Pay transparency and your company: How to comply with the UK’s new payslip legislation
New legislation around itemised payslips recently came into force on 6th April 2019, giving contractors, freelancers, and zero-hour workers the right to receive a detailed payslip from their employer regardless of their employment status. Previously legislation did not require payslips to be issued to those classified as ‘non-employee’ workers but now employers must provide payslips to all workers and display hours where pay varies by the amount of time worked. This legislation aims to increase transparency in the workplace and ensure workers are paid fairly and accurately in all industries across the UK, thus representing an important step forward.
Covering pay periods which began on or after 6th April 2019, the adjustment to current pay was motivated by a drive to increase transparency in the employer-employee relationship as a result of the Taylor Review of Modern Working Practices, which called for greater clarity over the hours of work UK employees were being paid for. It means businesses will need to provide their contractors, freelancers and zero-hour workers with detailed payslips. As self-employed people make up around 15% of the UK population according to ONS statistics, it’s highly important that they, like everyone else, fully understand their payslip.
So what should an itemised payslip look like and what exactly should it detail? In truth, the requirements still vary somewhat depending on the type of worker employed. Overall it comes down to if the worker’s pay varies on the number of hours they have worked. However it’s useful to look over government guidance to find out more specifically about what different types of employees require.
Below is an example of an ADP payslip which includes everything you would usually expect, such as earnings, tax and National Insurance deductions as well as annual running totals of both pay and taxes. The most important thing to note is that pay has been broken down into basic pay, bonus and overtime, so the employee can see exactly what they’re being paid for and at what rate. In this case, as the rate at which the employee is being paid for overtime doesn’t vary, it’s not necessary to include the rate. However it is absolutely crucial to include the figure of 1.5 hours overtime that the employee is being paid for.
With ADP’s Workforce View report recently revealing that around 28% of UK employees wouldn’t realise if they were paid incorrectly – either because their payslip confuses them, they don’t check it or for other reasons – pay transparency has never been so important. The report also revealed that 66% of British employees are regularly working unpaid overtime, signalling that employees are not being justly rewarded for the hours put in.
In recent times, transparency has become one of the biggest key challenges businesses face. The introduction of Itemised Payslip legislation will give companies the opportunity to be more transparent and show their employees the work they are doing is valued. And failing to disclose these details accurately could provide grounds for legal disputes, so all businesses should have already considered the new legal requirements and be looking at how their current payslip format can be amended to ensure they’re complying with the new legislation.
Further governmental guidance on the legislation can be found here.