In April 2019 new legislation on payslips and employers’ responsibilities were introduced by the government. The new law states that itemised payslips must be given to employees or workers. But a recent report shows that one in ten UK workers still doesn’t get a payslip, and thousands of businesses are at risk of prosecution.
Today, you need to give itemised payslips to all workers, including staff on casual, agency and zero-hour contacts.
It can be difficult to tell the difference between employees and workers, and many UK businesses hire a mix of both. In short, employees have a “contract of employment” with you and workers don’t.
For now, the most important thing to remember is that all workers and employees need payslips and all payslips must be itemised. That means they must show:
- Gross and net pay.
- Deductions from pay.
- The number of hours worked where pay varies based on the amount of time worked (more on this shortly).
- How you pay your workers’ wages if you use multiple payment methods (such as if you pay part in cash and part in BACS).
Depending on the types of contracts you have with your staff and what hours they work will also depend on whether you require to hours on a payslip.
Most employees work set hours for a fixed salary. Therefore, you don’t need to put hours worked on their payslips. Except for when they’ve worked certain hours for different rates of pay.
Casual or zero-hour workers often work on an hourly basis. Because their pay varies based on their hours worked, you will need to include all of their hours on their payslips.
Any deductions taken from employees and workers’ pay will need to be added to their payslips. This includes National Insurance, tax, and student loan payments, plus deductions for uniform or equipment costs.
For example, if your staff need to pay for their uniforms, then the new legislation on payslips states you must include the cost on their payslip. However, be aware of any staff who are paid National Minimum Wage when deducting for things like uniforms. This could bring them below the NMW threshold. Please read our blog for further details.
If you charge new starters for on-the-job training, you need to include this on their payslips. Don’t forget a robust deductions clause in any contract is required to be able to make deductions without the worry of any tribunal claims for unlawful deductions of wages at a later date.
Workers now have a statutory right to itemised payslips. If you don’t give your workers the correct payslip, they may submit a claim to an employment tribunal. And that could result in a hefty penalty.
The tribunal will look at any ‘un-notified wage deductions’ made in the 13 weeks before the claim.
Any deductions not put on a payslip, such as uniform, equipment or training costs, could count as ‘un-notified’. Therefore the tribunal can order you to pay compensation to the workers involved.
If you haven’t given workers itemised payslips since April 2019, there’s a risk that a worker can lodge a claim against your business. However, you can take steps to reduce the risk.
Identify which members of staff haven’t received itemised payslips since April 2019. Then calculate what deductions you made from their pay each month. Issue payslips for all periods since the 6th April 2019. Ensure your workers receive itemised payslips from the next pay reference period.
It’s also important to stay up to date with legal changes. There are to be some changes to employment law in April 2020. Workers and employees will gain employment rights as part of the update. This includes the right to receive a written statement of main terms from day one of their employment.
If you would like more details on the new legislation on payslips, or are worried about how new laws will impact your business, call Metis HR on 01706 565332.
Metis HR is a professional HR Consultancy based in the North West of England supporting clients across the country. We specialise in providing outsourced HR services to small and medium-sized businesses. Call us now on 01706 565332 to discuss how we may help you.