Employers, are you ready for the new payslip requirements?

Posted by Julie Taylor

05-02-2019

New rules are set to come into force in April requiring itemised calculations for variable rates of pay and hours worked and the right to a payslip will be extended to include all workers, not just employees.  

These two updates to the Employment Rights Act 1996 will come into force on 6 April 2019.  From that date, employees and workers, including those under casual or zero hours contracts, must receive correctly itemised written, printed or electronic payslips.

The purpose of imposing this increased transparency is to help employees understand their pay and easily check that they are being paid correctly.  It is also hoped that it will make it easier to identify whether employers are complying with the obligations under the National Minimum Wage and National Living Wage and that holiday entitlements are correctly managed.

However, while the intention and changes are straightforward, new payroll procedures and alternative software may be required to satisfy the new requirements.

These new rules also sit alongside what can be a much more complex question for many companies:  determining whether their different categories of staff are employees, workers or self-employed contractors in the first place.

Many organisations are not good at recognising that even where staff may not be employees, they could still be categorised as a ‘worker’ rather than just self-employed and therefore be entitled to certain rights such as the national living wage, paid holiday and sick leave.

Unfortunately the boundaries that distinguish ‘workers’ from the self-employed are increasingly difficult to pin down, especially following various high-profile cases, such as the Uber drivers and other so-called gig economy companies, where individuals rights to be treated as a worker, rather than a self-employed contractor, were upheld.

Lots of companies fail to meet minimum legal requirements simply because they do not understand their employment law obligations when it comes to workers, so hopefully this new process will be a step forward towards improved awareness.

As the distinctions between employees, workers and self-employed contractors may not be obvious for some organisations, it is important to regularly review your staffing arrangements and identify any uncertainty or potential risks and ensure that new developments are implemented to ensure compliance with legislation.  Where there is any doubt, it is useful to seek further legal advice.

What must be included in the written statement of wages:
  • the amount of gross wages or salary
  • for any part that varies according to time worked, the total number of hours worked and the rate of pay, either as a single aggregate figure or separately for each type of work or rate of pay
  • the amounts of any deductions and what they relate to
  • the net amount of wages or salary payable
  • if paid in parts, the amount and payment method for each part

Julie Taylor

Senior Associate, Employment
Employment Law Team

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