When we talk about health and wellbeing in the  workforce, discussions often focuses on mental health initiatives, flexible working arrangements, or managing the pressures inherent in demanding roles. While these remain crucial, one essential but sometimes overlooked factor is the financial foundations underpinning employees’ wellbeing, pay, benefits, sick pay, and ensuring staff receive their correct entitlements promptly and without confusion.

From our experience advising employers, many workplace disputes and formal claims arise not from misconduct but from uncertainty, inconsistency, or errors in how pay and financial entitlements are administered. Such issues, if left unaddressed, can affect staff morale and retention. 

This article outlines key considerations employers should prioritise to get these fundamentals right and support workforce wellbeing to reduce exposure to employment tribunal claims. 

Payslips and Pay Accuracy: The Foundation of Financial Wellbeing
Under section 8 of the Employment Rights Act 1996, employees have the statutory right to receive an itemised payslip on or before payday. Payslips must clearly set out gross pay, all deductions (including tax and National Insurance), and net pay.

Ensuring payslips are accurate and delivered promptly is critical. Even small errors or delays can cause significant financial anxiety for employees who rely on predictable income to manage household budgets and commitments. 

Accurate payslips also reduce the risk of disputes escalating into formal grievances or employment tribunal claims. Regular audits and effective payroll systems can help employers ensure compliance with legal requirements and demonstrate a commitment to transparency.

Sick Pay: Clear Rules and Consistent Application
Statutory Sick Pay (SSP) is governed by the Social Security Contributions and Benefits Act 1992 and sets the legal minimum entitlement for employees during periods of illness. While employers often provide enhanced contractual sick pay schemes, ensuring these are applied fairly and consistently is essential.

Inconsistent application of sick pay policies can lead to disputes and may intersect with claims under the Equality Act 2010 where disability is involved. Proper management of sick pay entitlements supports both legal compliance and employee wellbeing.

Notice in Lieu and Pay on Termination: Getting it Right
Pay in lieu of notice (PILON) and notice periods are often overlooked but important areas for employers to manage carefully. The Employment Rights Act 1996 (sections 86 and 87) sets out statutory minimum notice periods, which can be superseded by contractual terms.

Whether an employee works their notice or is paid in lieu, accurate calculation of pay, including any outstanding benefits or bonuses, is essential. Errors here can lead to claims for unlawful deduction of wages or breach of contract.

Employers should have clear policies on notice periods and PILON arrangements, ensuring payroll teams and managers understand the requirements and communicate clearly with departing employees. This clarity helps manage expectations and avoids disputes at a sensitive stage of employment.

Deductions from Wages: Avoiding Unauthorised Deductions
Section 13 of the Employment Rights Act 1996 protects employees from unlawful deductions from wages. Deductions must be authorised by statute (such as tax or National Insurance), contractually permitted, or made with the employee’s prior written consent.

Common issues arise over deductions for overpayments, training costs, or leave adjustments. While employers may be entitled to reclaim certain sums, failure to follow proper procedures or communicate clearly can expose them to claims.

To reduce risk, employers should ensure policies on deductions are transparent, accessible, and applied consistently. Open communication with employees about why deductions are made helps maintain good working relationships.

The Link Between Pay and Wellbeing
Financial security is a fundamental component of employee wellbeing. For  staff, who often operate under significant pressure and demanding conditions, the certainty of receiving full and timely pay and benefits contributes significantly to their ability to manage work related stress.

When employees trust that their financial entitlements are handled correctly, it reduces anxiety and helps them focus on their roles. Conversely, pay related uncertainties can exacerbate stress and impact overall morale.

Employers who prioritise accuracy and clarity in payroll and benefits administration send a positive message that they value and respect their employees. 

Practical Steps for employers
To safeguard wellbeing and legal compliance, employers might consider the following practical measures:
•    Regularly review payroll processes and systems to ensure payslip accuracy and timely delivery.
•    Train managers on sick pay entitlements and the importance of consistent application.
•    Develop clear policies on notice periods and pay in lieu, ensuring these are understood and consistently applied.
•    Establish transparent policies on wage deductions, ensuring employees are informed and consulted where necessary.
•    Encourage open dialogue around pay and benefits to quickly address any concerns or misunderstandings.

Conclusion
At Hempsons, we advise employers to take a holistic approach, integrating precise payroll management, transparent communication, and consistent policies with broader health and wellbeing initiatives.

Complying with statutory obligations is fundamental. Beyond legal compliance, getting pay, benefits, and financial entitlements right strengthens workforce stability and supports staff wellbeing.

 

 

For further information and professional advice tailored to your specific circumstances, feel free to contact our team at Hempsons. Our expertise in employment law for employers can help you navigate the complexities of workplace wellbeing and ensure your HR practices are both inclusive and compliant.

For more detailed insights, visit us at www.hempsons.co.uk.