UK payslip and pension changes coming in April 2019

UK payslip and pension changes coming in April 2019

Time is running out for HR and finance teams to prepare for important changes that come into effect next month


Employment law Pay benefits and reward


Time is running out for HR and finance teams to prepare for important changes that come into effect next month

If your finance and HR teams aren’t prepared yet for changes to payslip requirements, minimum pension contributions, and national minimum wage (NMW) increases that are effective from April 2019, then time is running out to implement the necessary modifications. Here, we outline the changes that are coming soon, and how to prepare for their introduction.


What’s changing?

From April 2019, employers will need to provide all workers – not just ‘employees’ – with printed or electronic itemised payslips. This change aims to increase trust and transparency between employers and workers by giving greater clarity about hours worked. Including this information on payslips means that ‘time worked’ workers will not only find it easier to reconcile their pay with their work hours but also to establish whether their employers are paying them the NMW. The provision of itemised payslips for all workers was one of the suggestions of the 2017 report, Good work: the Taylor review of modern working practices.

It is hoped that the itemised payslips will create clear audit trails so employers do not inadvertently infringe NMW rules.

What information do payslips need to include?

The rule changes mean that all workers – including gig economy workers, contractors, freelancers and other types of ‘non-employee’ workers – must be provided with an itemised payslip. If a worker works more than their contracted hours, those hours need to be reported and accounted for on the payslip.

Ciphr’s payroll specialist, Amanda Barnden, explains: “This new legislation requires a statement of hours on each payslip, which is a significant change to the current practice. Contractors, for example, must now not only have their day rate shown on their payslip, but also the total number of hours worked. Workers with variable pay must have their hours shown on their payslip, too, either for each pay element or for their total hours.”

Barnden adds: “It’s one of the most significant changes to payroll since auto-enrolment pensions – although, in practice, it’s only a small change that needs to be made to the payroll management process to ensure compliance.

“Hopefully your HR software or payroll supplier has already been in contact with you to make those changes. If you are a Ciphr customer and have Ciphr paylink, our service desk will be able to give you the guidance you need to make this change.”

The government has issued guidance for organisations on what now needs to be featured on payslips to comply with the changes.

Watch: the benefits of integrating HR and payroll data

Pension contributions

From April 2019, the minimum pension contributions will increase from the current rate of 2% employer contribution and 3% employee contribution (5% total) to 3% employer contribution and 5% employee contribution (8% total).

A handy checklist from payroll experts – and Ciphr Connect partner – RSM recommends HR teams prepare for this change by reviewing rates, and double-checking the pension process within payroll is running smoothly.

Barnden says: “when workers were first enrolled in your pension scheme, they should have received a letter that set out the contribution levels and told them that these would increase over time. So while it’s not a legal requirement to communicate April’s changes to workers, it’s good practice to keep people informed of changes, and consider a consultation period.” The Pensions Regulator has a letter template you can use to let your staff know about the increase.

Wage rises

The NMW and national living wage (NLW) will increase in April 2019. The NLW, for workers over 25, will rise from £7.83 to £8.21 per hour. The NMW for other age groups will also rise:

  • From £7.38 to £7.70 for those between 21 and 24 years old
  • From £5.90 to £6.15 for workers aged between 18 and 20 years old
  • From £4.20 to £4.35 for 16 and 17 year olds
  • From 3.70 to £3.90 for apprentices

Changes on the horizon for April 2020

The Parental Bereavement (Leave and Pay) Bill received Royal Assent in 2018. The act is expected to come into force in 2020, giving employed parents the right to at least two weeks’ leave following the death of a child under the age of 18, or if they suffer a stillbirth from 24 weeks of pregnancy. This right will apply from day one of employment. Bereaved parents will also be entitled to claim pay for this period if they meet the eligibility criteria.