When employees are first recruited, they are entitled under section 1 of the Employment Rights Act 1996 to written information on the main terms of their employment. The content of this information and its legal status are explained in detail elsewhere in this Guide (documenting the contract).
In relation to pay, the information must include:
- The scale or rate of the employee's pay or the method by which it is calculated. This should include, for example, details of piecework rates and overtime pay, commission and bonuses, performance- and profit-related pay.
- How frequently the employee will be paid, whether weekly, monthly or at some other interval. The employee may, for example, receive a basic monthly salary, a commission payment every quarter and an annual bonus payment.
- Any entitlement the employee has to holiday pay or sick pay.
- If the employee will be required to work outside the UK for more than one month, the currency in which he or she will be paid and any additional payments and benefits he or she will receive for working abroad.
- Details of any collective agreements that affect the employee's employment, including those relating to pay.
Employers are also required by the Employment Rights Act 1996 to give their employees a written itemised pay statement. This must be provided at or before the time the wages or salary are paid, and must set out these details:
- the gross amount of the wages or salary
- the amount of any fixed or variable deductions from pay, and the reason for them (such as tax, National Insurance contributions, loan repayments and so forth)
- the net amount of wages or salary
- if the wages or salary are paid in different ways - such as partly through a credit transfer and partly in cash - the amount and method of each part-payment.
If several fixed deductions are made, the employer may prefer to take up the option of giving the employee a separate written statement of them, rather than setting them out on every pay slip. In that case, the statement must detail the amount of the deductions, how often they will be made, and what they are for. This statement can be amended from time to time by adding or deleting deductions or altering their details. It must, however, be reissued at least annually.