Payslip legislation changes: What do they mean for employers and employees?
The law relating to providing payslips is set to change very shortly.
From April 6, new legislation, known as the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No 2) Order 2018, will come into force, making it compulsory for employers to:
- Provide all of their workers with itemised printed or electronic payslips.
- Make sure the payslips they issue state the total number of hours worked where an individual’s pay varies according to the hours that have been worked.
Employers currently have a statutory duty to provide their workers with payslips. However, from April 6, they will also be required to provide payslips to external employees, who are outside of their immediate workforce.
Who will receive payslips from April 6 who didn’t used to?
Under the new payslip legislation, ‘workers’ are considered as being individuals who:
“Have entered into work under a contract of employment or any other contract, whether express or implied and whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or custom of any profession or business undertaking carried on by the individual.”
‘Workers’ are classed as contractors, and other types of ‘non-employee’ workers. For instance, casual, agency, freelance, seasonal and zero-hours contract workers.
When do hours need to be included on payslips?
If workers carry out ten hours’ work one month and then 20 the next month, their payslips will have to state the number of hours they’ve worked.
However, if a worker completes the same amount of work every month, in exactly the same amount of hours, then the number of hours do not need to be stated on their payslips.
The hours can be shown as a single total of hours or broken down into separate figures for different types of work or different rates of pay.
Including this information on payslips means it will be easier for variable-time employees to reconcile their pay with their working hours. It will also make it more straightforward for them to establish whether they are being paid the national minimum wage by their employers.
Where do I find out more?
HMRC has published guidance on the new legislation, which can be found here – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/764576/payslips-legislation-april-2019-additional-info-on-payslips.pdf
Alternatively, for more advice about the forthcoming payslip legislation and making sure your payroll processes are set up to accommodate the new requirements, contact us on on 01905 777600 or firstname.lastname@example.org.