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Don’t puzzle people with their payslips

Employers should take more responsibility for ensuring staff understand their payslips, says Claire Treadwell, associate product director for HR and payroll at IRIS Software Group.

One in seven employees have said they were worried about the accuracy of their payslips
One in seven employees have said they were worried about the accuracy of their payslips

A staggering 5.9 million employees don’t check their payslips each month, and when they do, their understanding of the information can be sketchy at best. But does it matter? Absolutely it does.


Particularly as one in seven employees have said they were worried about the accuracy of their payslips.


So why should employers help staff understand their payslips?


Protecting employees

With the excitement of payday, many employees don’t take more than a cursory glance at their payslip, and the plethora of calculations, abbreviations and codes can be off-putting. However, employees need to know what they all mean.


A lack of understanding of the tax code could result in an employee overpaying tax or facing a hefty bill for unpaid tax several months down the line. Similarly, not keeping track of pension contributions could lead to disappointment or financial hardship in the future.


Even the personal details need to be carefully checked, as incorrect information on a payslip could scupper a staff member’s chances of getting a mortgage.


Protecting the business

It’s not only staff who could be in for an unwelcome surprise. Businesses need their employees to check for payslip errors so they can be rectified before they escalate into something more costly.


Failing to do this can land organisations in a heap of trouble.


Only a couple of years ago, Tesco had to pay out nearly £10m in underpayments to 140,000 of its employees due to a payroll glitch. Argos too had their share of payroll problems and were hit with a whopping £1.5m HMRC fine on top of owed backpay of more than £2.4m.


Demystifying the payslip

There are some simple steps employers can take to help staff navigate their payslips. Providing fact sheets and visual guides to explain all the terms on a payslip is one way to make them easier to understand.


Equally, employees should be aware of the person in the organisation they can turn to if they have questions about their pay, or spot a discrepancy.


Some employers are adopting electronic payslips to make them easier for staff to access and review, and to avoid the risk of paper printouts arriving late or going missing.


By throwing light on the payslip, companies not only avoid financial risk, they also keep their teams happy, focused and productive.

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