Knowledge
Glossary from A to Z
Short and clear explanations of the key terms from employment law, time tracking and HR administration.
A
- Absenteeism RateThe absenteeism rate measures working time lost due to sickness absence against planned contracted working hours over a given period, expressed as a percentage.
- ACAS (Advisory, Conciliation and Arbitration Service)A Crown non-departmental public body in the UK providing independent workplace advice, early conciliation, and statutory Codes of Practice on disciplinary and grievance procedures.
- Actual Working TimeActual working time comprises the hours a worker is genuinely working at the employer's disposal, after deducting statutory and contractual rest breaks.
B
- Bank Holiday Premium & EnhancementsA bank holiday premium is an enhanced pay rate (such as double time or time and a half) paid to employees working on a public or bank holiday. In the UK, enhanced pay for bank holiday working is not a statutory right, but depends entirely on the employment contract, subject to statutory minimum wage rules.
- Benefits in Kind (BiK)A benefit in kind (BiK) is any non-cash benefit or perk of monetary value provided by an employer to an employee. BiKs are generally subject to Income Tax and Class 1A National Insurance contributions (NICs) unless a statutory exemption applies.
C
- Capacity PlanningCapacity planning reconciles the staffing requirements of upcoming projects with available working hours to identify bottlenecks and idle time at an early stage.
- Capping LimitThe capping limit is the agreed maximum balance on a working time account or time off in lieu (TOIL) balance. Any hours exceeding this threshold are forfeited, paid out, or transferred to another account.
- Collective & Workforce AgreementsA collective or workforce agreement is an agreement between an employer and recognized trade unions or elected employee representatives governing terms, working conditions, and workplace rules.
- Company ShutdownA company shutdown (or mandatory closure period) occurs when an employer closes a business or facility and requires employees to take statutory annual leave simultaneously. Employers may mandate shutdowns provided statutory notice is given under Regulation 15 of the Working Time Regulations 1998.
- Continued Remuneration & Sick PayContinued remuneration refers to the ongoing payment of salary or wages when an employee is absent from work, most commonly due to illness under Statutory Sick Pay (SSP) provisions or contractual sick pay schemes, as well as during statutory annual leave.
- Contribution MarginThe contribution margin is the amount remaining from revenue after deducting variable costs, which contributes towards covering fixed costs. In project-based businesses, it is usually determined per project or per hour.
- Core Working HoursCore working hours represent the mandatory period within a flexible working or flextime scheme during which all employees must be present or contactable. Outside this window, employees can determine their own start and finish times.
D
- Daily Rest PeriodThe daily rest period is the continuous rest entitlement between the end of one working shift and the start of the next. Under Regulation 10 of the Working Time Regulations 1998, workers are entitled to at least 11 consecutive hours of uninterrupted rest per 24-hour period.
- Data Access (Tax & PAYE Audit)Data access refers to the statutory powers of HMRC to inspect and obtain tax-relevant digital records during a tax or compliance check under Schedule 36 to the Finance Act 2008 and Making Tax Digital (MTD) regulations.
- Data Erasure ScheduleA data erasure schedule defines which personal data must be erased and when. It translates the storage limitation principle under Art. 5(1)(e) UK GDPR into verifiable operational rules.
- Data Processing Agreement (DPA)A Data Processing Agreement governs the processing of personal data by a service provider on behalf of the controller. Article 28 of the UK GDPR makes it mandatory.
E
- E-InvoicingAn e-invoice is an invoice issued, transmitted, and received in a structured electronic format that allows for automated electronic processing. A standard PDF document is not an e-invoice.
- Employee Consultation and Information RightsConsultation and information rights refer to the formal legal mechanisms through which UK employers inform and consult elected workforce representatives or recognised trade unions on major operational changes, working time arrangements, and workplace monitoring.
- Employment Rights Act 1996 (ERA)The cornerstone statute of UK employment law establishing statutory employment protections, written particulars, unfair dismissal rights, and statutory redundancy terms.
F
- Fit Note (Statement of Fitness for Work)An official medical certificate issued by UK healthcare professionals confirming an employee is unfit for work or outlining workplace adjustments to facilitate a return to work.
- Fixed PriceUnder a fixed-price model, a set fee is agreed for a clearly defined scope of work. The contractor assumes the commercial risk of cost overruns, while retaining the upside if delivery is achieved more efficiently.
- Flexible Working Band (Bandwidth)The flexible working band (or bandwidth) is the employer-defined time corridor within which work may be performed. It establishes the outer operational boundary of a flextime arrangement.
- FlexitimeFlexitime is a flexible working arrangement allowing employees to vary their start and finish times within agreed parameters, tracking surplus or deficit hours in a working time account.
G
H
I
- Immutability (Tamper Resistance)Immutability (tamper resistance) means that once a record is entered, it cannot be altered in a manner that conceals or erases the original entry. Any subsequent amendments must be recorded with a fully traceable audit trail.
