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Written by Brabners LLP
Last week, two new Orders were placed before Parliament which is set to change the itemised payslip requirements for businesses engaging workers. The Taylor Review was published in July 2017 and set out recommendations to increase the rights of workers. The Orders follow the recent response from the government to that review which confirmed, amongst other things, that they would be introducing legislation to extend the right to receive a payslip to all workers, including casual and zero-hours workers.
Both Orders are due to come into force on 6 April 2019. The first Order, The Employments Right Act 1996 (Itemised Pay Statement) (Amendment) Order 2018, will change the content of an itemised payslip. When in force, additional information will need to be included in all itemised payslips to assist individuals in understanding their pay – this should be particularly useful for those individuals who work varied hours which results in changeable pay each pay period. The first Order requires payslips to state the number of hours that are being paid where wages vary according to the time worked. This information can be demonstrated either by: (i) an aggregate number of hours; or (ii) separate figures for different types of work or rates of pay. Employers will need to ensure that they have adequate systems in place to obtain and record this additional information and that it is included in payslips once this Order comes into force. The Order amends section 8 of the Employment Rights Act 1996 (ERA 1996) to include these additional requirements in this legislation. The second Order is named The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No. 2) Order 2018. This Order will bring into force the government’s recent commitment to require employers to provide all workers, and not just employees, with written itemised payslips – as you may recall, this commitment was set out in the government’s response to the Taylor Review. Once the second Order is in force, employers will be required to provide itemised payslips to all workers, containing the information at Section 8 of the ERA 1996 (including the additional information mentioned above). Section 8 of the ERA 1996 requires a written itemised pay statement to contain details such as the gross amount of wages, the amounts of any deductions to the gross amount, the net wages that are to be paid and, where different parts of the net amount are paid in different ways, the amount and method of each part-payment. The extension of the right to itemised payslips to all workers is aimed at improving transparency with regard to pay and the changes will, importantly, enable workers to enforce their right to an itemised payslip in the Employment Tribunal.
The government’s proposals in response to the Taylor Review are aimed at improving workers’ rights and their awareness of such rights. Once in force, the Orders will allow low paid workers to understand their pay and be able to recognise if they are not being paid correctly in line with the government’s proposal of transparency on pay for workers. Businesses must take steps to ensure that they are able to comply with the updated legislation in readiness for 6 April 2019. From a practical perspective, businesses should ensure that they are collecting accurate and appropriate information on pay, which can then be converted into an appropriate payslip for their workers. There needs to be adequate systems in place to record information on pay for both employers and workers and checks should be carried out on the format of payslips to ensure all required information is provided.
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