As of the 6th April 2019, a new legislation – the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No.2) Order 2018 – will require employers to change how their employees pay details are presented on their payslips. This will impact employees that receive variable amounts of pay, such as hourly paid workers, or workers that receive overtime in addition to their fixed standard hours. For example, where a worker has a fixed salary each month, and works variable overtime with additional or premium pay at an hourly rate, only the hours of overtime or premium rate need to be shown. It should be noted that where varied rates of pay apply, this should be listed in separate columns for clarity.
The legislation was introduced following the suggestions raised in the Taylor Review of Modern Working Practices, which called for greater transparency regarding the hours of work UK employees were being paid for. The government believes that this measure will allow employees to easily establish if they have been paid correctly and whether they have been paid in line with the national minimum wage.
Further to the requirement to specify the number of hours an employee has worked alongside the total pay received, the updated Employment Rights Act also specifies that the following information must be included on an employee’s payslip:
- Net salary received
- Gross salary earned
- Deductions, such as tax & National Insurance Pension ect
Employers should ensure that payslips are compliant for variable hours for annual and hourly paid colleagues as of 6th April 2019. Government guidance on the new laws regarding payslips can be viewed here.