Payslip Rules

Providing employees with a pay-slip is a legal requirement. Electronic versions are acceptable if staff can access them

The legal terminology for a pay-slip is an ‘itemised pay statement’ and employers must provide one for all employees either on or before each pay day. You can provide pay-slips electronically, but a hard copy must be issued if an employee cannot access an electronic version, eg. they don’t have an e-mail address.

Pay statements must accurately include the amount of gross pay the employee is due to receive, and where appropriate, what that pay is made up of eg.

  • Gross pay
  • Statutory Sick pay
  • Statutory Maternity Pay
  • Commission or Bonus

If employees earn a basic and a variable commission, we recommend that these are itemised separately, particularly as commission must now be included when calculating an employee’s holiday pay.

Of course deductions must be itemised also, and these include variable deductions; amounts which could change each month such as

  • Income tax
  • National Insurance
  • Pension contributions

And fixed deductions; amounts that usually remain consistent such as

  • Union subsidies
  • County Court issued attachment of earnings

The amount of take-home or net pay must also be given as must any parts of the net pay amount that will be paid via different methods, eg. cash and bank transfer.

If a disagreement arises over pay then the pay statement will be the go-to document for the basis of a discussion. If the disagreement can’t be resolved informally then the employee should raise a written complaint or grievance that could go as far as Tribunal in the worst case.

Most payroll software manages pay and deductions, including the production and sending of pay statements. However it is up to employers to ensure that details and parameters are correctly entered into the payroll system. Changes to taxation rates or minimum wage rates will usually be updated automatically through online updates these days, but non-standard employee tax codes will probably have to be amended manually.

Paying employees in exchange for work is the basis of all contracts of employment so make sure that you are fulfilling your end of the deal.

Share article