As you appreciate this is a debt forum, but aimed at those who owe debts rather than those who are owed. So the information from here will be biased, sometimes quite heavily as many of or members have been subjected to bailiffs and CO's.
However I do agree that this is complicated matter, which need legal input, so I would suggest reposting this on the legal website (under employment law), which can be found here:
They will be able to give you the advice you need and suggest possible better ways to deal with this.
I am also going to leave this thread open for any possible input form the forum members here, but please bear in mind that most if not all of the members on her have been on the receiving end, so their actual 'collections' knowledge will be biased and from one prospective only