Payslips are needed to give each employee information about their earnings. Each employee, full or part-time, must have a payslip on or before the day they are paid.

The Employment Rights Act stipulates the details a payslip must show:

• gross pay before deductions
• the deductions made and for what reason (income tax, for example)
• net pay after tax
• any tax credit payments
• a summary of payments where the salary is paid in different ways.

If the employee is receiving Working Tax Credits or is making contributions to a stakeholder pension, these sums must also be shown separately on the payslip.

Many employers add other, non-statutory details to their pay statements. These can cover basic pay, overtime, bonuses, commission, holiday pay, sick pay, Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay.

At the end of each financial year, all employees must be given a P60, which shows the amount of tax they have paid for the whole year. Any employee who leaves their job must be given a P45, which they can hand to their next employer.