If you employ people in the UK — even a single part-time member of staff — issuing a compliant payslip is not optional. It is a statutory right under the Employment Rights Act 1996, as strengthened by the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018. Get it wrong and you could face an employment tribunal, an HMRC compliance review, or simply a very awkward conversation with your workforce. This guide lays out exactly what must appear on every payslip, who qualifies for one, and the practical steps you can take to keep everything above board.
Who Is Entitled to a Payslip?
Since April 2019, the right to a payslip was extended beyond employees to cover workers as well. This is a meaningful distinction for many small businesses. A worker is someone who personally performs work or services under a contract, but who does not operate their own business supplying services to clients — think zero-hours staff, casual hospitality workers, and agency workers placed directly with your business.
Genuinely self-employed contractors and freelancers running their own business remain outside this entitlement, but the line between "worker" and "self-employed" is one HMRC and employment tribunals examine closely. If you engage someone regularly, give them shifts, and direct how they work, a tribunal may well deem them a worker regardless of what your contract says. When in doubt, issue a payslip.
The payslip must be provided on or before the date of payment. Handing it over a week later does not satisfy the legal requirement.
The Statutory Minimum: What Every Payslip Must Show
The legislation sets out a clear list of mandatory items. Every payslip you issue must include:
- Gross pay — the total earnings before any deductions are applied.
- Net pay — the amount the employee actually receives after all deductions.
- Variable deductions itemised individually — any deduction that changes from one pay period to the next must be listed separately, with a description and the amount. Income Tax and National Insurance Contributions (NICs) are the most common examples.
- Fixed deductions — deductions that remain the same each period (for example, a salary sacrifice arrangement) can be shown as a single aggregate figure, provided you have given the employee a written standing statement detailing what makes up that total.
- Number of hours worked, where pay varies by hours — this applies to employees whose pay in any given pay period varies according to the time worked. You may express this as a single total or as separate figures for different types of work or rates of pay.
Notice what is not on that statutory list: the employee's name, their tax code, their National Insurance number, the pay date, and the employer's name. None of these are required by the Employment Rights Act. That said, omitting them is poor practice and can create headaches during HMRC payroll audits or when employees need payslips for mortgage applications. Include them as a matter of course.
Common Mistakes That Land Small Businesses in Trouble
Employment tribunals regularly hear payslip-related complaints, and the penalties are not trivial. If a tribunal finds you failed to provide payslips, it must order you to pay a sum equal to the unnotified deductions taken in the preceding 13 weeks — even if those deductions were otherwise lawful. Here are the mistakes to avoid:
- Lumping variable deductions together. Combining Income Tax and NICs into one line labelled "deductions" is not compliant. Each variable deduction needs its own line and label.
- Issuing payslips late. A payslip handed out the day after payday is technically a breach. Build your payroll run into your calendar so slips are ready in advance.
- Forgetting workers on casual contracts. A pub that employs weekend bar staff on zero-hours contracts, for instance, must issue payslips every time those workers are paid.
- Not showing hours for variable-pay staff. Since April 2019, if an employee's pay varies by the time they work, omitting the hours count is a legal breach — not just an oversight.
- Paper-only processes with no records. HMRC expects you to keep payroll records for at least three years. If you are still using spreadsheets and printing slips, you need a reliable archive system.
Digital Payslips: Acceptable and Increasingly Expected
There is no requirement to issue payslips on paper. Digital payslips are perfectly lawful provided the employee can access, save, and print them. Sending a PDF by email is fine; giving access through a secure online portal is equally valid. What you must not do is send a payslip in a format the employee cannot open or store — for example, a proprietary file format that requires specialist software they do not have.
For most small businesses, digital delivery is the smarter route. It reduces printing and postage costs, creates an automatic audit trail, and makes it straightforward for employees to retrieve old payslips when they need them for rental references or mortgage applications.
Platforms like BizHub365 generate and distribute compliant digital payslips automatically as part of the payroll run. Because BizHub365 handles RTI submissions to HMRC directly — including Full Payment Submissions (FPS) and Employer Payment Summaries (EPS) — the payslip data and your HMRC filings are always in sync, removing one of the most common sources of discrepancy for small employers.
Payslips for Statutory Payments and Deductions
Payslips become particularly important when statutory payments are in play. If an employee is receiving Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), or Statutory Sick Pay (SSP), those amounts must be shown clearly on the payslip — ideally broken out from standard wages so both you and the employee can see exactly what is being paid and under which entitlement.
Similarly, if you are making deductions under a court order (such as an Attachment of Earnings Order) or recovering an overpayment of wages, these must appear as individual, labelled deductions. A vague line saying "other deductions" will not satisfy the statutory requirement and could trigger a grievance or tribunal claim.
Pension contributions — both employer and employee — are not statutory payslip requirements, but they are required disclosures under auto-enrolment rules. In practice, showing both the employee contribution deducted and the employer contribution alongside it is considered best practice and helps employees understand the full value of their remuneration package.
Keeping Your Payroll Compliant: Practical Next Steps
If you are running payroll manually or using a basic spreadsheet, the compliance burden grows with every hire. A few practical steps will put you on solid footing:
- Audit your current payslip template. Check it against the statutory list above. If variable deductions are not itemised, fix the template before the next pay run.
- Check your worker classification. Review everyone you pay — employees, workers, and contractors — and make sure those who qualify for payslips are receiving them.
- Set a payroll calendar. Map out pay dates for the full tax year, including the RTI filing deadlines (on or before each pay date). Build in a buffer for bank holidays — Good Friday and Christmas Day regularly catch employers out.
- Move to compliant payroll software. Purpose-built tools ensure statutory fields are always populated, variable deductions are always itemised, and records are retained automatically. BizHub365 covers all of this within its integrated payroll module, alongside auto-enrolment support and P60/P45 generation — useful when employees leave or the tax year ends.
- Train whoever runs your payroll. If a bookkeeper or office manager handles payslips on your behalf, make sure they know the post-2019 rules on workers and variable hours.
Conclusion
Payslip compliance is one of those areas where the rules are clear, the consequences of getting them wrong are real, and the effort required to do it properly is genuinely modest. Every employee and worker must receive an itemised payslip on or before pay day. Variable deductions must be broken out individually. If pay varies by hours, those hours must be shown. That is the core of it.
For small business owners already juggling sales, operations, and customer service, automating payroll is the most reliable way to stay compliant without it consuming your week. Review your current process, close any gaps, and make sure every person you pay receives a payslip that meets the legal standard — every single time.