Nowadays, most employers pay wages directly into the worker’s bank or building society account. This is not only administratively convenient for the employer but also minimises any security risk, and helps ensure that the right amount of tax and national insurance is being paid.
If your contract of employment says that you will be paid in cash, but your employer now wants to switch to another method, e.g. payment directly into your bank account, your employer should agree this with you (or your trade union) first, as it amounts to a variation or change of your contract.
Even if your employer pays you in cash, you must still be given a payslip each payday, showing all your pay, income tax and national insurance contributions for the pay period.
If the employer is paying you cash in order to avoid paying HM Revenue & Customs (HMRC) the tax and national insurance contributions that are owed, your employer will be breaking the law. In some circumstances, HMRC can also ask you to repay the tax that should have been paid, at a later date.
If your employer does not pay national insurance contributions to HMRC, you will lose out on contributory benefits such as statutory sick pay or the state pension that depend on your national insurance record.