Are you ready for the new payslip legislation?
Did you know that new legislation comes into force on 6th April 2019 that changes the requirements on what you have to include on employee payslips?
The payroll changes will impact on all those workers your business uses – not just employees and includes permanent and casual staff and those on zero hours contracts. It will require you to issue them all with fully-itemised payslips if you are not already doing this.
The changes follow recommendations made by both the Taylor Review into modern employment practices and a report from the Low Pay Commission. They called for employers to make it clear precisely how many hours staff were being paid for.
You should already be issuing payslips to employees, but from next April, you will need to make sure that the payslips (whether written, printed or electronic) set out how the payment was calculated in cases where the rate of pay and hours are variable and that they are issued to all your workers.
Alternatively, if more relevant, the different payments for varying types of work and/or pay should be itemised instead.
The changes have been introduced to help workers to understand their pay better and to ensure they are being paid correctly as well as enable them to challenge their employers if they feel there has been a mistake.
The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 will change the requirement of what information is given on an itemised payslip and is an attempt to improve transparency around pay, especially in cases where workers work varied hours or in various roles which involve differing rates of pay.
Once it comes into force, payslips must include both the information mentioned above, and that set out in Section 8 of the Employment Rights Act 1996, including earnings before and after any deductions, the amount of any deductions that may change each payment period such as tax and National Insurance (NI), an explanation of any fixed amount deductions and the net wages to be paid.
If you are not sure whether you already comply, or whether you have to make any changes, you should speak to your payroll provider or get in touch for further advice.
Posted on 22 Oct 2018