I wrote a blog a month or so ago about National Minimum Wage and how certain essential employee expenses (e.g. for uniform or other equipment) can potentially have a knock-on effect meaning that the employer has not met its NMW obligations.
While the focus when it comes to wages will invariably be on making sure that the correct amount of pay is paid to the employee, there is another important, yet often overlooked, legal obligation. That is the requirement to issue itemised payslips. I used to work on a farm and can remember the buzz I got at the end of a week when a little brown envelope half-filled with cash came my way. No payslip though, just a note on the front of the envelope confirming the amount.
Section 8 of the Employment Rights Act 1996 (“ERA”) sets out the legal position: a worker has the right to be given by his employer, at or before the point of a wage being payable to the worker, a written itemised pay statement. This statement must detail both the gross and net pay, plus any deductions to be made from the wage. Where an employer fails to issue an itemised payslip, the worker can bring a claim to the employment tribunal. The tribunal has the power to make a declaration that the employer has failed to issue the payslip.
Furthermore, section 12(4) of ERA allows the tribunal, in cases where deductions have been made from the employee’s wage (in the case of a wage where there is no payslip), to order the employer to repay to the employee a sum of up to the total amount of all unnotified deductions. Imagine I worked at the farm for 3 months and was paid weekly, with no payslips. In that period, I am paid £3,000. The employer has deduced from those wages £1,000 for income tax and NI. I have not been told in writing about those deductions. In such a case, an employment tribunal could order the employer to pay me that sum of £1,000.
There are no allowances for small business with limited resources. The requirement to issue itemised pay statements is a legal requirement for all employers.
It is surprising that we still hear of employers failing to meet their obligations on this easy task. Just last month there was an employment tribunal case involving a hotel which failed to meet this obligation, costing them over £3k. They were lucky in that it was just a single employee!
If you are in any doubt about your legal duties regarding payslips, please contact a member of the Blackadders Employment Team.
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