From 6 April 2019, the following wording will be added to s8(2) Employment Rights Act 1996, which is the section that sets out what must be included on a pay statement.
“and where the amount of wages or salary varies by reference to time worked, the total number of hours worked in respect of the variable amount of wages or salary either as:
This new legislation requires all employers to:
So how will this affect your business?
The Department for Business, Energy and Industrial Strategy have issued further guidance and some of their examples are included below:
Fred is contracted to work 40 hours a week for his employer at a salary of £24,000 per year. In his role no overtime is required, and he only works his contracted 40 hours per week.
As Fred's pay does not vary by the number of hours worked, there is no requirement to show any of his hours on his payslip.
Amrita is contracted to work 40 hours per week for a salary of £30,000 per year. Amrita's basic hours are Monday to Friday between the hours of 9 to 5 but as her work load fluctuates there are some periods when her work load is much higher, and she needs to stay late or come in on Saturdays as well. When this happens, she is paid an additional hourly overtime rate for any hours worked outside her basic hours.
In her last pay period aside from her basic hours Amrita also worked 6 hours of overtime.
Amrita's payslip does not need to show the basic hours for which she is paid a salary, as this does not vary based on the number of hours worked. The only variable amount of Amrita's pay in this pay period is the 6 hours of overtime, and it is this figure of 6 hours that must be included on her payslip.
George is paid National Minimum Wage for his age group for each hour he works. He is paid weekly depending on how many hours he worked that week.
All hours George works each week must be included on his payslip, because they are all paid on the basis of how much time he worked.
Jane is paid well above National Minimum Wage for each hour she works. She is paid weekly depending on how many hours she worked that week.
Sometimes Jane is required to work bank holidays. If she does so she is paid 1.5 times her normal hourly rate.
Jane worked 25 hours last week. 17 hours were at her normal rate. However, the Monday was a bank holiday, on which Jane worked 8 hours.
Jane's employer must record all the hours she worked on her payslip, because they are all paid on the basis of how much time she worked. Her employer can simply show these hours as a single aggregate figure, in this case 25 hours in total. Alternatively, to increase pay transparency the employer may show the hours broken down by the different pay rates, i.e. by showing 17 hours were worked at her normal rate of pay and 8 hours were at the increased rate for working a bank holiday. Either option is permissible.
Further examples can be found here.
If you have any further queries regarding the new itemised payslip legislation then please contact your local payroll office.