- Incapacity for WorkIncapacity for work occurs when an employee is unable to perform their contracted job duties due to illness or injury, or can only do so at the risk of aggravating their condition.
M
- Marginal Employment & Low-Earnings ThresholdsEmployment where earnings or hours are low, often falling below key National Insurance and workplace pension thresholds (such as the Lower Earnings Limit), whilst remaining fully subject to National Minimum Wage and Working Time Regulations.
- Maternity Protection & Maternity LeaveMaternity protection encompasses UK statutory provisions designed to safeguard pregnant and breastfeeding employees, including up to 52 weeks of Statutory Maternity Leave, mandatory workplace risk assessments, Statutory Maternity Pay (SMP), and robust protection against unlawful detriment and dismissal.
- Maximum Working HoursMaximum working hours refer to the statutory cap on working time set by the Working Time Regulations 1998. Adult workers must not exceed an average of 48 hours per week, calculated over a standard 17-week reference period, unless they sign an individual opt-out agreement.
- MilestoneA milestone is a distinct event in the project lifecycle with a defined, verifiable deliverable. It has zero duration and serves as a checkpoint, formal sign-off gate, or payment trigger.
- Mobile WorkMobile work is the performance of work at varying locations chosen by the employee outside traditional company premises, without a fixed, permanently established home workstation.
N
- National Minimum Wage & National Living WageThe National Minimum Wage (NMW) and National Living Wage (NLW) represent the legally mandated minimum hourly rates payable to qualifying workers across the UK under the National Minimum Wage Act 1998.
- Night WorkNight work is work performed during night hours. Under the Working Time Regulations 1998 (SI 1998/1833), night time is statutory defined as a period of at least seven hours including the hours between midnight and 5:00 am (defaulting to 11:00 pm to 6:00 am unless altered by a relevant agreement). A night worker regularly works at least three hours during night time as a normal course.
- Night Work PremiumA night work premium (or night shift allowance) is an additional payment made on top of standard pay for hours worked during the night. In the UK, it is governed by employment contracts, National Minimum Wage rules, and the Working Time Regulations 1998.
O
- 48-Hour Working Week Opt-Out AgreementA voluntary written agreement under Regulation 5 of the Working Time Regulations 1998 permitting an individual worker to work more than the 48-hour statutory average weekly cap.
- On-Call Duty (at Workplace / Employer-Designated Location)During on-call duty, the employee remains at a location designated by the employer to take up work immediately when required. Under the Working Time Regulations 1998, the entire duration counts in full as working time.
- On-Call Duty (Standby)During on-call duty (standby), employees remain at a location of their own choosing and only need to be contactable. As a general rule, only actual call-out time counts as working time.
- Overhead Absorption Rate (Overhead Surcharge)The overhead absorption rate allocates indirect costs that cannot be directly attributed to a specific project as a percentage of an allocation base — typically direct labour costs.
- OvertimeOvertime refers to hours worked beyond the contractually agreed standard working hours. It must be remunerated or compensated with time off in lieu (TOIL) in accordance with the employment contract and statutory minimum wage requirements.
P
- Payment in Lieu of Untaken Annual LeavePayment in lieu of untaken annual leave is the financial compensation paid to a worker for statutory annual leave accrued but untaken upon termination of employment. Cashing out statutory holiday during an ongoing employment relationship is strictly prohibited under UK law.
- Payroll Records (Lohnkonto)Payroll records (Lohnkonto) represent the mandatory statutory record that employers must maintain for each employee and tax year, documenting all gross pay, taxable benefits, statutory payments, and deductions under the PAYE Regulations 2003.
- Phased Return to WorkA phased return to work gradually reintegrates an employee recovering from long-term illness or injury back to full contracted hours through an agreed rehabilitation schedule and workplace adjustments.
- Post-Calculation (Post-Costing)Post-calculation compares actual incurred costs against the initial pre-costing estimate after a project is completed. It evaluates whether the original commercial and operational assumptions held true.
- Process Documentation (Electronic Record-Keeping)Process documentation describes how an organisation records, processes, secures, and retains digital data subject to statutory record-keeping rules. It demonstrates compliance to HMRC, auditors, and regulators for all IT and payroll systems.
- Proof of Activity (Detailed Timesheet)A proof of activity (or detailed timesheet) records precisely what services were carried out on each day and for what duration for a client. It serves as the foundation for billing and formal proof of service delivery.
R
- Readiness for Work (Arbeitsbereitschaft)Readiness for work is time spent by a worker present at the workplace in an alert state, ready to resume duties immediately as needed. It counts fully as working time under UK law.
- Reference PeriodA reference period is the statutory timeframe (normally 17 weeks) over which a worker's average weekly working hours are calculated to ensure compliance with the 48-hour maximum weekly working time limit under the Working Time Regulations 1998.
