HR · 2 October 2018

New payslip deadline just 6 months away: Here’s what employers need to know

Itemised payslips follow recommendations made by both the Taylor Review and a report from the Low Pay Commission

Employers have been reminded that there are just six months remaining until new legislation is introduced changing the requirements of employee payslips.

The payroll changes require all workers – including permanent, casual and zero hours – to provided with fully itemised payslips.

Itemised payslips follow recommendations made by both the Taylor Review into modern employment practices and a report from the Low Pay Commission which called for employers to make clear the hours which staff were being paid for.

Employers will need to issue staff with written, printed or electronic payslips which detail how the payment was calculated in cases where the rate of pay and hours are variable.

Alternatively, if more relevant, the different payments for varying types of work and/or pay should be itemised instead.

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Amendments employers need to make

Lindsey Knowles, head of employment law and partner at Kirwans law firm said the changes had been introduced to make it easier for workers to understand their pay, ensure they are being paid correctly, and challenge their employers if they feel they have been underpaid.

She said: “Following the recommendations of both the Taylor Review and the Low Pay Commission’s 2016 report, from April 6, 2019, employers must provide all workers with a payslip that clearly states the number of hours they are being paid for.

“The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 will change the requirement of what information is given on an itemised payslip and is an attempt to improve transparency around pay, especially in cases where workers work varied hours or in various roles which involve differing rates of pay.

“Once it comes into force, payslips must include both the information mentioned above, and that set out in Section 8 of the ERA 1996, including earnings before and after any deductions, the amount of any deductions that may change each payment period such as tax and National Insurance (NI), an explanation of any fixed amount deductions and the net wages to be paid.

“The second Order to be amended is The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No. 2) Order 2018, which will require employers to provide all workers – not just employees – with written itemised payslips.”

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Lindsey urged business owners to act now in order to ensure they’re ready by the deadline.

She added: “To ensure a smooth transition, employers need to ensure that their HR team understand the changes and how to implement them. Payroll processes need to be revised as soon as possible so that the additional information can be collated and included in the payslip.

“Finally, the format of the payslip itself needs amending so that the new information can be included ahead of the implementation deadline.”

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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.