What to Do If Your Employer Does Not Pay Salary: Employee Rights under UK Labour Law

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Миколаєнко Олена Василівна

Attorney

United Kingdom / England

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Publication date: 16.09.2025

Non-payment of salary is one of the most common breaches of UK labour law, severely impacting employee rights and employer obligations. If an employer delays payment, makes unlawful deductions, or fails to pay for worked working hours, the employee has full rights to resolution through mechanisms like Employment Tribunal or HMRC. This article details causes of non-payment, steps to resolve it, and practical advice, considering legal work status, minimum wage, National Insurance, and probation period. Legal Marketplace Consultant offers employment advice to help you develop a clear action plan, review employment contract, and protect your interests from job offer violations.

Under the Employment Rights Act 1996 and National Minimum Wage Act 1998, employers must pay full salary without unlawful deduction from wages, except for statutory deductions like PAYE or National Insurance. If payment is delayed, it is a breach of contract, especially if the employment contract specifies clear terms (e.g., monthly). For employees with day-one rights (from 2027) and during probation period (3–6 months), protection is enhanced, but currently workers can claim back pay via tribunal. For example, if minimum wage (£12.21/hr from April 2025) is unpaid for worked hours, HMRC can investigate, recover the debt, and impose fines up to £20,000 on the employer. Employee rights include the right to a detailed payslip with salary breakdown, deductions, and working hours, plus compensation for delay, including interest (8% annual).

For self-employment, the situation differs as self-employment involves an invoice system where the worker bills the client, but clients must pay timely, or it can lead to small claims court. Employer obligations include not only payment but also withholding PAYE and National Insurance for employees, affecting employee rights to pension and social benefits. Dismissal rules are relevant here if non-payment leads to resignation, allowing a constructive dismissal claim with compensation up to £115,115 (2025). If the issue arises during probation period, the procedure is simplified, but rights to minimum wage apply from day one.

Main Causes of Non-Payment of Salary and How to Identify Them

• Payroll Errors: Technical issues with PAYE or National Insurance leading to incorrect deductions; check payslip for mistakes.
• Company Financial Difficulties: Insolvency or cash flow problems where the employer cannot pay; apply to Redundancy Payments Service for statutory pay.
• Disputes Over Terms: Arguments about working hours or performance, but deduction without consent is illegal; compare with employment contract.
• Unscrupulous Practices: Intentional non-payment to pressure, which may be discrimination; gather evidence for tribunal.

Non-payment often starts with small delays but can escalate to full refusal, especially for workers on zero-hours contracts where salary depends on worked hours. In such cases, minimum wage (£12.21/hr) is mandatory, and violations can trigger HMRC enforcement.

Steps for Employees When Salary is Unpaid

1. Document the Issue: Collect all evidence: employment contract, payslips, emails about working hours, job offer; calculate owed amount, including minimum wage and interest.
2. Informal Communication: Discuss with manager or HR in writing (email), specifying date and amount; give 7–14 days to rectify.
3. Formal Grievance Procedure: Submit an official complaint per the employment contract procedure; demand payment and explanation.
4. Contact ACAS: Use early conciliation (free mediation up to 1 month); mandatory before tribunal claim.
5. File Employment Tribunal Claim: For unlawful deduction from wages (3-month time limit); tribunal can award full amount plus compensation.
6. HMRC for Minimum Wage: If involving minimum wage or National Insurance, HMRC investigates and recovers fine from employer.
7. Alternatives for Self-Employment: For self-employment, file in small claims court for unpaid invoices (up to £10,000); verify self-employment in contract.

Employment advice from Consultant helps calculate owed pay, including National Insurance credits for pension, and prepare documents for tribunal. 

Risks for employees include financial hardship, but tribunal claims are free, with 70% success rate for unpaid wages cases. If non-payment persists, it can be constructive dismissal, allowing unfair dismissal claim after 2 years' service (until 2027). For self-employment, risks are lower, but county court can award costs. Employer obligations, like PAYE withholding, remain, and breaches can lead to HMRC audits. Dismissal rules are relevant if non-payment forces resignation, allowing compensation claim.

Practical advice: If the issue occurs during probation period, contact HR immediately, as employee rights are limited, but minimum wage applies from day one. For zero-hours contracts, log working hours in an app or journal to prove owed pay. If the employer is insolvent, apply to Insolvency Service for statutory redundancy pay (2+ years' service).

Questions and Answers

Tips for Employees

Keep Records: Save payslips, emails about working hours, and job offer as basis for tribunal claim.
 

Seek Employment Advice: Consultant helps review employment contract and prepare grievance.
 

Assess Legal Work Status: Determine if you're employee or self-employment for the correct procedure.
 

Don't Resign Hastily: Discuss with employer to retain rights to unfair dismissal compensation.