From 6 April 2019, new legislation - known as the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No.2) Order 2018 - will change how UK employers provide payslips to their workforces. More specifically, under the new system employers will have to deliver itemised payslips to every worker on their payroll, not just those classified as ‘employees’. Current legislation does not require payslips to be issued to contractors, freelancers, and other types of ‘non-employee’ workers - this situation will change in 2019, with obvious consequences for payroll departments around the country.
The amendment to current pay legislation was proposed in February 2018 and motivated by a desire to increase transparency in the employer-employee relationship. The substance of the reforms was a result of the Taylor Review of Modern Working Practices which, amongst a number of suggestions, called for greater clarity over the hours of work UK employees were being paid for.
By extending the statutory entitlement to receive an itemised payslip, the government aims to ensure more workers are paid fairly and accurately in industries across the UK. Similarly, those workers will be able to react faster when they are paid incorrectly and, by extension, become more aware of their rights.
‘Time Worked’ Amendment
Beyond the simple expansion of payslip entitlement to all workers, the reformed Employment Rights Act also changes the information which must be included on the payslip. UK payslips must, under current provisions, detail:
- The employee’s gross salary/wages,
- Deductions (tax, NI, etc)
- Net salary/wage amount received.
Under the new legislation, from 6 April 2019, payslips will also have to include information about the number of paid hours the employee has worked - but only in situations where “the amount of wages or salary varies by reference to time worked”. In these variable contexts, payslips will have to show hours worked either as:
- A single, combined amount, or
- An itemised list of hours worked for different rates of pay
Including this information on payslips means that variable-time employees will not only find it easier to reconcile their pay with their work hours, but to establish whether they are being paid the national minimum wage by their employers.
Adjusting your Payroll
With the April deadline for the new regulations approaching, it’s time for employers to adjust their payroll setups to facilitate the provision of payslips to all workers. As an employer, this means reviewing your business’ payroll infrastructure and ensuring there is sufficient cohesion between other parts of your organisation, such as accounting and HR. Practically, you’ll need to ensure that your payroll is not only able to collect the information required by the new regulations but that your payslip format is adjusted to present it.
Payslips can be provided to employees as a printed or even written document, or provided electronically - and must be delivered on or before the employee’s payday. The Employment Act amendment doesn’t apply to salaries which are paid for ‘periods’ of work that start prior to 6 April 2019.
Compliance with the new regulations is especially important since the Taylor report recommended that the government extends its powers to deliver better terms and conditions for variable hours workers. The government has issued guidance for businesses on the new payslip rules.
Preparing with activpayroll
At activpayroll, our payslip provisions for fixed-time employees already cover all necessary information - and will require no significant changes. Employers who pay employees for time worked, however, will need to provide activpayroll with that data for each pay period. If you believe this requirement will affect your payroll, please liaise with our team.
For more information about activpayroll services for employers around the world, browse our Global Payroll page today.