Everyone deserves to be paid accurately and fairly for the work they’ve done. Yet sometimes, due to administrative errors, payroll delays, or changes in pay agreements, employees may not receive the correct wages. This is where back pay comes in—a legal and ethical obligation for employers in the UK to rectify past payment discrepancies.
Summary
“Back pay refers to the money an employee is owed when they’ve been underpaid or unpaid for work they’ve already completed.”
What is Back Pay?
Back pay, often referred to as back wages, is the difference between the amount an employee was actually paid and the amount they should have received.
It can arise due to a delay in implementing a wage increase, payroll mistakes, unpaid overtime, or legal rulings related to wrongful dismissal or underpayment.
For instance, if a worker was promised a raise effective from January, but the payroll team implemented it in March, the wages for January and February would be considered back pay.
According to HM Revenue & Customs (HMRC), all earnings including this must be taxed correctly and reported through payroll systems (HMRC source).
Summary
“Back pay corrects previous underpayments and ensures employees receive what they legally and contractually deserve.”
When Can Employees Claim Back Pay?
There are several common situations where an employee can legally claim this in the UK:
- Delayed wage increase – If a raise was agreed but not applied promptly.
- Unpaid overtime – Overtime that wasn’t recorded or remunerated.
- Incorrect classification – An employee wrongly paid as part-time or at a lower rate.
- Minimum wage shortfalls – If an employer failed to comply with the UK National Minimum Wage.
- Wrongful dismissal – If reinstated after dismissal, workers may claim wages for missed time.
- Contract errors – Mistakes in contractual obligations such as bonuses, commissions or salary bands.
Employees can claim back pay through informal discussions or legal channels such as an employment tribunal if necessary (GOV.UK).
Summary
“Back pay may arise from various legal and payroll oversights, ranging from misclassification to wage violations.”
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Do Employers Have to Pay Back Pay?
Yes—under UK employment law, employers are legally required to pay all earned wages, including any owed back pay. Failing to do so can result in serious penalties, including legal claims and enforcement action from HMRC.
If the case involves the National Minimum Wage or National Living Wage, HMRC can issue fines of up to £20,000 per underpaid worker (UK Government source).
Employers are advised to act swiftly once underpayment is identified and rectify it in the next available payroll cycle.
Summary
“Employers are legally bound to pay owed back wages—delays can lead to financial penalties and legal action.”
How Does Back Pay Appear on a Payslip?
To ensure transparency, it should must appear as a separate line item on an employee’s payslip. It is usually labelled clearly—such as “Back Pay – March 2025” or “Pay Adjustment”.
The payslip should show:
- Gross back pay amount
- Applicable tax and National Insurance deductions
- Updated year-to-date (YTD) totals
For example:
| Description | Amount |
| Basic Salary | £2,200.00 |
| Back Pay – Feb 2025 | £250.00 |
| Tax | -£380.00 |
| NI | -£180.00 |
| Net Salary | £1,890.00 |
Summary
“Back pay must be transparently itemised on payslips, reflecting gross amount and statutory deductions.”
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How to Calculate Back Wages: Step-by-Step
Before you begin any calculations:
- Review employment contracts for agreed salary rates and changes.
- Use accurate payroll data—ensure historic timesheets or salary records are reliable.
- Communicate with affected employees to explain the situation and expected payment date.
- Use HMRC-compliant payroll software to calculate taxes and NICs on this accurately.
Summary
“Accurate back pay calculation relies on proper documentation, payroll tools, and clear communication.”
How to Calculate Back Pay for Salaried Employees
To determine this for salaried workers, follow these steps:
- Calculate pay per period – Divide the annual salary by the number of salary periods.
- Determine underpaid period – Calculate the difference owed for each affected period.
- Account for unpaid work – If extra hours were worked, break down salary to an hourly rate.
Example:
Jane earns £36,000 annually and is paid monthly (£3,000/month). In April, she worked an extra 15 hours that weren’t paid.
- Monthly salary = £3,000
- Weekly salary = £3,000 ÷ 4 = £750
- Daily salary = £750 ÷ 5 = £150
- Hourly salary = £150 ÷ 7 = £21.43
- Overtime = 15 hrs × £21.43 = £321.45
If overtime is paid at time-and-a-half:
- £21.43 + (£21.43 ÷ 2) = £32.15/hr
- 15 hrs × £32.15 = £482.25 back pay
Summary
“Salaried employee back pay involves pro-rata calculations based on missed hours and overtime rules.”
How to Calculate Back Pay for Hourly Workers
- Identify unpaid hours – Check timesheets or schedules.
- Multiply by hourly rate – Include overtime if applicable.
Example:
Alex earns £10.50/hr and missed five hours of salary in March.
- 5 hrs × £10.50 = £52.50
If overtime is paid at 1.5x:
- £10.50 + £5.25 = £15.75/hr
- 5 hrs × £15.75 = £78.75 back pay
Summary
“Hourly back pay is straightforward—multiply missed hours by the correct rate, including overtime adjustments.”
Time Limit to Claim Back Pay in the UK
Employees generally have three months less one day from the date of the underpayment to lodge a claim with an employment tribunal. However, if the issue spans several payments (e.g. repeated underpayment), they may claim for a series of deductions.
To avoid legal complications, it’s best for employers to handle all pay disputes swiftly and document everything.
Summary
“Back pay claims must usually be made within three months—delays can jeopardise legal standing.”
Final Thoughts
While payroll mistakes can happen, what truly matters is how they’re handled. Transparent communication, timely payments, and proper accounting are vital for employee trust and legal compliance.
Employers should invest in reliable payroll systems, conduct regular audits, and provide training to avoid future back pay issues. Likewise, employees should regularly review their payslips and raise concerns early.
Summary
“Proper payroll management reduces back pay issues and builds employee trust and legal protection.”
The content provided on TaxCalculatorsUK, including our blog and articles, is for general informational purposes only and does not constitute financial, accounting, or legal advice.
You can also visit HMRC’s official website for more in-depth information about the topic.
