Getting your payslips right, and making sure all the right information is on them, is an essential task for any employer. Making sure your payslips are up to standard is going to be even more important from 6 April 2018, when important changes to the legislation on payslips.
First of all, let’s take a look at how things stand currently.
There are penalties if employers fail to supply an employee with a copy of a payslip. If they don’t, the employment tribunal can order the employer to reimburse the employee with the full amount of any unauthorised deductions made in the 13 weeks preceding the application. That’s a hefty price to pay for not getting your house in order.
Under the Employment Rights Act 1996, employees have certain rights when it comes to their payslips. Under UK legislation, payslips must contain particular information. This includes:
- The date of payment;
- The gross amount of the wages or salary;
- The net amount of wages or salary payable;
- The amount and payment method of each part-payment, where different parts of the net amount are paid in different ways;
- Method of payment (e.g. BACS transfer);
- The amounts of any variable or fixed deductions from the gross amount and the reason they are made (e.g. National Insurance, tax, contractual deductions such as insurance etc.)
Whilst traditionally payslips have been paper statements many employers now supply them electronically, and HMRC guidance says that a payslip ‘can be in either paper or electronic format’.
So what amendments to the Employment Rights Act 1996 should employers be preparing for?
The important point concerns wages or salaries that vary by reference to time worked. Where this is the case, the total hours worked in respect of the variable amount of wages or salary must be shown, either as:
- a single total figure, or
- separate figures for different types of work or different rates of pay.
The change is set to come into force very soon, so employers need to update the information on their payslips ASAP.
For expert, plain-English advice on the legislation surrounding payslips, you can contact Alison here.
