation for individuals is vastly different.
Most worker naturally schedule their direct debits around their payday. So, even a slight delay on payments could cause cash flow issues that impact their credit ratings and lead to charges on their personal accounts. Even when this isn’t the case, the inconvenience is not something that employees will appreciate, which can disrupt morale and productivity.
From a legal perspective, this is technically a deduction of wages and can also break the terms of the employment contract. Given that the Employment Rights Act 1996 states that the date on which they will be paid should be included alongside other details such as how they’ll be paid, breaking the contract could potentially lead employees to seek legal action.
In truth, this is unlikely for a single case of a 48-hour delay on payments. However, long-term or repeated delays can bring serious problems. In fact, employees can sue for consumption of up £25,000 if the courts declare that a breach of contract has occurred.
How To Handle Delays
First and foremost, it’s important for all employers to accept that things can go wrong from time to time, even when dealing with fundamental features like the payroll. Likewise, the fallout of faults in other areas of the venture can often disrupt payments.
Ultimately, though, there are three things every employer should do throughout these difficult moments. They are:
Maintain transparency and clear communication
Whether it’s due to an error by HR during the payroll processes or because funds from a major client haven’t cleared, you must advise employees of potential problems that could occur with their next pay packet. They might not like it, but they will respect you while it also gives them the best chance to think of contingencies.
Investigate the situation
Getting to the bottom of the issue is vital if you wish to prevent repeat situations from surfacing. When you successfully do this, it becomes possible to put employee fears to bed by providing reassurance over their future payments. Failure to do this is asking for the same problems to occur further down the line.
Consider the long-term implications
Payment delays may be caused due to bigger problems that require drastic measures. This could include making redundancies. Redundancies should be handled carefully, and employers should seek legal advice to avoid costly claims for breach of contract or unfair dismissal.
Discover the Neathouse Employment Law and HR Guide 2024
Download your copy of the Neathouse Partners Employment Law and HR Guide 2024 – a handy resource for every business manager covering various aspects of employment law and HR.
Fill in your contact information to access this resource.
By clicking, you agree to our Privacy Policy.
Neathouse Partners: Your Trusted Partner
We empower employers across the UK with tailored advice, offering strategic guidance that aligns with business needs and goals.
99.2 %
Customer happiness rating
99.2 %
Customer happiness rating
100%
Qualified experts
Chester Headquarters
Regus House, Chester CH4 9QR
Related blog posts
Ramadan In The Workplace: 6 Handy Tips For Employers
How your company can support LGBTQ+ at work during Pride Month 2024
Mental Health In The Workplace
Have questions?
Get in touch today
Contact us, and our team will get back to you within 24 hours. We value your questions and are committed to getting them answered quickly.
Hello! I am Nicky
Just fill in the form below with your details, and I will arrange for a member of our team to give you a call.
By clicking, you agree to our Privacy Policy