Are electronic payslips legal?

Considering electronic payslips as a way of reducing admin costs?  The benefits of reduced paper, electronic delivery and ease of archiving are tempting.  But are electronic payslips legal?

As many businesses streamline admin costs through reduction in paper, it’s human nature that there will be a few in the business who are reluctant to embrace change.  Understanding the legality of electronic payslips, and what needs to be done to support their introduction, makes for a smoother transition.

Electronic payslips and the law

In the UK, we can look to the Employment Rights Act 1996 for validation of the legal status of electronic payslips.  It says that an employee:

“has the right to be given by his employer, at or before the time at which any payment of wages or salary is made to him, a written itemised pay statement”

This statement is accompanied by a further clarification of the what information should be included in the pay statement.

However, nowhere in this act does it state that payslips cannot be issued electronically.  HMRC has made no objection to their introduction, and also allows P60s to be issued in an electronic format (since 2011).

As electronic payslips are a format accepted by the HMRC, they are also accepted by banks and other financial institutions as proof of income.

Recommendations for issuing electronic payslips

However, in order to avoid falling foul of the spirit in which the Employment Rights Act outlines employee rights to pay statements, it is important that certain considerations are made.  The spirit of the law, in this case, is to have a clear and easily available communication between employer and employee regarding payment of their wages or salary.

In order to uphold this intent, the following considerations are advisable:

1. Deliver electronic payslips in an easily readable format (e.g. PDF attachment) prior to, or at the point their salary or wages are paid.
2. Ensure employees provide the most suitable email address for receipt of payslips – this is not necessarily, and should not be assumed to be, their work email address.
3. Place the onus on employees to inform you of any change to their preferred email address, but still validate this (requiring a response to an email to confirm) every 12 months.
4. If employees do not have secure and discrete access to email, or the ability to print from email, provide them with a printed payslip instead.
5. When there is a change of circumstance, such as prolonged sick-leave or maternity leave, ensure that the employee can still access and print their payslips – or arrange for a printed payslip to be delivered in place of this.
6. Provide access to print payslips, at no extra cost, from the original electronic copies.
7. Provide employees with access to their archived payslips, allowing printing of old copies.
8. Explain clearly to employees how to print payslips.
9. Explain clearly the security and efficiency benefits of electronic payslips to employees.

Making electronic payslips easy

One of the biggest concerns about going electronic with payslips is the ease of access to these.  Moving to a digital format doesn’t necessarily force all recipients to log in online to get their payslips though.  A modern electronic document distribution system, such as Netsend, should enable a variety of delivery options.  Payslips could be sent as PDFs or other document types attached to emails and/or stored online for archival and ease of access at a later date.

Netsend goes one further, enabling a percentage of recipients to continue to receive printed and posted payslips.  Without bringing any additional complexity to the set up and administration of the solution, Netsend can automatically handle, off-site, the printing and postage of particular payslips as and when required.  This keeps every recipient in the same system, streamlining and reducing costs.

Going electronic doesn’t mean complexity and cost.  A streamlined solution can fit into existing processes in much the same way as a printer – simply sending payslips to the electronic distribution system, rather than printing and then needing to dispatch manually.  Rules can be set (and modified when needed) to determine in which format, and to which address, each invoice is sent.

The benefits of issuing electronic payslips

Electronic payslips present a significant streamlining in administrative paperwork.  As the formatting and values are taken from accounting systems, payslips can be generated automatically; improving accuracy and reducing administrative overheads.

Electronic delivery removes the dependency on printing equipment and delivery processes.  In conjunction with a wider digital transformation project, this can support a business-wide drive to reduce printing, handling, postage and storage costs – from equipment to staff time.  Solutions such as Netsend present an outsourced solution to any printing requirements, reducing postage costs and removing the need to maintain equipment in-house.

Beyond the immediate delivery of electronic payslips, there are additional benefits in the ease of archival, retrieval and printing of historic payslips where required.  Employees stand to gain a more convenient and supportive payslip service, and businesses stand to improve efficiency and drive administrative costs down when implementing electronic payslips.