Prepare for Payslip Changes

New legislation comes into force from 6 April 2019 which requires all employers to (a) provide payslips to all workers and (b) show hours on payslips where the pay varies by the amount of time worked.

These changes are pursuant to the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018.

The statutory right to receive an itemised payslip will be extended to all workers. Currently this right only applies to employees, a sub-category of workers.

From 6 April 2019, a payslip must show the total number of variable hours a worker has worked. This is only required when workers get a different wage depending on the hours they have worked. This might be because they have worked overtime, the number of hours they work changes in each pay period, or the rate they get for working certain hours is different.

The payslip only needs to show the hours that actually vary. For example, if a worker is salaried to work for 20 hours in a pay period but also works 4 hours of overtime, only the additional 4 hours must be recorded

The new rules mean that employers will have to ensure that they provide a payslip to all workers and that the payslip includes the following:

1. Gross salary or wages;
2. Net salary or wages payable;
3. Where there are deductions, specify the amount and what they relate to;
4. Where it is paid in parts, the amount and payment method for each part;
5. If any part varies due to time worked, specify both rate of pay and total number hours worked. This can be either as a single aggregate figure, or separately for each rate of pay or type of work

A payslip may be provided in either a physical format or an electronic format that the worker can print.

If a worker’s pay does not vary by time worked (for example because they are paid a fixed salary each month) there is no need to include an hourly figure to account for variations in pay caused by taking unpaid leave or being on statutory sick pay.

A worker who thinks that they have not received a payslip, or that the payslip they have received lacks the required information, may bring a claim before an Employment Tribunal. Therefore it is important that all employers check their payroll processes and amend them as necessary to comply with the new rules.

If you should require any advice in relation to these changes, or in relation to any other employment law related matter, please contact Erin Duffy, Head of Litigation, who will be pleased to advise you.