September 23, 2019

9 per cent of UK Employees Reported they Did Not Receive any Payslips in 2016-2018

Analysis of ONS data conducted by the Resolution Foundation think tank found 9 per cent of UK employees reported they did not receive any payslips in 2016-2018.

The analysis also found that roughly one in five employees on or earning just over the minimum wage were earning less than the legal minimum in 2018.

Lindsay Judge, senior economic analyst at the Resolution Foundation, said:

“Labour market violations remain far too common, with millions of workers missing out on basic entitlements to a payslip, holiday entitlement and the minimum wage”.

In July, the government launched a consultation on proposals to create a new single body to improve enforcement of employment rights. Part of its core remit would be to tackle underpayment of the National Minimum Wage (NMW) and to ensure workers are receiving basic entitlements such as legally required payslips. The consultation is open until 6 October 2019, so we’ll report on the findings next month.

You’re legally required to provide itemised payslips

The analysis found 9 per cent of UK employees reported they did not receive any payslips in 2016-2018.

This illegal labour practice was most prevalent in SMBs:

  • 17 per cent of employees who reported they had not received a payslip worked in businesses employing fewer than 20 people
  • 16 per cent worked for businesses with more than 250 workers

Not only is it illegal to not issue payslips, the rules surrounding payslips have tightened this year. Many of you will be aware that from 6 April 2019 two major changes to the rules on itemised pay statements took effect.

The Employment Rights Act 1996 was amended meaning that:

  • Firstly, the right to an itemised pay statement has been extended to include workers
  • Secondly, itemised pay statements must include the number of hours worked where the employee’s pay varies by reference to time worked

Both changes were a direct response to the Taylor Review of Modern Working Practices that called for greater clarity over pay for UK employees. An itemised payslip makes it easier for employees to check whether they are receiving the correct pay rate.

What are the consequences of failing to pay the minimum wage?

The Resolution Foundation think tank also found that roughly one in five employees on or earning just over the minimum wage were earning less than the legal minimum in 2018.

Failure to pay the National Minimum Wage can result in:

  • Criminal conviction
  • Being publicly named and shamed by the government
  • Being required to pay back arrears of wages to employees at current minimum wage rates
  • Financial penalties of up to 200% of arrears, capped at £20,000 per underpaid worker

It’s not unusual to see yet another company “named and shamed” for failing to pay the NMW.

Earlier this year, the HMRC accused Iceland of a NMW breach which could lead to a £21m bill. Iceland broke NMW rules because employees could choose to save in a “Christmas Club” direct from their wages. This salary sacrifice provision potentially infringed the rules because actual take-home pay dropped below NMW levels.

Why are hundreds of companies failing to pay the minimum wage?

The top five reasons for underpayment of the national minimum wage and national living wage are:

  1. Employers taking deductions from wages for costs such as uniforms
  2. Underpaying apprentices
  3. Employers failing to pay travel time
  4. Misuse of the accommodation offset
  5. Using the wrong time periods for calculating pay

Moorepay makes it easy

When it comes to payroll, the list of things to think about can seem endless and complex.

When your payroll system is running like a well-oiled machine it goes unnoticed. But getting wages wrong or failing to provide payslips can have frightening consequences.

Behind the headlines it’s clear that many breaches are an unintentional consequence of poor processes and inadequate systems.

If you are worried about any aspect of payroll it may be time to think about outsourcing. To find out more, book a free demonstration or download our payroll brochure.

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About the author

Hannah Booth