PAYE & National Insurance
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Payslips
Most employees receive payslips and take them for granted, but what are the legal requirements?
All employees, including those working part-time and temporarily, are entitled to receive a written payslip on or before their pay day. The Employment Rights Act (ERA) sets out the required contents of a payslip:
- Gross pay
- Amounts and purpose of variable and fixed deductions
- Net pay
- Method of payment (where different amounts are paid in different ways)
Employers paying Working Tax Credits should note that the Tax Credits Act requires the amount paid to be a clearly identifiable separate amount on the payslip.
Employers deducting premiums for stakeholder pensions must show the deduction clearly on the payslip.
In practice, most employers give much more information than the basic statutory requirements. For instance, it is obviously good practice to analyse gross pay to show:
- Basic pay
- Overtime (hours and rate)
- Bonus, commission, etc.
- Special allowances
- Sick pay (including Statutory Sick Pay)
- Parental pay (including Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay)
- Holiday pay
It is also usual to show the period covered by the payment, and the date of payment.
You can significantly reduce queries from employees by giving basic details such as:
- National insurance number
- PAYE tax code
- Tax Office name and reference
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