Employer’s Guide: How To Prepare Payslips

All employers know how important it is to treat your employees well as they are the backbone of the business. So when it comes to compensating them for their efforts, you want to make sure you do it right. 

Paying employees isn’t always as simple as sending them a cheque. This is because of a number of factors that come into play, such as:

• Is my employee permanent or casual?
• What are their working rights?
• Do I have record-keeping obligations?
• How do workplace pensions work around this?
• What about insurance?

So, when you pay your employees, you also have to think about your employer obligations and their minimum entitlements to make sure they’re being compensated correctly. 

This article will guide you through all the key things you need to consider when paying your employees (and ways you can make the process a lot easier!)

What Is A Payslip?

When employees receive payment, it isn’t always the same for everyone. For example, some employees might receive certain deductions, or receive more money for overtime work. Since each payment is personalised depending on a number of things, each employee gets their own payslip. 

What Is Included On A Payslip? 

While most payslips are personalised, they should generally include the following:

• Employer and employee’s name
• Gross wages (payment received before any deductions)
• Deductions (e.g. tax, National Insurance)
• Pay after deductions (these are their as ‘net’ wages)
• The number of hours worked
• ABN
• Pay period
• Gross and net pay
• Details around workplace pensions
• Relevant tax codes

Despite any small differences between each employee’s pay slip, it should note the final amount that they get to take home. It’s also important to remember that pay slips have to be given to employees within 1 working day of the pay date (this applies even when an employee is on leave). 

What Is National Insurance?

If your employees earn more than £190 a week, or they are self-employed and make more than £6,725 a year, then they need to pay National Insurance. They must also be over the age of 16.

To do so, your employees will need to hold a National Insurance number.

It’s important to note key changes taking place from April 2022. From 6 April 2022 to 5 April 2023, National Insurance contributions will see an increase (1.25 percentage points).

If your employee is required to make these contributions, the details around how much they will be paying should be clearly outlined in their payslip.

How Do I Generate Payslips For My Employees?

Each employer might have their own preference for how they issue payslips to employees. For example, you might provide an electronic version if you like to keep all your important files in one accessible place. 

Other employers might prefer to give payslips in printed form. However, it might be easier for payslips to be given electronically as it’s easier to send through email, and it won’t take up any physical space.

No matter which form you prefer, a template usually comes in handy. This makes it a lot quicker to issue the payslips and ensure you include all the correct information.

What If I Don’t Have The Correct Information On The Payslips?

We all make mistakes, but when it comes to payslips, you want to make sure you double check the details on it every time. This is because it outlines each employee’s entitlements depending on their circumstances and their award, so it’s evidence that you have been providing them with the right payments. 

If you make a mistake, and did not take steps to correct it, then you may be charged a penalty. So, it’s important that you correct any inaccuracies as soon as they are brought to your attention.

How Can I Avoid This?

To avoid these kinds of mistakes, it’s important to encourage your employees to raise these issues with you when they do arise. Similarly, if you do identify the error, it’s your duty to notify employees and fix it right away. 

For example, if you’ve accidentally paid your employee less than required, you should notify them and pay them the owed amount as soon as possible. It’s also worth noting that if an employee requests access to any of their employee records, it’s your obligation to provide them with this. 

The key thing to remember is that you should always try to sort out any issues with your employees first, before you take next steps. This way, you can avoid heavy or unnecessary fines, or even court. 

Need Help?

Payslips are part of every employer’s obligations to their employees, but it can also be easy to make a mistake. This is the last thing you’d want, as the fines can be overwhelming and you wouldn’t want to face an infringement notice over a tiny error. 

To avoid these kinds of issues, you should always remember to:

• Check that the details of your employees are correct (for example, if they are a casual worker, are you paying them the correct amount?)
• Issue the payslip at the correct time
• Check that their wages are accurate
• Ensure that payslips comply with the relevant requirements (for example, it must be in an accessible format)
• Make sure you have more than 1 copy of each payslip just in case

If you need help sorting out payslips or any other important employee records, you can reach out to us at [email protected] or contact us on 08081347754 for an obligation-free chat.

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