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Employers Will Have to Give More Information in Payslips (From April 2019)
From April 2019, employees whose wages vary depending on how much time they have worked, will be entitled to more information in their payslips. Employers should look at their payroll processes now and prepare for the changes expected in just over a year’s time.
On 8 February 2018, a new statute was laid before Parliament: The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 (the Order). It will come into force on 6 April 2019.
The Order will amend and supplement the Employment Rights Act 1996* (the 1996 Act) which gives an employee the right to receive certain information about their employment.
Currently, under section 8 of the 1996 Act, an employer only has to include:
- details about the employee’s gross amount of wages or salary;
- deductions from that gross amount; and
- the net amount of wages or salary received.
What does the proposed Itemised Pay Statement Order Provide?
Some employees’ wages vary depending on how much time they have worked. In these cases, under the Act, employers must set out, on the employee’s payslip, the number of hours they are paying the employee for. The employer must either:
- show the aggregate number of hours worked for which payment is being made; or
- give separate figures for different types of work worked – or where different rates of pay are paid for the work done.
Why is the Order needed?
The aim of the Order is to increase transparency over whether employees are paid correctly and to address the issue of underpayment – whether of the National Minimum Wage, the National Living Wage or under the employee’s contract of employment.
An employee will be able to see when they read their payslip whether the number of paid hours matches their understanding of how many hours they have actually worked. Employees can then:
- challenge their employer if they think their payslip is wrong;
- alternatively raise a case with the Advisory, Conciliation and Arbitration Service (ACAS); or
- raise a case with HMRC (if the National Minimum Wage has not been paid).
In all these cases, the employee will be able to use their payslip as evidence.
Right to receive a payslip – another new right
The Government has also introduced the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No. 2) Order 2018, which will extend the right to receive a payslip to all workers.
This law is also not due into force until April 2019.
What Action Should Employers Take?
The Order comes into force on 6 April 2019. Before then, employers should:
- ensure their human resources team are aware of the changes;
- amend the format of their payslips;
- ensure payroll processes are adjusted to collect the new information required; and
- include the new information – where appropriate – on payslips.
* Other statutory rights given by the Employment Act 1996 protect employees’ rights in relation to dismissal, redundancy, pay and flexible working etc.) Section 1 (2) of the 1996 Act requires the employee to record the main terms of the employment in writing and give it to the employee within two months of starting employment.
For more information about your current rights under the Employment Act 1996 or the new Act due in force in 2019, contact Susan Mayall on 0161684 6948 or Kate Hunter on 0161 785 3500 or make an enquiry.
- The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018
- Explanatory Memorandum - The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 2018 No. 147
Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers LLP or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.