Simpler and More Transparent Payslips Will Be Reality With Change In Law 2019

The employers of the United Kingdom need to alter the manner in which they provide payslips to their employees with the introduction of fresh legislation.

As per the current legislation, payslip should be given to all employees at the time of pay except for the following: contractors, freelancers and workers. Besides, payslips are not required for following as well: merchant seaman; master and crew of share fishing vessel and police service. However as per the new system, businesses will have to provide itemized payslips to each and every worker registered on their payroll and not just to those categorized as ‘employees’. At present, the law does not necessitate payslips to be rendered to contractors and non-employee workers. The new legislation which is known as the Employment Rights Act 1996 (Amendment) (No.2) Order 2018 is effective from April 06, 2019.

Payslip Law Changes April 2019

As per the legislation, there are minimal details required on payslips. Formats and presentation of details differ from employer to employer and with industrial sector as well. The idea of salary packet or wage packet has dwindled gradually with the advent of pay credit to employee’s bank accounts. Salary in cash or cheque payments has almost disappeared.

The UK legislation requires payslips to have at least following details:

1. Earnings prior to and post deductions
2. Amount of deductions

Amount of deductions may vary from period to period. In case deductions are fixed amounts, the businesses need to give details that can be part of a different statement.

Some exceptions continue to exist like the armed forces, merchant seamen and women for whom the new legislation will not be applicable.

It is crucial that the employers clearly comprehend the modifications in payslips and there will be no exceptions apart from the above mentioned cases. For salary periods starting on or after April 06, 2019, itemized salary slip will be applicable to both employees and non employees. Earlier the right was only applicable to employees but going forward employers have to include workers like casual and zero-hours workers in the list of employees who should receive detailed payslips regularly on or prior to the salary date.

National Minimum Wage

Many businesses have appeared to be on the wrong side of law considering employment rights for holiday pay, sickness National Minimum Payments. They have intentionally or inadvertently denied rights of employees to minimum wage. Many employers are used to making unlawful deductions from wages or not considering deductions to benefit themselves as employers.

There have been some cases where employers do not calculate the working hours properly thus, denying their employees actual amount that should be paid depending on the number of actual working hours. A lot of times, workers have found it complicated to verify their actual pay with actual hours worked. The UK government is now introducing regulations to bring in clarity and provide workers a device to identify if they have been paid appropriately in compliance with minimum wage requirements.

As per the fresh legislation introduced in the parliament on February 08, 2018, businesses will have to include number of hours being paid for on the payslip to workers being paid on ‘time worked’ basis.

Making it Simple

The addendum to present law was suggested in February 2018. This was inspired by intent to enhance transparency in the association between employers and employees. The content of modification was subsequent to the Taylor Review of Modern working Practices. One of the major proposals of this review was to put focus on the working hours for which UK employees receive payslips.

Making it statutory entitlement to get itemized payslip is aimed at achieving fair and accurate pay for maximum possible workers in different industrial sectors of the UK. Concomitantly, this will also raise awareness among the workers due to which they will be able to respond promptly in case of incorrect pay by employers.

Addendum in the Form of Hours Worked

The revised Employment Rights Act also modifies the format of payslip and mandates inclusion of following;

• Worker’s gross pay,
• Deductions and
• Net pay

Starting from April 6, 2019, the employers will also have to include details about the number of hours the employee is being paid for. This is applicable only in cases where amount of salary differs with the amount of time worked. Consequently, the payslips will have to exhibit hours worked by a worker in the form of a single combined amount or itemized list of hours worked at varying rates as applicable.

The requirements on this can be complicated to understand. Salaried hours employees as well as hourly paid employees will be within the ambit of the new rules. Salaried hours workers are paid equal amount of salary for their minimum hours every month but can also be paid for overtime and hence, may get additional pay for this. In this case, the payslip should show the hours relevant to overtime.

The new set of regulations is a big step forward in trationalizing the structure of payslips so that workers working at hourly rates will be easily able to reconcile their salary with working hours. This will also facilitate in verifying whether the workers are getting the national minimum wage as prescribed by the government.

In response to Taylor report, workers are also being empowered to facilitate favorable conditions for contract workers working for short hours and it is being ensured that holiday and other prerogatives are applied. As matter of fact a lot of employers do not meet the obligations as per law and huge number of employees in the United Kingdom are no aware of basic details like their payments for national insurance, tax an even pensions.

What Employers Need to do?

The businesses will have to fiddle with their payroll structure to comply with the provisions of new legislation. There needs to be thorough review of the payroll set up so that there is enough harmony between other departments like finance & accounting, human resource and operations etc. Most importantly, the set up should be modified to enable it to receive accurate information about actual working hours, hourly rates from different departments on real time basis.

Employers Have to Deliver Payslips in Printed form or Electronically or Even in Written form Prior to Employee’s Salary Day.

Considering the fact that Taylor report’s main objective was to ensure better facilities for workers employed on variable hours structure, it is significant for the businesses to comply with the new guidelines.

The new law provides an opportunity to organizations to become transparent and fair with their employees. This will also remove the ambiguity workers face while dealing with their payslips. Better presentation of salary details in payslips will facilitate in building better understanding and trust amidst employers and their workers. This is expected to improve employee productivity as well.

When Employers Continue to Flout New Norms

Employees’ basic rights issue has received enormous coverage in the recent times. If an organization fails to provide an itemized payslip to its employees, it could face a tribunal claim. Workers who do not receive proper payslips can stake claim to the employment tribunal. If the claim is proved to be correct and the tribunal agrees, the worker will be awarded an amount that is equivalent to deductions made in the prior period of 13 weeks.

For other discrepancies like incorrect deduction of salary etc. there are separate solutions available to employees.

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