From April 2019, a legislative change to the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018, requires employers to include additional information on payslips.
This means that workers now have the statutory right to see what hours make up their pay and to see these hours clearly itemised on their payslip.
Guidance on compliance
In broad terms, a worker’s payslip must be itemised if their pay varies depending on the number of hours they work in a period.
This does not apply, however, if a worker is salaried with no variation in their pay. If this is the case then an itemised payslip is not needed.
The vast majority of employer processes should already comply with the new legislation but the most likely aspect of the legislation that employers are likely to fall foul of is failing to itemise gross overtime payments to workers.
For more in-depth guidance on compliance the Department for Business, Energy and Industrial Strategy (BEIS) has recently published a guidance document to help clarify how employers will need to comply with this new legislation.
The guidance offers practical examples of different workers situations including:
- Example 1: A salaried worker with no variable pay
- Example 2: A salaried worker with additional variable pay
- Example 3: A worker paid by the hour
- Example 4: A worker paid by the hour with additional pay for unsociable hours
- Example 5: Term time workers
- Example 6: Day rate workers
- Example 7: A salaried worker takes unpaid leave
- Example 8: An hourly worker on statutory sick pay
The guidance has drawn some criticism from CIPP for including more complex scenarios as put forward by some stakeholders. Discussions between CIPP and BEIS are ongoing to hopefully offer more detailed, pragmatic advice to employers.
We will of course pass on any new clarification or advise as soon as it comes available.