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PAYROLL MISTAKE ON A PAYSLIP
May 2009
PAYROLL
A MISTAKE ON A PAYSLIP
As a careful employer you always provide your employees with an itemised pay statement, often called a payslip, at the point you pay them. But where do you stand if a member of staff say’s it’s incorrect?
The legal bit
It’s section 8 of the Employment Rights Act 1996 which gives employees the right to receive a “written itemised pay statement” every time they are paid, e.g. weekly or monthly. These are more commonly known as pay or wage slips and they must be made available to an employee either on the day you pay them, or just before.
Tip. Whilst the right extends to part time staff, it does not apply to any individuals you pay who are non-employees, e.g. freelancers and contractors.
What must it show?
An itemised pay statement must always include the following information: (1) gross wages or salary ie. what the employee earns before any deductions are made: (2) amounts of “fixed deductions”, i.e. those that stay the same, and the reasons for them, e.g. season ticket loan or union subscriptions/ / (3) amounts of any “variable deductions”, i.e. those that vary from one pay period to the next, and the reasons for them, e.g. charity contributions (4) net wages or salary, ie. the employee’s “take home pay” after all deductions are applied and (5) where you pay part of the wages or salary in a different way, e.g. cash and cheque and how much you paid for each part,
Tip. Deductions for tax may either be fixed or variable depending on the terms of the contract. If you pay the employee the same amount each time it’s fixed, if not, it will be variable.
What if my employee disagrees?
Although, it’s unlikely that you would make a mistake on an employee’s pay statement, it can happen. This is usually where variable deductions are concerned as they have to be calculated each time a payment is made.
Tip. If an employee challenges your figures, be prepared to show them how you made your calculations and provide them with a written breakdown. In the unlikely event that you have made an error in payment, rectify it immediately.
We’re right
But what if you have gone through your calculations with your employee and they still say that you have got your sums wrong? Well, where this happens, they are a bit stuck as they don’t actually have the legal right to ask a tribunal to check your maths.
You are wrong
But there’s a risk that an employee could refer the matter to a tribunal if they believe that you have not kept to the rules on itemised pay statements. For example, this could be if you have left out some of the required information, or have failed to provide them with an itemised pay statement altogether.
Risk, This could leave them able to bring a claim for unlawful deduction from wages. But they would only be successful if there’s an actual error, so putting it right quickly will help to stop this.
Tip. Don’t delay in providing a pay statement – it must be available to the employee by the time they are paid. This will stop them being able to claim that you have failed to provide one.
Source: Tip & Advice Personnel 29 May 2009
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