Businesses need to prepare for upcoming payroll changes

Businesses in the UK have less than six months to prepare for important new payroll legislation which will shake up the requirements of employee payslips, it has been warned.

From 6 April 2019, employers will need to provide all of their staff with ‘fully itemised’ payslips, which clearly break down how workers’ pay has been calculated in instances where hours – or the rate of pay itself – is variable.

Depending on the nature of the work at hand, different individual payments for various items of work or pay will need to be itemised instead.

The upcoming changes, which come in a bid to improve transparency around workers’ pay and how it is calculated, follow recommendations laid out in the regent Taylor Review into modern employment practices, alongside longstanding calls for change spearheaded by the Low Pay Commission.

Ahead of the deadline, employment solicitors and other experts are urging businesses to act now to “ensure a smooth transition” – as getting to grips with and implementing the new changes could prove to be time-consuming.

Concerns have been raised that many businesses will need to completely revise their payroll processes to make sure that all of the additional information necessary can be collated and included in their payslips.

Lindsey Knowles, Head of Employment Law at Kirwans law firm, said: “Once it comes into force, payslips must include both the information mentioned above, and that set out in Section 8 of the ERA 1996, including earnings before and after any deductions, the amount of any deductions that may change each payment period, such as tax and National Insurance (NI), an explanation of any fixed amount deductions and the net wages to be paid.”

The news comes at a time when HM Revenue & Customs (HMRC) is increasingly cracking down on payroll failings regarding the National Minimum Wage (NMW), auto-enrolment pension contributions and company bosses wrongly defining workers as self-employed.