Getting Paid

Employees are generally paid weekly, fortnightly, every four weeks, or once per calendar month. With every payment the employer is legally obliged to supply a pay slip showing in detail how the amount of take-home pay is worked out. In particular it will show basic pay for the period, overtime, bonuses or commission, and will itemise all the deductions.

Certain deductions have to be made from gross pay. Two compulsory deductions are income tax under the Pay-as-you-earn system (PAYE), and your National Insurance contributions. Income tax is explained in Chapter 3. National Insurance contributions, the rates of which are liable to change in the government's annual budgets, are currently (2000) at the rate of 6.75% of pay from the employee, and 10.2% of pay from the employer. The latter amount, of course, does not appear on the pay slip; the employer has to find that amount from his own resources, together with an additional 3.5% wages tax. Deductions for income tax and National Insurance contributions are likely to reduce take-home pay to around four-fifths of total gross pay when you first start working.

Voluntary deductions

By agreement between employer and employee certain other payments that you choose to make on a voluntary basis may be deducted from your pay and the monies paid over by your employer as directed by you. In the pay slip illustrated in Fig. 1.1 the employee, who has joined the company pension scheme voluntarily, is paying £1.75 per week at present, being 4% of his basic pay, into the pension fund which will provide him with a pension on retirement, additional to the state pension. The fact that the employer also pays a sum equivalent to 6% of the employee's pay into the fund, or such other larger amount as may be needed to `fund' the required benefits (see Chapter 2 on pensions), is not, of course, shown on the pay slip. Any contribution by the employer to your pension benefits is virtually an addition to your total remuneration package, namely, deferred pay.

This particular employee also saves £30 a week in a Save-asyou-earn (SAYE) scheme, and puts £2.50 a week into a holiday fund run by the company. He will be able to withdraw a sum equivalent to 52 multiples of £2.50 from the fund to help pay for his holiday, even though he may not have anything like that amount in the fund at the time of his holiday.


Social Amenities

Facilities for social and sports clubs and for playing fields are increasingly being offered by large employers, and these can be important factors in the total package of benefits.

Pensions

A most important part of your total remuneration is the value to you of membership of any company pension plan. If you qualify to become a member of such a scheme, whether the company pays all or only a part of the regular contribution required, you should look on your eventual entitlement to pension and other benefits as a form of deferred pay. (See Chapter 2 for an assessment of pension schemes.)Social Amenities


Personal And Business Finance 2017

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