It can often feel that the employees have a lot of rights and it can be quite easy to overlook some more technical of those such as for example the employees’ right to receive itemised payslips from their employer.
Think tank, Resolution Foundation, recently reported an alarming finding that about 10% of employees in the UK do not receive a payslip. Why is this important and is there really any need for issuing payslips?
Payslips are a fundamental aspect of the working relationship that employers must fulfil correctly. Being provided with an itemised payslip for every pay period is a legal right set out in section 8 of the Employment Rights Act. From 6 April 2019 this was extended to apply to workers, including zero-hours, casual and agency workers.
The Payment of Wages Act 1991 also outlines what should be included in a payslip – it must show what an employee earns before tax, as well as any deductions and which deductions are going where. This provides clarity and saves time in the long run as employees don’t have to query payments they receive in each pay period. The payslips are often also needed as proof of income mortgage applications, visa applications and tax returns.
Payslips must be issued on or before the payday and can be issued electronically or in a paper form. Many payroll software packages include an online payslip option as standard that meets all current payroll legislation and safely sores payslips available to the employee at a moment’s notice.
The payslip must clearly show and changeable deductions which are typically tax and National Insurance, and must also explain any deductions fixed in amount. Employee may also have pension contributions, deductions for any benefits provided by the employer, repayment of a company loan etc. These should all be itemised.
The law is very clear, but, are there any risks of ignoring this? Failing to provide payslips will leave employers open to internal grievances, and potentially even tribunal claims resulting in compensation payments; but more importantly it can also damage the relationship between the employer and employee; and above all – it is illegal.
In summary, for the benefit of saving some paper – or not even that if you issue payslips electronically – it really isn’t worth ignoring the law.