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What Information Should be on a Payslip?

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So, what are the main rules around what should be on a payslip?

Payslips – Legal Information

The employee payslip must have the data broken down on it by law.

This is as defined as follows:

  • earnings before and after any deductions;
  • variable deductions that are taken off the Gross Pay such as Income Tax or National Insurance Contributions;
  • the number of hours worked in a pay period, if the hours relate to an hourly rate of pay.

 

What Other Payslip Information Should be Considered?

Whilst the above statutory information must be included on a payslip, the limited information does not really help employees or employers that much.

We consider below some other items that we think should be on a payslip and the reasons why:

 

Statutory Sick Pay (SSP)

SSP should be split out on the payslip so that the employee can check that their statutory entitlement to SSP has been calculated properly.

From the employer’s side it is important to track the number of weeks where SSP has been paid. SSP is capped at 28 weeks after which the employee would be on unpaid absence.

It is also important for the employer to track the SSP element when paying full Company Sick Pay.

Company Sick Pay should include SSP as an element of this payment, and therefore, the 28-week SSP limit would normally be expected to start on the first day of Company Sick Pay.

If it is not split out on the Payslip, it is not easy to check if this was the case or not.

 

Family-Friendly Statutory Pay

Any Family-Friendly Pay, such as Maternity, Paternity, Adoption, or Shared Parental Leave, should be shown separately on the employee’s Pay Slip to ensure that this payment is recorded and can be identified.

As with all statutory payments, it is the employee’s right to receive this payment, so showing it on the payslip is a way of making sure they understand their statutory pay.

From the employer’s point of view, it is important to record that these payments are made in accordance with current Employment Legislation.

The Payslip acts as a record that these payments have been made in accordance with the Law.

 

Holiday Pay

Holiday Pay should always be identified as a separate payment on the Payslip.

Holiday Pay is a statutory right (minimum of 28 days/5.6 weeks p.a.) and, therefore, falls in the same category as statutory payments above from a recording point of view.

The employee needs to be able to identify the number of days or hours used as holiday and the holiday pay that goes with this.

Employers also need to keep a separate record of the Holiday Pay paid to employees in case there is a future dispute about how much Holiday Entitlement has been paid and at what rate.

 

Bonus and Commission

If Bonus or Commission is paid, it can be important to the employee that these payments can be identified separately.

This information would be useful if they have to apply for loans, mortgages, or benefits so that any potential lender can understand the employee’s pay makeup and see what the underlying basic pay is.

From the employer’s point of view, it ensures that any additional payments can be tracked and shows the makeup of the employee’s gross pay

 

Pension Contributions

It is advisable to ensure that all parties understand the pension payments that have been deducted from employees’ pay.

Employees need to know this so they can reconcile their employee deductions against their pension statement.

Employers need to be able to report on employer and employee pension contributions paid to the pension provider.

 

Company Loan Repayments

If employees have been given any form of loan or advance by the employer, then any deduction needs to be properly recorded in accordance with any loan of advance agreement.

This is so that the employer can prove that the deduction as made lawfully and in agreement with the employee.

The employee needs to be able to understand the deductions made from their pay.

 

Salary Sacrifice Arrangements

As with Company Loan Repayments above, Salary Sacrifice arrangements should be recorded on the Payslip.

This is important for Salary Sacrifice arrangements as theses deductions are made before PAYE or National Insurance Contributions are made.

It is important that Salary Sacrifice arrangements are documented and in line with current HMRC rules to avoid any PAYE or National Insurance Contribution issues occurring.

 

Contact Us

If you have any concerns on any of the above details and changes or just need some HR support, we are ready to help you.

Simply call us on 01903 754107 or email us at heidi@hrsmartuk.com or jon@hrsmartuk.com

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