Beware Slipping Up on Payslip Provision

Posted on April 12, 2021

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Advocate John Aycock of M&P Legal analyses a recent Employment and Equality Tribunal decision which looked at the obligation of employers to provide wage slips to staff and came up with some helpful guidance.

Guidance on to what extent an employer must actually distribute payslips to staff has been given by the Isle of Man Employment and Equality Tribunal.

In a recent judgment the Tribunal analysed the statutory obligation on an employer to “give” a payslip to each employee. The points discussed included whether electronic transmission of a document amounted “giving” a payslip and whether online provision of payslips that is password protected and requires employee access satisfies the statutory obligations.

In the case, the employee worked at a delicatessen and complained that he had never been handed any payslips and did not even know he was entitled to payslips while employed. After handing in his notice he requested payslips and was provided with each payslip detailing gross and net pay with deductions made. The employer gave evidence that the payslip system was that they were kept centrally in an office and were available for staff to pick up if they wished.

The Tribunal took this opportunity of clarifying aspects of the law surrounding provision of payslips and setting out some useful best practice guidelines for Manx employers. In doing so, the Tribunal had regard to a 2014 decision from the Northern Ireland Court of Appeal which provided guidance on provision of payslips.

The Tribunal analysed the situation thus. Section 14 of the Employment Act 2006 of Tynwald provides every employee with a right to be given an itemised pay statement in writing. Hitherto, the Manx Tribunal had adopted a strict interpretation of this statutory right. For instance, a 2006 case had ruled that a hotel employer who left payslips in its reception for staff had not satisfied the burden of “giving” the payslip to employees.

Another Manx Tribunal decision in 2008 found that a building employer who made statements available to employees without actually distributing them was not acting compliant with Section 14. This was despite the employer leading evidence that some staff had no interest in their payslips and they were discarded, hence a request system was put in place. The same employer came before the Tribunal eleven years later in 2019 and it was clear that the system of employees requesting payslips, rather than the employer distributing them, remained in place because of the employer’s concerns about discarded payslips being left lying around.

In the December 2020 case the Tribunal found the employee knew his payslips were available in the central office to be picked up if he wished but that he had not asked for one during his employment until he handed in his notice. The Tribunal considered the employee’s lack of interest in payslips to be significant. Despite a fluctuating weekly income he had not asked his employer about payslips nor had he queried their provision with his work colleagues.

So was a ‘payslip on request’ system compliant with law? To resolve this, the Tribunal looked at the Northern Irish case of Anakaa v Firstsource Solutions Limited (2014) when a related issue was reviewed. The Tribunal felt that it could not have been the intention of Tynwald to punish an employer for operating an effective payslip system whereby staff were aware but did not have an interest in receiving the payslips. The Tribunal stated: “If wage slips are left at a known central and sensible point for employees to collect, does that not amount to giving them to the employees?” The Tribunal answered this question by stating: “Nowadays, many employers expect employees to access online payslips. It is now accepted that many, if not most, employers provide payslips electronically. Such employers have made the payslips available but have not in the literal sense, given them to their employees. Neither, in a literal sense, have the payslips been provided in writing” (Tribunal’s own emphasis).

The Tribunal noted that a purposive test should be applied to the statutory wording rather than a literal interpretation of actually giving a payslip. They felt therefore that the statutory obligation to give a payslip could sensibly be construed as meaning to make the payslip readily available including electronically.

Concluding the Tribunal’s decision, the Chairperson Douglas Stewart outlined ten pointers the Tribunal considered to be best practice. These included that:

Written terms and particulars of employment should explain the method of payslip provision;

  • Payslips must be readily available when payment is made and an employee should not have to ask for them;
  • Online provision of payslips satisfies the statutory right but if an employee has difficulty accessing this the employer must find another way;
  • If payslips are not physically handed or made available online then they should be readily available in a location convenient to the employee;
  • Where wages are paid in cash the payslip and cash should be provided together in one envelope;
  • The employer should state in writing to staff that there is an obligation on staff not to leave payslips lying around where others may read them;
  • All payslip systems must be GDPR compliant (that is, observing latest data protection principles); and
  • If an employee knows of a problem as to receiving payslips then they should raise it with the employer.

It is important that employers ensure they comply with the law because of the sanction attached if this obligation is breached. The Tribunal must award a minimum of two weeks’ wages in the event of a breach and, if just and equitable, can top that up by a further two weeks’ pay.

Handing out paper payslips may now seem something of an anachronism. As is sometimes the case, the law has not promptly kept pace with changes in HR practice. It is good to see the Manx Tribunal clarify this for employers and adopt a common sense attitude to interpreting statutory wording that originates from the pre-digital era.

Employers would do well to check their terms and conditions and method of pay comply with the Tribunal’s helpful guidance.

John Aycock is head of the M&P Legal employment unit and has thirty years’ experience of advising on labour law matters in three jurisdictions.

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