An update on Payslips and Variable Pay

ArwenMakin_ESPLaw
Senior solicitor
ESP Law
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The Current Position

Most employers must provide their employees with a payslip.

There are a number of exceptions, most of which will not apply. Payslips are not applicable in the police service, for merchant seamen, or for a master or crew member working in share fishing. The other, admittedly more common exception is for people who are not employees, for example, contractors or freelancers.

Payslips are important for clarity, but also because they can be used as proof of earnings, tax paid and any pension contributions.

Employers can choose whether they provide printed or electronic (online) payslips, but whatever format they are in, they must be provided on or before payday.

Payslips must currently show earnings before and after any deductions, together with the amount of any deductions that may change each time an employee is paid, such as tax and National Insurance.

Employers must also explain any deductions fixed in amount, for example repayment of a season ticket loan. They can choose to do this either on a payslip, or in a separate written statement. This separate statement must be sent out before the first payslip and employers must update this every year.

The Future Position

The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 was laid before Parliament last Thursday.

The amendment requires an itemised pay statement to also contain information regarding the number of hours worked by the employee for which they are being paid, but only in situations where the employee’s pay varies as a consequence of the time worked. 

For example, if an employee has a different rate of pay for day and night shift work, the details of their hours on each shift will have to be set out on their payslip.

Employers have plenty of time to prepare as this change comes into force on 6 April 2019. The amendments made by the Order do not apply in relation to wages or salary paid prior to the change.

About ArwenMakin_ESPLaw

Arwen Makin

After studying law at Cambridge University, I trained at leading national law firm Mills & Reeve, qualifying into their employment team in 2002. I have extensive employment law experience, gained through advising both employers and employees on a wide range of issues, across an array of sectors – including but not limited to finance, education, hospitality, transport and retail. This diverse experience means I am ideally placed to provide advice in relation to professional conduct and regulatory matters.

I am now a senior solicitor at ESP Law, part of ESP Group – a very different employment law firm and HR consultancy business, with our own in-house legal and HR experts. Taking pride in our reputation for delivering sensible, straight-talking and practical advice – at the same time as being approachable and supportive – I am passionate about the way ESP works with its customers. By building on trusted relationships and providing prompt support at the earliest stage of any issue, we help ensure that sound commercial decisions are taken.

The vision for our business was to deliver an exceptionally personal, yet cost-effective service that truly meets the evolving needs of modern and forward-thinking HR teams and their organisations. I’m lucky to be among a team of very talented employment lawyers who work hard day in, day out, to make this vision a reality.

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