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Are you ready for the new payslip requirements?

Are you ready for the new payslip requirements?

From this April, all workers will be entitled to receive a payslip from their employer. For workers with variable hours, the number of hours worked will need to be recorded on the payslip as well as the pay received.

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The new payslip requirements

The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 and Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No 2) Order 2018 come into effect from 6 April 2019.

These regulations extend the right to receive a payslip to all ‘workers’ (i.e. not solely employees) and, where employees or workers are paid for variable hours, require the number of hours worked to be recorded on the payslip. 

What does this mean in practice?

The Department for Business, Energy & Industrial Strategy has published guidance on the new requirements.

In summary, hours worked can be recorded on the payslip as an aggregate number for the period, or by each category of work for which the variable pay applies.

Examples of how this will operate include:

  • For salaried employees who are not paid for overtime, no hours need to be shown on the payslip;
  • For workers paid by the hour, those hours covered by the pay in the period should be recorded;
  • For workers paid a salary and overtime, the overtime hours should be recorded; and
  • Hours of absence do not need to be recorded.

Employers should confirm whether their current payslips provide sufficient detail to meet the requirements and consider any changes that might need to be made in readiness for the new regime. This may include how data on the number of hours worked is captured and changing how these are incorporated into the payroll process and reflected on payslips.

Note that this is different to calculating the hours worked for National Minimum/Living Wage purposes, although the same hours might apply for those purposes.

If an employer fails to comply with the new rules, the worker can make a complaint to an Employment Tribunal with the consequence that, if agreed, the outcome can be published on the Tribunal’s website. 

How KPMG can help

We can provide advice and support on the details that should be included on the payslips and the definition of worker for these purposes.

If you have any queries, please get in touch with your normal contact or e-mail employersclub@kpmg.co.uk.

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