Advice on Payslips
In the UK, Payslip Law is addressed in the Payment of Wages Act 1991. This Act grants all employees the right to a payslip and outlines what should be included in a payslip. Fundamentally, a payslip is a written statement from your employer that shows what you earn before tax, as well as any deductions.
Under current payslip law, payslips can be provided in traditional hard copy or an electronic copy. In order to streamline their payroll functions and save on paper and ink, more and more people are opting for online payslips.
They also provide extra benefit to employees, because the payslips are safely stored and available at a moment’s notice. Many payroll software packages include an online payslip option as standard that meets all current payroll legislation and is able to be adapted easily to accommodate for future changes.
Payslip Law Changes for 2019
With so many big legislative shake ups surrounding pay, such as the National Minimum Wage and National Living Wage, pay has been getting closer scrutiny from the Government. It has been revealed that some employers have been either inadvertently, or deliberately, flouting UK employment law and denying employees their rights to minimum pay.
A lot of the bad press has focused on zero or low hour contracts. Some companies were requiring individuals to be available on demand, yet with no or limited guarantee of work or pay. As a result, employers were not meeting their obligations with regard to deductions and employee rights.
Often employees were finding it difficult to equate their actual time worked with their actual pay received. As of 2019, changes are being made to payslip law to make things a little clearer and to give a means for employees to see if they have been paid properly. This means that payslips need to show time worked and demonstrate that all pay is appropriate and in accordance with legal set minimums.
Under new payslip law laid before parliament in February 2018, The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 was passed.
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.
“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 change comes into force from 6th April 2019.
For more payroll news, including the latest legislative changes, check out our blog.
Do employers have to provide payslips?
Section 4 of the payslip law states that employees have the right to receive payslips from their employers. This is regardless of the number of working hours to do, or even if you are on a zero hours contract. If you are an employee, you have the right to a payslip. However, employer’s don’t have to provide payslips if you are:
- a contractor, freelancer or ‘worker’;
- in the police service;
- a merchant seaman;
- a master or crew member working in share fishing.
Freelancers and contractors don’t have the right to a payslip from the people they work for, regardless of the length of service. Generally speaking, contracts for freelancers and contractors include an invoicing element of some kind.
When should I receive my payslip?
In accordance with payslip law, your employer must issue your payslip on or before your payday. Paydays vary by business and by pay run. Some paydays are the same day every month, while others are weekly. If you’re paid every four weeks, your payday will vary every month. You employer’s payroll team should manage this in a way that ensures that your payslips are made available to you on or before each payday.
What should be on my payslip?
Most importantly, your payslip must show two things:
- your earnings before and after any deductions
- the amount of any deductions that may change each time you’re paid
Changeable deductions are typically tax and National Insurance, but they will vary based on your personal circumstances. Employers must also explain any deductions fixed in amount. You may have pension contributions, a child care subsidy or similar benefit provided by your employer. They can choose to do this either on a payslip, or in a separate written statement.
What deductions can my employer make on my payslip?
Payslip law also refers to situations where deductions are made from pay or you are required to make a payment to the employer. Employers are allowed to make deductions in cases when the deduction is:
- required by law. Such as PAYE tax and National Insurance;
- provided for in the contract of employment;
- part of recovery for an overpayment of wages or expenses;
- arises due to strike action;
- required by a court order;
- made with your written consent.
If you do something that results in your employer suffering a loss, they may be allowed to deduct the loss from your wages. This can include breakages, till discrepancies, or in situations where your employer is providing you with a service. This is most commonly in circumstances where your employer provides you a uniform. In these cases, a deduction or payment by the employee is only allowed within circumstances.
Under payslip law, such deductions can only be made if they are already allowed for in your contract if they are part of a service provided. For unforeseen circumstances, such as damage or breakages, payslip law states that you must have received a full week’s written notice first. Such deductions must be fair and reasonable and not exceed that cost of the loss. Deductions as a result of loss caused must take place within 6 months of said loss occurring.
Failure to pay all or part of the wages due to an employee is considered an unlawful deduction in pay and has reasonable grounds for dispute. Likewise, unpaid notice, holiday pay, bonus and commission payments can also form part of a claim under current legislation.
GDPR & Payslips
Do payroll companies need consent from their client’s employees?
Businesses must provide their employees with information on what happens to their data. This includes sharing employee’s personal data with an outsourced payroll company. Fortunately, this falls into the remit of the GDPR legislation. Employee personal data can be stored and managed by a payroll bureau, bookkeeper or accountant for the sole benefit of correctly paying their wages, paying the correct tax and providing a payslip.
Employee consent under GDPR
Payroll companies do not need to seek consent from individual employees that the payroll is processed for. However, the employer will need to inform their employees that they are sharing their personal information with a third party. An employee cannot withdraw their consent for their personal data to be used as part of the payroll processing.
Find out more about FMP Global’s GDPR Compliance.