Payslip changes – they’re no April fool!

We kick off this new year with news of a seemingly innocuous piece of legislation that will undoubtedly bring clarity and accuracy to workers’ pay.

It may, however, come with a dose of difficulty and bureaucracy for employers. But, forewarned is forearmed, so we hope this briefing will prepare you for changes which will in time benefit all parties.

What is changing and when?

As from 5 April this year, all workers are entitled to receive a payslip which, where relevant, shows a breakdown of a worker’s hours worked. The changes are aimed at ensuring that low-paid workers with variable working arrangements are paid in full for the time worked.

When is this additional information relevant?

This information is only relevant for hours where a worker’s pay varies according to the number of hours worked. It is only those additional or variable hours which need to be detailed. In practice, this will apply to workers paid on an hourly basis, whose working practices are not set but change according to shifts and/or demand, for example.

What information is required?

The number of variable hours worked must be shown on the payslip. Therefore, for non-salaried workers, where pay is determined by the hours worked, all hours worked will need to be shown. For salaried workers who have an agreed working pattern but with additional variable overtime, it is only the additional variable hours which need to be accounted for.

How does that work in practice?

Applying this to some examples may make it easier to see how it will work in practice;

1. HR manager at an agency providing 24/7 care – she is on an agreed salary and although she often works beyond her contractual hours, she is not permitted to claim overtime
   Her payslip will remain the same, with no need for working hours to be set out and no further information will be required. This is because she is salaried, and her pay does not vary according to the number of hours worked.
   
   
2. Administrator at an agency – she is on an agreed salary but can claim overtime when she works beyond her contractual hours
   Her payslip will need to state the amount of hours worked in overtime. It does not need to provide any further information with regards to the hours worked as part of her agreed working pattern and the salary paid.
   
   
3. Carer – employed by an agency on a zero hours’ contract and paid differing amounts per hour, depending on whether the shift is during the day or the night, and whether it falls on a bank holiday or a weekend etc.
   His newly-issued payslip will need to state all hours worked for which he is being paid, as they are variable and so the payslip will need to demonstrate that he has been paid for all the work he has done. There is no requirement to differentiate between hours paid normally and those hours paid at a premium, i.e. bank holiday rates etc. but such differentiation would help further clarity and transparency.
   
   
4. Live-in carer – employed by an agency to provide live-in care support for clients and is paid on a daily rate
   Whilst the carer’s pay is fixed for the day, her overall pay is variable depending on how many days she works. As such, the Department for Business, Energy and Industrial Strategy (BEIS) guidance stipulates that the payslip will need to state the number of hours worked. This requirement will be challenging for providers who operate an ‘unmeasured work’ approach to the National Minimum Wage, and we would recommend that further advice is sought on the same.
   
   
5. Window cleaner who an agency uses and pays on an hourly basis for the agency’s office and clients’ houses
   The window cleaner invoices the agency for time worked and has no contract of employment with the agency. The window cleaner has a team he employs and any one of that team will clean the windows when required, and they wear overalls with the cleaner’s logo and details on and not the agency’s. There is no requirement to provide these individuals with a wage slip with any details, as they are not, on the face of it, workers employed by the agency.
   

Wage slips and National Minimum Wage (NMW)

The hours shown on the wage slip are not the same as those that must be included for the purposes of NMW calculations. They may, of course, be the same for some workers, but they might not be. In particular, this could apply where some working hours, such as travel or training time, are not directly paid for, and therefore would not be included on the payslip. However, the changes being made in April 2019 do not in any way negate the requirements of the NMW Regulations, and in particular, checking compliance against all hours worked. The requirement for employers to keep clear records showing that workers have been remunerated in any pay reference period at a rate which is no less than the NMW, will remain in place.

What format should the wage slip take?

A payslip may be provided in either a physical format or an electronic format that a worker can print. The key issue is ensuring that the worker can access and/or collect the slip at the end of each pay period.

What happens if we don’t comply?

A worker may bring a claim to a tribunal if they have not received a payslip, or they believe information has been excluded. The tribunal has two possible sanctions if it upholds the complaint; it may make a declaration to that effect published on its website, and it might also order repayment of any unnotified deductions made in the previous 13 weeks, even if these deductions were lawful.

Preparation

In order to ensure that you are able to meet the payslip requirements after April 2019, we would recommend that employers:

• Agree how wage slips will be issued to workers throughout the organisation
• Identify from payroll records which individuals will require further information in their payslips
• Discuss and agree with your finance team regarding how this information will be collated into a pay slip, and what checks will be kept to ensure that necessary details are being provided
• Discuss how you ensure that the information on wage slips helps you demonstrate your NMW

For more information

If you require any assistance with your workforce arrangements, please get in touch with Anna Dabek, or your usual contact in our Employment Team. You can find out more about our employment work on our website.

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