S
- Salary Sacrifice (Pension Schemes & Benefits)Under a salary sacrifice arrangement (also known as salary exchange), an employee contractually agrees to reduce their contractual gross cash remuneration in return for the employer providing a non-cash benefit, most commonly qualifying workplace pension contributions, resulting in tax and National Insurance savings.
- Shift PatternA shift pattern defines the recurring schedule and sequence in which employees work at different times of the day to ensure operational coverage beyond standard business hours.
- Short-Time Working and Lay-OffsShort-time working is a temporary reduction in an employee's contracted working hours due to a downturn in business. Eligible employees may receive Statutory Guarantee Pay (SGP) under the Employment Rights Act 1996.
- Special LeaveSpecial leave refers to authorized time off granted for specific personal, family, or civic circumstances, separate from statutory annual leave. Whether it is paid depends on statutory provisions, company policy, and the employment contract.
- Statutory Annual LeaveStatutory annual leave is paid time off work granted for rest and recreation. Under the Working Time Regulations 1998, UK workers are entitled to a statutory minimum of 5.6 weeks of paid holiday per year (capped at 28 days for full-time workers).
- Statutory Business & Tax Audit (HMRC Compliance Check)A statutory business audit or HMRC compliance check is a formal inspection of an organisation by tax authorities (HM Revenue & Customs) or statutory regulators. It examines whether tax, payroll, National Insurance, and statutory employment obligations have been accurately recorded and fulfilled.
- Statutory Overtime / Additional HoursIn employment law terminology, statutory overtime / additional hours refers to working time that exceeds statutory maximum daily or weekly limits (such as the 48-hour average working week), whereas contractual overtime refers to hours worked beyond an employee's contractually agreed target hours.
- Statutory Parental LeaveStatutory Parental Leave is an employee's statutory right to take unpaid leave of absence to look after a child's welfare. Eligible parents can take up to 18 weeks per child up to their 18th birthday.
- Statutory Retention PeriodThe statutory retention period is the minimum time frame for which employment, tax, and accounting records must be preserved under UK law. In HR and payroll, these statutory periods range from two years for working time records to six years for National Minimum Wage compliance, PAYE records, and financial accounts.
- Statutory Sick Pay (SSP)The mandatory statutory minimum payment made by UK employers to eligible employees who are incapacitated for work due to illness, payable from the fourth qualifying day.
T
- Target Working HoursTarget working hours (or contracted working hours) represent the contractually agreed hours an employee is required to work over a given period, serving as the benchmark against which actual hours worked are measured.
- Time and Materials BillingIn time and materials billing, actual hours worked are invoiced at agreed rates. The risk regarding the required effort rests with the client.
- Time BalanceThe time balance is the net difference between actual hours worked and contractual target hours. A positive balance represents accrued time credit, whilst a negative balance indicates a time deficit (undertime).
- Time ClockA time clock is a physical or digital device used to record clock-in and clock-out times. Today, it typically refers to a digital terminal operated via RFID keycard, badge, PIN, or biometric identification.
- Total Employer Labour CostThe total employer labour cost (gross cost of employment) is the total direct expenditure incurred by an employer, comprising gross wages/salaries plus mandatory employer secondary Class 1 National Insurance contributions, statutory workplace pension contributions, and applicable statutory levies.
- Trust-Based Working HoursTrust-based working hours is a working time model where the employer waives strict control over daily scheduling, allowing employees to manage their hours autonomously. The focus is on deliverables and work results rather than mere physical presence.
U
- Untaken Annual Leave & Carry-OverUntaken annual leave refers to statutory or contractual holiday entitlement remaining at the end of the leave year. Whether it can be carried over depends on statutory exceptions, sickness, parental leave, or contractual agreements.
- Utilisation RateThe utilisation rate indicates what proportion of available working time is spent on billable or productive activities. It is the core KPI in project-based business.
W
- Wage Type / Pay ElementA wage type (or pay element) is a unique payroll code categorising a specific remuneration or deduction component. It determines PAYE tax, National Insurance liability, and general ledger posting.
- Working from Home (Home Office)Working from home (home office) refers to work carried out from an employee's private residence. UK employment law distinguishes between formal hybrid/remote arrangements, statutory flexible working, and mobile working.
- Working Time AccountA working time account records the difference between contractually agreed working hours and actual hours worked as a credit or debit balance, enabling reconciliation over a defined reference period.
- Working Time ModelA working time model determines how agreed working hours are distributed across the day, week, and year, and how much flexibility employees have regarding when they work.
- Working Time Regulations 1998 (WTR)The primary statutory instrument in the United Kingdom governing maximum weekly working hours, daily and weekly rest periods, rest breaks, and statutory paid annual leave.
- Works Council & Employee RepresentationA works council (or employee consultation forum) is the elected representative body of employees in an organisation, facilitating formal consultation, information sharing, and workplace agreement.
- Written Statement of Employment ParticularsThe mandatory legal document that UK employers must provide to employees and workers on or before their first day of work setting out basic terms and working hours.