Changes to Payslips Law 2019 | Perrys Accountants
On April 6th 2019, new legislation came into play requiring all employers to provide payslips to all workers. The law also states that they must display hours on the payslips where the pay varies by the amount of time worked.
In this article, we’ll help you understand the new legislation and make sure you’re providing the right information for your staff.
Why do employees get payslips?
A payslip is a written statement given to your employees to show them what they earn before tax, along with any deductions.
You give your staff payslips to ensure they have a clear understanding of what they’re earning and where wage deductions are going. They’re also used to provide proof of income for the likes of tax returns, mortgage applications and so on.
Giving your employee a payslip saves time in the long-term, as it means they won’t need to ask as many questions about the payments they receive on pay day.
Law changes as of April 2019
So why did the law change?
It’s fair to say there have been a few shake-ups surrounding legislative pay recently, with the National Living Wage and National Minimum Wage also increasing in 2019.
It has been brought to light that some employers had been violating employment law (either inadvertently or deliberately) and denying their staff the rights to a minimum salary.
It seemed that employees were having trouble working out how the amount of time they’d worked equated to the amount of pay they received. The new laws are designed to make things much clearer and allow staff members to check that they’ve been paid correctly.
Payslips now need to show how much time has been worked and prove that all pay is received according to the legal minimum.
All workers, including those on zero hours and casual contracts, need to be presented with either printed or electronic payslips, either on or before their stated pay day.
The payslips must be itemised, meaning that they detail the following:
- Gross wage – this is the full amount of pay before any deductions
- Deductions – such as tax and National Insurance (we’ll go into this in a bit more detail shortly)
- Net wage –the amount of pay after the deductions are made.
What other information should payslips include?
Alongside the above items, payslips also need to include the number of hours the employee has worked, but only if the amount of pay is different in relation to the amount of time they’ve worked.
In this case, payslips must show either:
- A single aggregate figure
- Different figures for different types of work or different pay rates
Payslip law requires you to state where any deductions are made from your employees’ gross wage. These include:
- Legally required deductions (like tax and National Insurance)
- Those provided for in the employment contract
- Recovery for expenses or overpayment of wages
- Deductions required by court order
- Pay deducted due to strike action
- Any deductions made with the employee’s written consent
If a worker does something that results in your business suffering a loss, such as breakages or till discrepancies, you may be liable to deduct this loss from their wages.
However, you can only make these deductions if you’ve already allowed for them in your employment contracts. Any unforeseen circumstances require a full week’s notice in writing before you can deduct the loss from the employee’s wage. The deduction can’t exceed the cost of the loss, and must take place within six months of the incident occurring.
Adjusting your payroll
By now, you should have adjusted your payroll setup to ensure you can provide payslips to all workers. The new law means that your payslips shouldn’t just collect the information required by the new legislation, but also need to be laid out in a way that clearly presents it.
This article outlines a rough guideline of what the new payslip laws entail. If you need further guidance, seek the help of an employment law professional or check out the Government website.