If your business breaches basic employee rights, the consequences could be huge.
You could be ordered to pay back everything you owe, going back years.
A worker can make a tribunal claim without a lawyer.
The new Fair Work Agency (FWA) can audit your records, issue financial penalties and name you publicly.
And, if your staff find out that their rights have been breached, even accidentally, this breaks their trust and can damage your business from a retention point of view.
New research has found that 5.6 million UK workers have experienced a clear breach of their basic employment rights in the past two years.
Not because employers deliberately broke the law, but because they didn’t know their obligations or simply had no proper systems in place.
What the research found
The most common violations were:
- Being paid below the National Minimum Wage
- Not receiving payslips
- Not being given legally required employment documents
Workers in insecure or low-paid roles were hit hardest. More than 25% of people in low-income, non-traditional or minority-background roles reported a breach.
And 37.5% of the workforce reported negative mental health as a harmful practice they had experienced at work.
Small businesses are particularly at risk
If you manage HR informally, you are more likely to be in breach of something than you think.
We often see smaller businesses doing things like:
- Verbal agreements instead of written contracts
- Payroll that has never been properly checked against minimum wage rules
- Workers who have been with you for years without a proper written statement of employment
More specifically, these are areas that often trip business owners up:
- National Minimum Wage: tips, commission or deductions can push effective pay below the legal minimum without you realising it. The calculation is more specific than most employers expect.
- Payslips: since 2019, every worker has had the right to a payslip, not just employees. If you have people working for you who are not on the payroll in the traditional sense, this applies to them too.
- Written statements of employment: this is a day-one right. The written statement must be provided on or before the first day of employment, not at the end of a probation period.
- Holiday pay: if your workers have irregular hours, calculating holiday pay correctly is more complicated than dividing annual leave by twelve months. This remains one of the most misunderstood areas of employment law.
- Working time: rest breaks and the 48-hour weekly limit still apply, even where workers have signed an opt-out agreement. The opt-out covers the hours limit, not the right to rest breaks.
The FWA is now operational and taking action to better protect workers’ rights.
It can conduct proactive inspections and audits on your business unannounced, without needing an employee complaint first. It can also bring claims on behalf of workers, issue financial penalties and back-payment orders and, in serious cases, publicly name employers who fall short.
Ignorance is no longer a defensible position.
What to do now
Start with a basic compliance audit. Work through your key obligations and check whether your records, documents and processes actually hold up.
Questions to ask yourself:
- Are your written employment statements in place and up to date?
- Are your payslips being issued to everyone who is entitled to them?
- Are you confident that your minimum wage calculations are correct, including for tipped or commission-based staff?
- Are your holiday pay calculations right for all workers, including those on irregular hours?
If the answer to any of those is “I’m not sure” now’s the time to fix it.
We can help
We carry out compliance audits of employment practices, identify gaps before they become enforcement issues and help you to put the right systems and documentation in place.
If you are not confident that your basics are covered, get in touch. A short review now costs far less than an FWA investigation later.