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Payslip law changes April 2019 – ‘For the hour is nigh and the day soon at hand’

Payslip law changes April 2019 – ‘For the hour is nigh and the day soon at hand’

 

The law requires that a payslip is provided to all employees each time they are paid. The exception to this legal requirement means that for the following there is no obligation to provide a payslip, non-employees: contractors, freelancers and workers. There are additional categories where a payslip is not required: police service; merchant seaman; master and crew of share fishing vessel.

When a payslip is required, it can be provided as a printed or written document, or your employer is at liberty (according to gov.uk) to provide it electronically. However provided, the payslip must be provided on or before the employee’s payday.

The legal requirements of the detail on payslips are limited, there are many styles and formats which vary from employer to employer and industry to industry. The concept of wage packet has increasingly reduced, with the onset of direct credit transfer into the employee bank accounts. Cash pay, once the norm, is now rare as are cheque payments.

So, the UK law on payslip requires at least the following to be shown (as a minimum):

  • Earnings before and after deductions
  • The amounts for deductions which may change from period to period

Where deductions are fixed amounts, the employer also needs to provide details although that may be provided as part of a separate statement. For the majority, the payslip would often show deductions along with further employer provided information. If a statement of deductions was used, then that statement must be issued before the first payment to a new employee and annually thereafter to all employees with such deductions.

National Minimum Pay

With the onset of employment rights policing of holiday pay, sickness, and National Minimum payments (such as National Minimum Wage and National Living Wage), many employers are being shown to either inadvertently, or for some deliberately, flouting UK employment rights and denying employee the rights to minimum pay. Some making illegal deduction for wages, or not taking account of deductions for the benefit of the employer which reduce national set minimum pay, or denial of holiday pay entitlements which are currently and legally based, as a minimum, on a week’s pay being derived from the prior 12 weeks’ pay.

Employers in some circumstances have not been counting all worked time that should be paid! There has been bad press for zero or limited low hour guarantee hours contracts, some requiring individuals to be available on demand, yet no or limited guarantee of work or pay. Often employees were finding it difficult to equate their actual time worked with their actual pay received. Government set requirements are now being applied to make things a little clearer and a means for employee to be able to identify if they have been paid for time worked and appropriately in accordance with legal set minimums.

Under new law laid before parliament on Thursday 8th February 2018, The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 was passed and comes into force from 6th April 2019. Employers will now be required to provide employees who are paid according to 'time worked', details of the number of hours being paid on their payslip this time.

"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—

  1. a single aggregate figure, or
  2. separate figures for different types of work or different rates of pay.”

Many payroll solutions (such as SD Worx) already offer such capability, however, not all employers provide hours information to their payroll or, if they do, choose not to show such information to their employees on their pay statement. This will need to change.

Prepare!

In preparation for April 2019, employers must review their business and payroll data processes and to check compliance with this new law - amend their processes and configure their payroll operation, to enable the correct hours information to be provided.

These government initiatives better enable employees to identify what they are being paid and equate that with worked time. It will enable them to better identify if the employer is meeting their minimum pay obligations (National Minimum Wage and National Living Wage) and are not requiring added unpaid work-time.

Powers are also being extended to enable better terms and conditions as part of the response to the Taylor report for short hour contract workers (zero hours, those with non-guaranteed hours etc.) and that holiday entitlements are being correctly applied. It is considered that many employers are not currently meeting the legal minimum requirements whether deliberate or inadvertently due to not understanding the employment law obligations.

‘The hour is nigh and the day soon at hand’. Beat the 6th April 2019 deadline.

Let SD Worx help you comply with this new law 

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About the author

Simon Parsons
Director of Payments, Benefits & Compliance Strategies

Simon has been a major contributor to SD Worx’s payroll expertise since 1984. Besides being influential in the development of SD Worx’s payroll services, he is a major presence on a number of HMRC consultative groups and committees.

A fellow of the Chartered Institute of Payroll Professionals and one of the original Masters of Science in Payroll Management, Simon is a regular author and speaker on payroll matters. He is also Chair of IReeN, the electronic exchange with government user network, and the Honorary Chair of the British Computer Society (BCS) Payroll Group (The Chartered Institute for IT). 

Simon has won a number of awards in the past including the Strathearn Award for Lifetime Achievement at the 2012 Pay & Benefits Awards, the Payroll Alliance Award for Advancing the Payroll Profession in 2010 and IPP Person of the Year in 2006.

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