QUESTION: I own a small business with six employees who are paid weekly. At present I do not provide them with any payslips and have heard that new legislation is coming into force soon. Can you advise me what this is and what I need to do?
ANSWER: On April 6 2019 HMRC is introducing new legislation which covers the provision of payslips to employees. The main features of this legislation are that as an employer you will have to provide payslips to all of your workers and on the payslips you must show the hours worked where the pay varies by the number of hours worked.
This new legal right to receive a detailed payslip covers all workers. At present, only employees of the business are entitled to receive payslips however a worker could include one of the following;
• someone on a zero hours contract;
• a seasonal worker (example a fruit picker);
• a freelance worker;
• an agency worker;
• a casual worker.
All of the above 'workers' are protected by the 1996 Employment Rights Act which defines a worker as a person who:
“has entered into work under a contract of employment or any other contract, whether express or implied and whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or custom of any profession or business undertaking carried on by the individual".
Where you have workers who are paid variable amounts each week or month with the variation being due to the number of hours worked you will have to show the hours worked on each relevant payslip. However, a staff member receiving a monthly salary for a fixed number of hours does not need to be shown the number of hours they work on their payslip. In this case, the hours can be shown as a single total of hours or can be separated into separate figures for different types of work or different rates of pay. This would be the case where employees on a fixed monthly salary are required to work overtime at a different pay rate. These new regulations come into being for pay periods beginning on or after April 6 2019.
Three classic examples of persons falling within these regulations would be:
• A worker paid by the hour – Bob is paid £12 per hour and receives payment weekly for the number of hours that he has worked. His pay varies by the number of hours worked and therefore all hours which he works each week must be shown on his payslip.
• Bill has a contract of employment to work 37.5 hours per week on an annual salary of £30,000. He sometimes works overtime when required to do so.
Bill's payslip does not need to show the number of hours for which he is paid the monthly salary, however his payslip does need to show the number of hours that he works as overtime as this is variable pay.
• Jane has a contract of employment to work 35 hours per week at an annual salary of £70,000 per annum. Jane does not work overtime and works a flat 35 hours per week. Because Jane's pay does not vary by the number of hours worked there is no need to show the number of hours worked on her payslip.
:: Paddy Harty (p.harty@pkffpm.com) is director at PKF-FPM Accountants (www.pkffpm.com). The advice in this column is specific to the facts surrounding the question posed. Neither The Irish News nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.
