Payroll: Enforce new rules for Payslips in 2019
Introduction to the new rules and guidelines on using this guidance From April 2019
New legislation has come into force from April 2019 requiring all employers to
(a) furnish all workers with payslips who are on their payroll
(b) show the hours worked and how the pay is variable depending on time worked once payroll is done and payslips are issued
This guidance is intended to help employers who operate payroll and their employees understand the new legislation. The courts and tribunals are yet to interpret the legislation, this guidance does not have any legal force that can be used to interpret it. The guidance is a general overview of the legislation and is not intended to provide definitive guidance on individual queries. It is not designed to be a substitute or in a specific context where one may be seeking advice since each case will be different.
Whether you are an employer or an employee if you are unsure about any component of the payslip guidelines you need to contact a good Payroll Accountant or specialist.
Workers on Payroll entitled to payslips from April 2019
All workers will have the right to get itemized payslips from 6 April 2019 and onwards. Only employees, a subcategory of workers currently have that right. You can determine whether a person is classified as a worker by clicking here. All payslips in the period beginning April 6, 2019, and going forward need to comply with the new legislation. There are some exclusions in the legislation on who has the right to get the payslips with merchant women and seamen and persons in the armed forces excluded. If you are not sure about how your payroll works or what to include on the payslips, we recommend finding a good payroll accountant or accountant in London.
Showing hours on pay slips in which pay varies by time worked
From April 2019, the employer who operates payroll for their employees needs to show additional information about the hours the employee worked on their payslips. Where this is applicable, the payslip needs to show the payment as it relates to the hours worked. The payslip need not show any other hours. For instance, a worker who earns a fixed salary every month and gets additional pay in the form of hourly pay for variable overtime will have the right to have the hours worked overtime indicated on the payslip. The hours may be indicated either as disparate figures for varying rates of pay or disparate kinds of work or as a single compilation for the hours put in during the pay period. It needs to be clear which period the worker put in those hours. Any hours put in after 6 April 2019 should be shown on the payslips. Make sure if you operate payroll as an employer you implement all the required changes.
The hours that need to be indicated on the payslip are different from the National Minimum Wage hours though most workers that get an hourly wage will probably have similar hours. The worker could get the payslip either in electronic or physical format. Check out further guidance on payslips by clicking here.
Variations Resulting from Sick Pay or Unpaid Leave
If a worker’s salary is not variable according to time worked for instance if they get a fixed salary every month), you do not have to indicate an hourly figure to take into account differences in pay by taking statutory sick pay or unpaid leave. Such instances will not apply to pay differences according to the time worked. If a worker’s pay is not variable on the basis of hours worked (for instance because they get a fixed wage each month) the employer does not have to indicate an hourly figure that will account for differences when the employee takes statutory sick pay or is on unpaid leave. Such instances will not be deemed as variable pay according to the hours worked but instead variable pay as a result of changes in normal pay and working arrangements due to statutory sick pay or unpaid leave. Nonetheless, if the employee gets paid on the hours they put in and then gets statutory sick pay or unpaid leave, all hours they put in will have to be indicated on their payslip.
A worker who believes that the payslip they were furnished with has omitted some information or they did not receive the payslip at all may take the matter to the Employment Tribunal. If the tribunal finds for the worker, they will declare their decision and publish it on their website. The tribunal could also order that the employer pays back any deductions not declared in the previous 13 weeks before the commencement of the claim. This amount is payable even if the employer can show that they were justified in making the deductions. This is different from a claim for proper compensation that may include claims for unauthorized deductions that typically has other remedies.
Example 1: A salaried Employee with no Flexible Pay Fred is under contract to work a 40 hour work week for 24,000 annually. The role does not require any overtime and he only gets to work his forty hours every week. Given that he does not have variable pay according to the hours put in, the employer has no obligation to indicate his hours on the payslip.
Example 2: A Salaried Employee with Extra Variable Pay Amrita is under contract to work 40 hours every week for a total of 30.000 annually. She works 9 to 5 Monday to Friday though her workload tends to fluctuate as there are times when she has a higher workload and needs to come in on weekends or stay in the office late. During such times, she gets an overtime hourly rate of pay for hours worked outside normal working hours. Her most recent pay period saw Amrita put in six hours in overtime. The employer is not required to indicate the basic hours she put in for a salary since this is not variable according to the hours put in. However, since the overtime is variable it needs to be indicated on the payslip.
Example 3: An Employee on an Hourly Contract George is on a minimum wage hourly contract and is paid every week according to the hours worked. All hours put in need to be indicated on George’s payslip since he gets paid according to how many hours he works.
Example 4: An Employee Compensated on Hourly Basis with Extra Pay for Extra Hours Jane hourly rates are well above the National Minimum Wage. She gets paid for every hour worked at the end of the week. On some occasions, she is asked to work on bank holidays. She gets paid roughly one and half her normal hourly rate when she does this. Jane usually works for 17 hours a week but put in 25 hours in the past week. However, she worked for 8 hours on Monday, which happened to be a bank holiday. The employer needs to indicate all hours Jane put in since she gets paid on an hourly basis. One way of doing it is to show a single aggregate of 25 hours in her payslip. Conversely, the employer can also indicate the different pay rates according to the hours Jane worked. For instance, the employer can show the 17 hours of normal hourly rates and then the 8 extra hours that she put in during the bank holiday. Either of the two options is acceptable.
Example 5: Term time Employees Peter is a school worker who works during the term and never during school holidays. Peter gets an equal monthly payment regardless of whether the schools are open or closed. Since he gets paid an equal number of monthly instalments, his pay is not variable according to the hours worked, and hence the employer is not required to indicate this on the payslip.
Example 6: Day rate Employees Sally works as a day rate employee which means that the wage, she gets is the same regardless of how many hours she puts in. Since her pay is variable according to the number of days she works, the employer needs to indicate the hours on the payslip even if her pay is on a daily rate rather than hourly.
Example 7: A Salaried Employee on Unpaid Leave David gets a salary of 40,000 annually, which is paid in equal monthly instalments. He had exhausted his paid leave but chose to take a week and a half of unpaid leave when he had a family event. The employer deducts the week and a half from his salary since he did not work during that time. The employer is not required to indicate the hours he put in on the payslip. His pay is not pegged to the hours worked, though it varied in the given month because of the change in normal pay and working arrangements. Example 8: An Hourly Employee that Takes Statutory Sick Pay Helen gets paid every month according to the hours she puts in. She recently fell ill and could not work for ten days. She gets paid statutory sick pay during those days though it is pay that is less than her normal hourly rates. Given that her pay is according to hours she puts in, the employer needs to indicate her hours in the payslip given that she was working for the rest of the month.
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