Keeping up with payslip rule changes: what you need to know

With an increasing number of the UK workforce engaged in the ‘gig’ economy and working under ‘non-standard’ contracts, growing focus is being put on this area.

In 2017, the Government-commissioned the ‘Taylor Review of Modern Working Practices’ report. This considered the challenges of the gig economy and the impact of new working styles on peoples’ workplace rights and opportunities.

Amongst its 53 recommendations was a call for greater clarity on rates of pay and any deductions being made. This push for clarity for workers (and as a result employees) has led to changes in the law around payslips, which come into force this April.

For any work that takes place after 6 April 2019, employers will now have to deliver itemised payslips to every worker on their payroll, not just to its employees, as is the current requirement. This includes payslips for any employees, agency staff, casual staff, zero hours staff, contractors, freelancers and other types of ‘non-employee’ workers on the payroll.

There are already existing laws around payslips. These include that payslips must be delivered on or before the employee’s payday, although they can be provided to employees on paper (even handwritten) or electronically.

What do I need to include on a payslip?

Employers must already include on a payslip:

• Pay before any deductions (‘gross’ wages)
• Deductions like tax and National Insurance
• Pay after deductions (‘net’ wages)

Payslips can also include information like the employee’s National Insurance number and tax code, their rate of pay, and the total amount of pay and deductions so far in the tax year.

For pay periods following 6 April 2019, all these existing requirements will continue and will also apply to the payslips provided to workers on the payroll. There are also new requirements for the information that must be on employees/workers’ payslips.

Under the new law, if an employee/worker’s pay varies with the number of hours they work, then the payslip must also include information about the number of ‘variable’ paid hours they have worked. This can be shown as either:

• a single, combined amount; or
• an itemised list of hours worked for different rates of pay.

To give a few examples:

• An employee has a fixed salary each month but also works variable overtime at an hourly overtime rate. Only the hours of variable overtime need to be shown.
• A casual ‘day-rate’ worker works the same hours in a day if she is asked to work but doesn’t have set working days. She would be classed as having ‘variable hours’ and would need her hourly rate shown on the payslip.
• An employee has a fixed salary each month but has taken some unpaid leave in July. Although his pay differed from normal in July, this would not be classed as ‘varying’ hours and no hours would need to be itemised on his payslip. The same would apply to an employee whose pay had been reduced because of being paid SSP in a month.

It is therefore important to now take steps to ensure that you will comply with these new payroll laws post-April.

Helping you comply with new legislation

Our Employment Law and HR experts can help you make the employee/worker distinction so you can stay on the right side of the law.

If you’ve got any questions about the implications of this new legislation on your business, don’t hesitate to give our expert team a call on our advice line on 0345 844 4848.

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