An employment relationship is based on an exchange, where labor is provided in return for an agreed fee. This trade relationship is formalised through an offer that sets out terms and conditions, known as a contract of employment. Defined in Section 2 of the Employment Act, a contract of employment is “an agreement, whether oral or in writing, expressed or implied, whereby one person agrees for a wage or other benefit or both to let his labour to and to perform it under the orders of another person who agrees to hire it.”
Part of this agreement includes details about an employee’s wage or remuneration. As defined by the Employment Act, “wage” means “remuneration or earnings, however, designated or calculated, which is paid by an employer to an employee, is capable of being expressed in monetary terms, is fixed by mutual agreement or by legislation and is payable by virtue of a written or unwritten contract of employment.”
This article highlights that payslips are not just a courtesy; they are a legal requirement. Want to learn more? Read on!
Payslip Contents
Generally, payslips—or pay advice slips—should include information about the employee, their employment, and remuneration. This might consist of details like employee names, banking details, employment start date, type of employment, and specifics of wages such as basic salary, allowances, and benefits. This information usually comes from the employee’s file. Providing payslips can be challenging when the employment contract is verbal, but that is a topic for another time. Now that we understand the essential contents of a payslip, let’s address the legal obligations around them.
Legal Framework
Labor laws treat the payment of wages as a matter of high importance, and failure to comply is a significant breach of an employment contract. Section 145 of the Employment Act emphasizes this by stating, “any employer who fails to pay wages or other remuneration due to an employee, unless he has reasonable and probable cause for thinking that the same are not due shall be guilty of an offence and liable to the penalties prescribed by section 151(c).” Section 151(c) further states that “any person convicted of an offence under this Act shall be liable to a fine not exceeding P1 500 or to imprisonment for a term not exceeding 12 months or to both.”
Labor laws also stress the importance of employees understanding their monthly earnings. Clause 10.3 of the Codes of Good Practice, Model Procedures, and Agreements: Remuneration and Payment Systems reads, “management should provide sufficient information to enable every employee to know how their pay has been calculated, details of any overtime payments, allowances, and deductions. Payment systems should be kept as simple as possible to ensure employees understand them.”
Conclusion
The information above clearly outlines the legalities surrounding payslips and provides guidance on the details they should contain. Since wages and payslips go hand in hand, payslips must be shared with employees each month before payday. Employees have a right to this information, and employers are legally obligated to provide it. Remember, it’s a right, not a courtesy.
Contact Information
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