Benefits of being on PAYE
Your National Insurance Contributions entitle you to certain state benefits, such as statutory sick pay (SSP), statutory maternity pay (SMP) and unfair dismissal...As an employee on PAYE you have the same rights as any other employee working in the UK and your National Insurance Contributions entitle you to certain state benefits.
Protection Against Unfair Dismissal
If you started work before 6th April 2012 and have been in continuous employment (i.e. working for the same employer) for at least one year you are automatically protected against unfair dismissal. Employees who started work on or after 6th April 2012, gain protection against unfair dismissal after two years of continuous employment.
Statutory Sick Pay (SSP)
As an employee you are entitled to SSP if you are sick for three days or more.
- Normally the three waiting days do not include non-working days (weekends or days not normally worked)
- Working days lost prior to SSP commencing are paid at your employer’s discretion
- Your employer may be able to reclaim some of the costs from the state
Statutory Maternity Pay (SMP)
If you are pregnant and have been working for the same employer for at least nine months prior to the baby’s due date your employer is obliged to administer SMP on your behalf.
If you choose to resume your employment following your maternity leave you are fully entitled to do so, with the same terms and conditions as before. In most cases your employer can reclaim all costs of operating and paying SMP from HMRC.
Statutory Adoption Pay (SAP)
If your are adopting a child you have a right to 26 weeks Statutory Adoption Pay (SAP), providing you have been in continuous employment (working for the same employer) for at least 26 weeks by the date the adoption is approved.
Statutory Paternity Pay (SPP)
Effective April 2003 new fathers are entitled to two weeks' Statutory Paternity Pay (SPP), with a right to a further 13 weeks of unpaid leave. In order to qualify you must have been in continuous employment (with the same employer) for at least 26 weeks (six months).
You are entitled to redundancy pay if you have been in continuous employment for a minimum of two years, providing you are not on a fixed-term contract.
State Pension Contributions
By paying National Insurance Contributions you also qualify for State Pension contributions. The State Pension is divided into two parts:
- The Basic State Pension
- The State Second Pension
For more information you can either speak to an Independent Financial Advisor or contact the Pensions Helpline on 0845 3000 168.
All employees in the UK are entitled by law to 5.6 weeks holiday per year. For a full-time employee that is 28 paid days off per year, of which 4 weeks (20 days) is standard leave and 1.6 weeks (8 days) is all 8 of the bank holidays.
BEWARE: You Could Lose Out If Your Employer Cuts Corners!
If your employer does not register for PAYE or if they register but only declare part of your salary in order to save themselves money it will directly affect your full entitlement to the above and other state benefits. Also, remember that you will need evidence of declared income in the form of payslips to get a personal loan, mortgage or provide a financial reference to a landlord.
It is never in your interest to agree to any illegal tax-saving arrangement with your employer!
information for domestic workers
All domestic employers in the UK are required by law to pay at least the National Minimum Wage (NMW). It is a criminal offence for an employer to pay below the NMW, carrying a fine of up to £5,000 on conviction, unless you're living as part of the family household (i.e. without separately metered accommodation). For current NMW rates, please refer to our rates and thresholds page.
- You can check if you are above the NMW from the payslips your employer should be providing you with. Simply divide your gross weekly wage by the number of hours you have worked to calculate your hourly wage
- If you think that your employer is not paying the NMW you are also entitled to inspect the tax records they keep for your employment. They must give you access to these within 14 days of receiving a written request from you, but this should only be your final course of action after more friendly and informal communication between you has broken down
Domestic employees are exempt from the measures concerning working hours but are entitled to a 20 minute rest break for every six hours worked.