Law change requires increased documentary transparency over worker payments
From 6 April 2019, a new law came into force which states organisations have to include hourly figures on payslips where a worker’s pay varies according to the time worked. As a new requirement, it is key that this is understood because a failure to do this correctly could lead to an organisation breaching the right to receive a written itemised pay statement.
The Department for Business, Energy and Industrial Strategy (BEIS) guidance on this issue makes it clear that only those hours worked which vary pay need to be recorded on the payslip. For example, where a salary paid worker receives the same pay each month regardless of how many hours are actually worked, no hours need to be stated on their payslip. On the other hand, where the same worker works overtime and is paid an additional amount for each hour of overtime worked in each month, the number of overtime hours will need to be included on the payslip as these are the hours worked that affect pay.
Other examples outlined within the guidance include:
- no hours will have to be included on a payslip for a term-time worker who receives equal monthly salary instalments, regardless of whether it is term time or the holiday period
- all hours worked will have to be recorded on a zero hours’ worker’s payslip where they are paid an hourly rate for each hour worked – their entire pay will vary depending on each hour worked
- all hours worked will have to be stated on the payslip for a day worker who is paid a set day rate for each day worked as their pay varies according to the amount of time worked.
Payslips may still vary in their appearance as organisations can determine how the hourly figure will be displayed. There is a choice between including one figure that totals all the hours which vary pay, or separate figures for each pay variation. As an example, a salary paid worker who is paid an additional sum for working six hours’ overtime and four hours at Sunday rate may have either ‘10’ stated on their pay slip or ‘6 hours’ overtime, 4 hours Sunday rate’.
There is an exception where a fixed pay worker is on unpaid leave or Statutory Sick Pay as their pay will be lower in the period that this occurred. Although their pay is lower, the BEIS deems the variation to be caused by a ‘departure from the normal work and pay arrangements’ and not by the amount of time worked. In these cases, the amount of time worked will not have to be included on the fixed pay worker’s payslip. For those workers who are paid an hourly rate, eg zero hours’ workers, even if they are on unpaid leave or SSP, their pay will still be varied by their working time so hours will continue to be included on their payslip.