New requirements for employers to provide payslips are on the way – the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No.2) Order 2018 comes in to effect on the 6 April 2019. Once implemented, all workers will have the right to obtain a written, itemised payslip at any time before or after their wage or salary has been paid to them. Previously, this obligation extended to employees only. The new law comes after a recommendation by the Low Pay Commission in 2016 and forms part of the Government’s raft of initial responses to the Taylor Review on Modern Employment Practices. The Taylor Review, published in July 2017 set out key recommendations to increase the rights of workers and this new legislation is aimed at ensuring that low paid workers can work out whether they have been paid correctly.
The widening of the obligation will increase transparency in relation to wages and will assist workers in challenging discrepancies. It will also highlight if an employer is falling short of their minimum pay obligations (National Minimum Wage and National Living Wage).
Aside from being necessary evidence for pay disputes, payslips are required by workers for many other purposes – securing credit for a property, securing rental accommodation, proof of loss of earnings and proof of employment generally.
The extension of the right to include all workers will now mean workers in the gig economy and those on casual or zero hours contracts will be entitled to an itemised pay slip where previously they were not.
After 6 April 2019, all workers will also have the right to bring an employment tribunal claim for the following:
– if an employer fails to provide an itemised statement;
– if questions arise over what details should have been included in a statement of fixed deductions; or
– if the statement does not comply with the requirements set out in statute (i.e. The requirement to include gross pay, net pay, deductions, and where payment is varied based on number of hours worked – the number of hours for which the employee is being paid. The number of hours can be included as an aggregate figure or separately itemised if paid differently or for a different type of work.)
The legislation will not apply to wages paid for work done prior to the commencement date. This means that there is still plenty of time for employers to get the necessary systems in place to ensure that they are compliant. All businesses should review their payroll processes to make sure that they are collecting the necessary information on pay, that the figures are correct and that they can be translated into an appropriate payslip for all employees and workers.
The legislation places an obligation on employers, however small or large, to provide accurate, sufficiently detailed payslips to all workers and employees. As above, the penalty for doing so is a potential Employment Tribunal claim. Therefore, employers need to be aware of this now in order to ensure they don’t pay for it later.