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Employers Served Two Orders

Both employers and employees need to be aware of two orders that will amend the Employment Rights Act, and how this could affect them -  but questions remain.

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In spring 2016, the Low Pay Commission (LPC) Report contained the following recommendation:

 

“We recommend that the Government reviews the current obligations on employers regarding provision of payslips and considers introducing a requirement that payslips of hourly-paid staff clearly state the hours they are being paid for. By definition, firms paying workers already have this information, the sharing of which should impose little new burden.”

 

In the light of this, employers need to be aware of two orders that amend the Employment Rights Act 1996 in Great Britain:

 

  • The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018

 

This Order was put into UK legislation on February 8 2018 and comes into force on April 6 2019.

 

Very simply, this amends the details that need to be provided on an itemised payslip to say that the hours worked for the reference period must be stated on the employee’s payslip. This is where the wages or salary that are paid varies according to the hours that have been worked in the reference period.

 

  • The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No. 2) Order 2018

 

At the time of writing, this is a draft order and, assuming that it is made a UK Statutory Instrument, also comes into force on April 6 2019.

 

Again, very simply, this gives workers the same rights to an itemised payslip as employees. Workers will have the right to an itemised payslip that must include the number of hours where the wages or salary that is paid varies according to the hours that have been worked in the reference period.

 

There are so many questions but employers should not approach their software developer at the moment as we are still trying to find out the answers. For example:

 

  • If I am paid one hour of overtime in addition to my monthly salary, does this mean that my pay has varied according to the hours worked and, if so, does this mean that my contractual hours have to be shown as well as the overtime hours?
  • What about employers that just pay overtime as a cash value? Does this mean that they have to now break it down into hours?
  • What about ‘deemed workers’/off-payroll workers? Does the legislation extend to them? At the moment it does not but will these deemed workers be given employment rights in the future when it is probably rolled-out to the private sector? If employment legislation puts them under ERA 1996, these will be captured too.
  • And what about Northern Ireland? Employees and workers in Northern Ireland probably have a contract under the Employment Rights Order rather than the Employment Rights Act. Will that be amended at the same time?

 

Please keep these two pieces of legislation towards the front of your mind. However, the legislation and the guidance is irresponsibly lacking in detail so, we await answers to the many questions that employers will have.

 

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