Many organisations choose to employ students, particularly during the holidays and they can be an invaluable source of labour during key times of the year.
However it is important to remember that student workers are entitled to certain employment rights, including Statutory Sick Pay (if their earnings are high enough to qualify), holiday entitlement, and payment in line with national minimum wage, etc.
The Inland Revenue allows students to be paid free of tax, where their earnings are below their basic personal allowance. In order to be paid tax free, the student must complete and sign the declaration on form P38(S).
We have been approached by a university to take a student on a one-year work placement as part of their degree. What employment rights would they have (if any)?
They would have the same statutory rights as any other employee such as minimum wage, protection against being treated less favourably and disciplinary and dismissal procedures.
Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations do not apply to apprentices or students on work experience placements of one year or less where those placements are part of a course (note however that student holiday jobs are covered by the regulations). Therefore you may wish to offer a less comprehensive benefits package and / or salary if appropriate to the role.
When do I need to use a P38?
A student's wages are taxed differently depending on when the student works. Students who only work during the vacations do not pay income tax on their wages if:
- Their taxable income for the tax year is below the personal allowance and
- They complete a P38 (for each tax year)
If a student works during term time as well then a P45/46 must be completed, as a P38 is only applicable for non term-time working. Students with taxable income in excess of the personal allowance pay Income Tax at the normal rates, and those students who work during the university vacations are liable to pay National Insurance Contributions if they earn over the relevant threshold.
Can students work in term times?
Students who work during term-time pay Income Tax and National Insurance Contributions on their wages in the same way as other employees and so therefore should complete a P45/46. Students who work both during term-time and vacation-time do not qualify for special treatment. Income tax and National Contributions are deducted from their wages in the same way as for other employees.
An employer who employs a student during term-time should treat that student the same as any other employee for tax purposes.
What is the situation on employing foreign students when studying in the UK?
Overseas students who work during vacation time may be treated the same as UK students who only work during vacations if they have a P38 stamped by an authorised sponsor. If they do not have a stamped P38 they pay normal rates. National Insurance Contributions are also deducted from their wages unless they have a valid certificate (E101) issued by their home country. Overseas students may reclaim the Income Tax they have paid on leaving the UK if there is a tax agreement between the UK and their home country.
Non-EU National students are not allowed to work for more than 20 hours per week during term time (with the exception of where the placement is necessary for their studies and undertaken with the educational institution's agreement). Their passport / visa will display their status to work in the UK. These arrangements do not apply to those on courses of 6 months or less who have been granted entry on conditions that prohibit any form of employment.
Do students accrue holiday?
The Working Time Regulations 1998 set down the minimum annual leave provisions for workers although some employers may provide more generous contractual holidays. Under the Working Time Regulations, workers (including part-timers, students and freelance workers) have the right to:
• 5.6 weeks of their normal working week paid leave each year
• payment for untaken statutory leave entitlement on termination of employment
Do I issue a P45 if I know they will work for the Company in their next holiday break?
If terminating a fixed-term contract then you would need to issue a P45 as for any other employee, in case they decide to take some term-time work elsewhere. However, to avoid having to do this each time, you could employ on a 0 hours contract and keep them on the books until they resign or don't work for an extended period.
Should students a sign contract of employment?
It would be in your interest to ensure that students sign a contract of employment. This will ensure that the employees are clear on the terms and conditions put in place when working at your Company. It will also make clear any statutory rights that they have and provide you with a paper trail should any problems arise with their employment. Part-time workers, including students, have the statutory right not to be treated less favourably than a full-time worker.
Students under 18 - are there any specific areas of employment law that I should know before recruiting?
These are protected under the Young Workers Directive and the Health and Safety (Young Persons) Regulations. Therefore, until a student is 18 then you must treat then as a Young Worker.
When looking at the standard hours that they will be undertaking you must take into account that the working time for young workers, at present is limited to:
- 40 hours per week,
- Eight hours in any one day and
- Night working is prohibited between 10pm and 6am or 11pm and 7am.
- Young workers must also be given a break of at least half an hour when they have completed 4.5 hours work.
- A daily rest break of at least 12 hours and a weekly rest break of at least 48 hours in a seven-day period.
With regard to Health and Safety, you must take into account the young workers' lack of experience and awareness of existing or potential risks when assessing the risks with regard to their health and safety in the workplace. We would advise that you inform parents or those with parental responsibilities the outcome of the risk assessment and any control measures that you feel are necessary to apply to the role.
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