In 2018 the Global Payroll Association outlined two pieces of legislation affecting employers and the payroll department from April 2018:
- The Employment Rights Act 1996 (Itemised Pay Statement) Order 2018 which requires payslips to detail hours where pay varies according to hours worked and
- The Employment Rights Act (Itemised Pay Statement) (Amendment) (No 2) Order 2018 which extends the right to receive a payslips to workers as well as employees
At the time, we said that we were awaiting guidance from the Department for Business, Energy and Industrial Strategy (BEIS) and the Advisory, Conciliation and Arbitration Service (ACAS) so that employers could comply with the new requirements.
We were more concerned about the guidance that employers would need to cope with the first piece of legislation about hours on payslips. After all, the Impact Assessment indicated that employers will have initial costs of £23.1 million and many (12%) would have to upgrade their payroll software.
In late 2018, BEIS published their guidance. It extends to 7 pages and covers the following situations only:
- A salaried worker with no variable pay
- A salaried worker with additional variable pay
- A worker paid by the hour
- A worker paid by the hour with additional pay at a premium rate
- Term time workers
- Day rate workers
- A salaried worker who takes unpaid leave
- An hourly worker on SSP
ACAS have updated their payslip guidance as well under the section “variable hours”.
GPA Comment
The Global Payroll Association is disappointed that BEIS and ACAS have produced small guidance or employers on what could be a major change for employers. The government recognise that it is a major change too.
Also, we wonder whether the guidance is consistent with what the legislation says in the first place:
- The 2018 order says there is a requirement to show hours on payslips “where the amount of wages or salary varies by reference to time worked”
- BEIS indicate that hours on payslips are not always required if the reason that the pay has varied is because of a “departure from the normal working and pay arrangements”. This is where the worker is paid a fixed salary of wage and not by the hour
- ACAS indicate that “a payslip must show the total number of variable hours a worker has worked. This is only required when workers get a different wage depending on the hours they have worked”
We think that there are many situations where pay varies according to hours worked, far more than is covered in the 8 examples in the BEIS guidance. As this is such a fundamental change for some employers, we think that both BEIS and ACAS should have realised this and consulted with employers more.
So we think employers should look at the purpose of the legislation in the first place that is outlined in the memorandum accompanying the legislation. This is so that hours on payslips “increases transparency over whether employees are paid correctly”. It also refers to this applying where the worker is “time paid”.
So there is quite a difference between someone’s pay that varies and they are on a fixed salary and someone’s pay that varies and they are hourly paid. Please read and interpret the legislation and guidance and adapt payroll processes in time for April 2019. This may mean having to use unit payroll elements instead of paying cash lump sums.
In 2018 the Global Payroll Association outlined two pieces of legislation affecting employers and the payroll department from April 2018:
- The Employment Rights Act 1996 (Itemised Pay Statement) Order 2018 which requires payslips to detail hours where pay varies according to hours worked and
- The Employment Rights Act (Itemised Pay Statement) (Amendment) (No 2) Order 2018 which extends the right to receive a payslips to workers as well as employees
At the time, we said that we were awaiting guidance from the Department for Business, Energy and Industrial Strategy (BEIS) and the Advisory, Conciliation and Arbitration Service (ACAS) so that employers could comply with the new requirements.
We were more concerned about the guidance that employers would need to cope with the first piece of legislation about hours on payslips. After all, the Impact Assessment indicated that employers will have initial costs of £23.1 million and many (12%) would have to upgrade their payroll software.
In late 2018, BEIS published their guidance. It extends to 7 pages and covers the following situations only:
- A salaried worker with no variable pay
- A salaried worker with additional variable pay
- A worker paid by the hour
- A worker paid by the hour with additional pay at a premium rate
- Term time workers
- Day rate workers
- A salaried worker who takes unpaid leave
- An hourly worker on SSP
ACAS have updated their payslip guidance as well under the section “variable hours”.
GPA Comment
The Global Payroll Association is disappointed that BEIS and ACAS have produced small guidance or employers on what could be a major change for employers. The government recognise that it is a major change too.
Also, we wonder whether the guidance is consistent with what the legislation says in the first place:
- The 2018 order says there is a requirement to show hours on payslips “where the amount of wages or salary varies by reference to time worked”
- BEIS indicate that hours on payslips are not always required if the reason that the pay has varied is because of a “departure from the normal working and pay arrangements”. This is where the worker is paid a fixed salary of wage and not by the hour
- ACAS indicate that “a payslip must show the total number of variable hours a worker has worked. This is only required when workers get a different wage depending on the hours they have worked”
We think that there are many situations where pay varies according to hours worked, far more than is covered in the 8 examples in the BEIS guidance. As this is such a fundamental change for some employers, we think that both BEIS and ACAS should have realised this and consulted with employers more.
So we think employers should look at the purpose of the legislation in the first place that is outlined in the memorandum accompanying the legislation. This is so that hours on payslips “increases transparency over whether employees are paid correctly”. It also refers to this applying where the worker is “time paid”.
So there is quite a difference between someone’s pay that varies and they are on a fixed salary and someone’s pay that varies and they are hourly paid. Please read and interpret the legislation and guidance and adapt payroll processes in time for April 2019. This may mean having to use unit payroll elements instead of paying cash lump sums.