Employment law impacts payroll from April 2019 with the Employment Rights Act 1996 (Itemised Pay Statement) Order 2018 coming into effect. This requires employers to put hours on payslips to “increase transparency over whether employees are paid correctly”.
The exact wording of the legislation says that hours on payslips are required where “the amount of wages or salary varies by reference to time worked”. The Global Payroll Association has commented before that the wording of the law seems to expand greatly on the original intention. If workers have salary reduced because of unpaid leave or sickness for example, these are all cases where the pay will vary according to time worked.
We have looked forward to the guidance on this February 2018 legislation from the Department for Business Energy and Industrial Strategy (BEIS). In December 2018, 10 months after the legislation, BEIS issued their guidance and it covers 8 situations that employers can use to clarify whether hours are required on payslips:
- A salaried worker with no variable pay
- A salaried worker with additional variable pay with additional hours
- A worker paid by the hour
- A worker paid by the hour with additional pay for unsociable hours at a premium rate
- Term time workers
- Day rate workers
- A salaried worker takes unpaid leave
- An hourly worker on statutory sick pay but see the additional text at the start of the document
The small number of examples do not reflect all of the situations where pay varies according to hours worked in the Global Payroll Association’s opinion. BEIS seem to have gotten around this by using the new terminology “pay varying because of a departure from the normal working and pay arrangements”. So a worker who has pay reduced because they have taken unpaid leave has not had their pay varied according to hours worked but have had their pay varied because unpaid leave was a departure from what happens normally!
We hoped that the guidance from ACAS would give more insight and reflect what we think is wide legislation. Under “variable hours”, ACAS have updated their guidance on payslips which says hours on payslips are required when “workers get a different wage depending on the hours they have worked”.
The BEIS guidance and the ACAS guidance do not seem to correspond.
We urge all employers to look at their pay practices and their software functionality to see if they are capable of meeting the requirement in law, interpreted differently by BEIS and ACAS. This is important as courts and tribunals have not interpreted the legislation in any case law. Employers have to be in the best possible position remembering that the overall intention of the legislation was to show workers whether or not they are paid the correct number of hours.
Employment law impacts payroll from April 2019 with the Employment Rights Act 1996 (Itemised Pay Statement) Order 2018 coming into effect. This requires employers to put hours on payslips to “increase transparency over whether employees are paid correctly”.
The exact wording of the legislation says that hours on payslips are required where “the amount of wages or salary varies by reference to time worked”. The Global Payroll Association has commented before that the wording of the law seems to expand greatly on the original intention. If workers have salary reduced because of unpaid leave or sickness for example, these are all cases where the pay will vary according to time worked.
We have looked forward to the guidance on this February 2018 legislation from the Department for Business Energy and Industrial Strategy (BEIS). In December 2018, 10 months after the legislation, BEIS issued their guidance and it covers 8 situations that employers can use to clarify whether hours are required on payslips:
- A salaried worker with no variable pay
- A salaried worker with additional variable pay with additional hours
- A worker paid by the hour
- A worker paid by the hour with additional pay for unsociable hours at a premium rate
- Term time workers
- Day rate workers
- A salaried worker takes unpaid leave
- An hourly worker on statutory sick pay but see the additional text at the start of the document
The small number of examples do not reflect all of the situations where pay varies according to hours worked in the Global Payroll Association’s opinion. BEIS seem to have gotten around this by using the new terminology “pay varying because of a departure from the normal working and pay arrangements”. So a worker who has pay reduced because they have taken unpaid leave has not had their pay varied according to hours worked but have had their pay varied because unpaid leave was a departure from what happens normally!
We hoped that the guidance from ACAS would give more insight and reflect what we think is wide legislation. Under “variable hours”, ACAS have updated their guidance on payslips which says hours on payslips are required when “workers get a different wage depending on the hours they have worked”.
The BEIS guidance and the ACAS guidance do not seem to correspond.
We urge all employers to look at their pay practices and their software functionality to see if they are capable of meeting the requirement in law, interpreted differently by BEIS and ACAS. This is important as courts and tribunals have not interpreted the legislation in any case law. Employers have to be in the best possible position remembering that the overall intention of the legislation was to show workers whether or not they are paid the correct number of hours.