From April 2019, a change in UK legislation brings hourly paid workers (paid by reference to time) more detail to their itemised pay statement (payslip).
From 6th April 2019, the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No. 2) Order 2018 – (The Order) – requires more information to be present on a payslip: for workers receiving variable rates of pay for the time they work.
Industry experts suggest around a third of UK payroll teams will need to make changes to comply with the legislation and employers are advised to act now to prepare.
What’s changing to payslips?
Section 8 of the Employment Rights Act 1996 requires an employee to receive – at or before the time any payment of wages or salary is made – a written itemised pay statement (payslip). This must display:
- The employee’s gross wages or salary
- Any deductions from the gross amount
- The net amount of wages or salary
From 6th April 2019, The Order amends Section 8 to require itemised pay statements to also include:
- The amount and method of payment for each part-payment, where the net amount is paid in different ways, and;
- where the amount of wages or salary varies by reference to time worked, the total number of hours worked in respect of the variable amount of wages or salary either as:
- a single aggregate figure, or
- separate figures for different types of work or different rates of pay.
This additional information is only applicable where pay varies as a consequence of the time someone has worked.
Preparing to deliver more itemised payslips
Now is the time to prepare for the legislation changes.
- Consider how your payroll system(s) stores and presents pay data. Are adjustments needed to payroll processes to capture the required information?
- Will your epayslip and printed payslip formats need reprogramming to display the additional fields?
- How will you communicate to employees the change to the way their pay data is displayed?
‘Workers’ also gain the right to a payslip
The Order, will also extend the right to receive an itemised pay statement (payslip) to any worker: not just those with a contract of employment. Payroll teams should now review their systems and processes to ensure they are able to capture the data required and accommodate providing itemised payslips to workers.
The amendments made by the Order do not apply in relation to wages or salary paid in respect of a period of work which commences before the Order comes into force.
A guide, Payslips: guidance on legislation in force from April 2019 requiring employers to include additional information on payslips (published by the Department of Business, Energy and Industrial Strategy) is now available.