The Employment Act 2006 (the “Act”) requires an employer to provide employees and, since 1 April 2024, workers with itemised pay statements either at or before the time any payment of wages or salary is made. (NB The term “worker” below also includes employees.)
The statement should set out[1]:
- Gross earnings (total pay before deductions);
- Net pay (total pay after deductions);
- Fixed deductions (amounts that do not change payday to payday); and
- Variable deductions (amounts that vary by reference to the earnings in that pay period, ie National Insurance, pension contributions etc.)
- Total hours in respect of variable pay where the remuneration is determined by time worked (either as a single aggregate figure or separate “line items” for different types of work/different rates of pay)
Employers can use a “standing” statement of fixed deductions provided separately to workers which itemises the deductions (amount, intervals at which the deduction is made and what it is in relation to). Where used, this must be updated and reissued in consolidated form – ie incorporating any amendments since last issue – not less than once every 12 months. If any changes occur in the meantime to the standing statement of fixed deductions, they must be notified in writing to affected workers.
Itemised pay statements should also include:
- Breakdown of how the wages will be paid if more than one payment method is used, for example bank transfer and cash;
- Tax code of the worker;
- National Insurance number;
- Time period the pay covers;
- Pay rate (annual or hourly); and
- Additional payments, eg overtime, bonuses etc. – to be included in the gross earnings figure and subject to deductions as applicable
What if itemised pay statements have not been received/provided?
Where a worker has not received an itemised pay statement, or believes it to be incorrect or incomplete, they should speak with the employer and request that the correct (or outstanding) pay statement be provided.
Failure to provide an itemised pay statement
If the Employment and Equality Tribunal (the “Tribunal”) finds that there has been an ‘un-notified deduction’ because the employer has failed to provide an itemised pay statement, it must order the employer to pay the worker a sum equal to 2 weeks’ pay, but if it considers it “just and equitable” to do so it may order the employer to pay the worker up to 4 weeks’ pay in total.
Where the Tribunal finds that an itemised pay statement has been issued but that is incomplete or does not otherwise comply with the requirements relating to itemised pay statements it may make a declaration to this effect and, depending on the circumstances, order the employer to pay the worker up to 2 weeks’ pay.
A week’s pay for these purposes is currently capped at £540 (gross).
In addition, the employer may face prosecution by the Department for Enterprise.
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Reference:-
[1] Section 14 Employment Act 2006
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