Payslips
Section 8 of the Employment Rights Act 1996 stipulates that all workers (including temporary workers) have the statutory right to receive an itemised pay statement which is commonly known as a payslip.
Who is classified as a worker for the purpose of receiving a payslip?
Under section 230 of the Employment Rights Act 1996 a worker is defined as an individual who has entered into or works under:
- a contract of employment; or
- any other contract, where express or implied, whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual. (For example an agency worker on a contract for services).
As such if you are operating as an employment business you must provide a payslip to your agency workers as well as your internal employees.
For the avoidance of doubt self-employed contractors or freelancers are not classified as ‘workers’ and do not need to receive a payslip.
How should the payslip be presented to my workers?
A payslip can be given to a worker in either a physical format or an electronic format that the worker should be able to access and print.
What information needs to be included on a payslip?
In accordance with the Employment Rights Act 1996, the payslip should contain particulars of:
- the gross amount of the wages or salary;
- the amounts of any variable, and any fixed deductions from that gross amount and the purposes for which they are made;
- the net amount of wages or salary payable;
- Where different parts of the net amount are paid in different ways, the amount and the method of payment should be presented.
- Where the amount of wages or salary varies by reference to time worked, the total number of hours worked and paid for should be clearly displayed. This also includes any overtime that the worker has worked. Any other hours do not need to be shown, although you may wish to do so if it would be helpful to present this additional information.
- The hours can be shown either as a single total of all such hours in the pay period, or they can be broken down into separate figures for different types of work or different rates of pay. The hours that must be shown on a payslip are a separate matter for the number of hours worked for National Minimum Wage (NMW) purposes; though workers who are paid by the hour may well have the same figures.
My workers are paid a day rate regardless of how many hours that they work. Do I still need to include the number of hours worked on the payslip?
A day rate worker’s pay will vary depending on the days that they actually work, i.e. by the amount of time they spend working. The hours that they spend working will therefore need to be included on the payslip, and this should be documented as accurately as possible.
What about variations caused by unpaid leave or statutory sick pay. How will that affect information presented on the payslip?
If a worker’s pay does not vary by time worked because they for example are paid a fixed salary per month, you are not required to include an hourly figure to account for variations in pay caused by taking unpaid leave or being on Statutory Sick Pay (SSP). This is because the variance in pay is not related to the amount of time that they work, but rather a variance due to departure from normal working and pay arrangements caused by the unpaid leave or SSP.
Conversely, if a worker is paid according to the amount of time that they work and they take unpaid leave or receive SSP, any hours that they were able to work, should be included on their payslip.
When must a payslip be issued?
Section 8 (1) of the Employment Rights Act 1996 states that a payslip must be given to a worker at or before the time at which any payment of wages or salary is made to them.
We have a worker who is working through an umbrella company. Who is responsible for providing the payslip?
If a worker is working through an umbrella company and the worker is engaged on a contract of employment with them, then the umbrella company would be responsible for paying the worker. This is because they are the employer.
What will happen if I do not give my workers a payslip or I do not include all information required?
If you have not/ if a worker believes that they have not received a payslip, or that the payslip they have received lacks the requisite information, that worker may bring the matter to an Employment Tribunal (ET). The ET have the authority to determine what particulars ought to have been included or referred to in a payslip so as to comply with the requirements of the sector concerned. If it is determined that the payslip in its current form is inaccurate or does not satisfy all requirements, the ET may amend those particulars, or substitute other particulars for them as they deem appropriate. The statement shall also be deemed to have been given by you to the worker in accordance with the decision of the ET.
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