As of 6 April 2019, employers will not only have to provide their employees with itemised payslips but workers too.
Until April 2019, written itemised payslips only needed to be provided to any staff classed as employees and not necessary for workers.
With employees and workers all falling under the same umbrella now, employers will need to look over the payslips of any workers to make sure that they meet the new rules. All worker payslips will have to include:
- Gross salary before any deductions
- Amounts deducted from gross salary with reasons.
- Net pay after deductions have been taken into account.
- Amounts and methods of part-payments – relevant if the worker is paid partly in cash and BACS transfer (bank transfer).
- Hours with variable pay – different hourly payment rates for overtime or working unsociable hours, for example.
Difference Between Employees and Workers
You might be wondering what the difference is between an employee and a worker and, unfortunately, it’s hard to find a clear definition. Ultimately, however, all employees are workers but not all workers can be considered employees.
Employees hold a ‘contract of employment’ meaning that the employer can tell the employee where and when to work, providing all of the necessary tools and equipment and make tax and national insurance payments on behalf of the employee.
Employees are assigned work that the employees can’t turn down and should performance be deemed unsatisfactory, then the employer can carry out a disciplinary procedure.
So, while an employee has a contract of employment with a company, there’s no ‘mutuality of obligation’ between employers and workers. To put that simply, employers don’t have to provide workers with work and the workers have the option to turn down any work that comes their way.
Someone might be a worker rather than an employee if they meet one of the following criteria:
- Agency workers
- Seasonal work
- Have a zero hours contract
Workers are fully entitled to National Minimum Wage and holiday pay, the same as employees, but aren’t protected against unfair dismissal and don’t have to be provided with a statutory notice period.
Being self-employed is a third category, meaning that you’re running your own business and can make your own work arrangements, but the new payslip rules concern employees and workers.
What is an Itemised Payslip?
An itemised payslip is another name for a standard payslip given from an employer to staff ahead of, or on, payday. Itemised payslips show gross pay, deductions for Income Tax and National Insurance and the total net pay.
Understanding the New Payslip Rules
To help you get a better understanding of the new payslip rules, find out how the pay should be displayed on the payslip of workers working under different contracts.
Employee 1: Salaried Worker
An employee contracted to work:
- A fixed number of hours a week
- Receives an annual salary
- Isn’t required to work any overtime
In this case, there’s no need to show the hours worked on the payslip as the employees hours don’t vary.
Employee 2: Salaried Worker with Variable Pay
A salaried worker is contracted to work a certain number of hours during the week but should they be required to work additional hours of overtime, this period has to be accounted for on their payslip.
So, for example, if one of your salaried employees works an additional 6 hours of overtime, then these hours need to be included on their payslip along with the total amount accrued during these additional working hours. The contracted hours don’t need to be included, only the overtime.
Employee 3: Worker Paid Hourly
For any employee paid hourly, their hours should be listed on the payslip as their total payment for that period is based on how many hours they’ve worked.
Employee 4: Worker Paid Hourly including Unsociable Hours
Any employee paid by the hour who is also required to work at times considered unsociable, such as bank holiday, must also have their total hours worked printed on their payslip.
Whether to display this as a single aggregate figure (total of all hours) or to break the hours into different pay rates (show the total hours worked for basic pay along with the total hours worked at unsociable times listed separately), is up to the employer.
Employee 5: Worker Paid by the Day
A worker paid for each day they work, no matter how many hours that involves, still needs to have their total hours listed on their payslip.
Employee 6: Salaried Worker on Unpaid Leave
Should a salaried employee take unpaid leave during their payment period, then their working hours don’t need to be included on the payslip.
Employee 7: Hourly Worker Taking Statutory Sick Pay
Even though an employee has spent some time out of work during their payment period, any hours they have worked must be included on the payslip.
Why the New Payslip Rules?
In 2018, several companies were found guilty of paying staff below the National Minimum Wage and were forced to make payments to the staff who had been underpaid. However, finding companies that aren’t meeting the legal requirements when it comes to paying their staff is hard to do.
Introducing itemised payslips across the board for all staff will help HM Revenue & Customs find companies guilty of under paying staff. In addition, it will also mean make it easier to prosecute any company charging workers for uniform and equipment necessary to carry out the work.
Why it’s Important to Display the Correct Information on a Payslip
In the case that a worker feels that their payslip doesn’t include all of the correct information, or if they haven’t received a payslip at all, can make a claim to the Employment Tribunal.
Should the tribunal agree with the claim, they could order the employer to repay any unnotified deductions even in the case that the employer was entitled to make said deductions.
Support with Itemised Payslips
If you’re a member of the Association of Plumbing & Heating Contractors (APHC) then you can get support to ensure that your company is following the new payslip rules by contacting the APHC Business Helpline.
For more information on the new payslip rules, visit the Department for Business, Energy & Industrial Strategy’s payslip legislation guidance.