From 6 April 2019, new regulations will expand the existing rules on itemised pay statements (or payslips) as follows:

  • the right to receive a payslip will be extended to all workers, not just employees.
  • where pay varies by reference to time worked, payslips must also state the total number of hours being paid for (either as a single aggregate figure or as separate figures for different types of work or different rates of pay)

The government committed to make both of these changes in its recent response to the Taylor Review (click here for our earlier alert on that response). The intention is to increase transparency over whether employees and workers are being paid correctly, including whether they are receiving the National Living Wage/National Minimum Wage. The right to the NLW/NMW applies to those with worker status as well as those with employee status.

The consequences of not providing a compliant payslip remain the same, i.e. the employee (or, in future, the worker) can apply to a Tribunal, which can:

  • make a declaration of non-compliance, and
  • order the employer to pay compensation, but only if the employer has made a deduction which has not been properly itemised on the payslip (even if the deduction was lawfully made). The compensation cannot be greater than the total amount of all unnotified deductions in the 13 weeks before the Tribunal application.

The requirement for payslips to state hours worked for time-paid employees will require a change to payroll systems but, in most cases, employers will have already calculated the hours worked in order to determine the amount payable. The main impact will therefore be the need to adjust payroll software to include the additional information. The government's Impact Assessment assumes that 88% of employer already comply by providing hours on payslips.

The extension of the right to receive payslips to workers could prove to be a more significant change:

  • Many employers currently do not provide payslips to all workers, and many require workers to submit invoices. The change will therefore involve additional administration.
  • An individual who is treated as self-employed but who succeeds in establishing that they have worker status will, in future, be able to claim that they have not received compliant payslips in addition to claiming various employment rights. However, this will not present a material increase in risk unless the employer is making deductions (e.g. for uniforms or equipment or PAYE, where PAYE is applied) which are not properly itemised in written statements.