Why is it important for employees to understand their payslips?

Why is it important for employees to understand their payslips?
Why is it important for employees to understand their payslips?Why is it important for employees to understand their payslips?

Payslips need to be simple, readable and understandable for all. But many aren’t. When this is the case, some employees struggle to get a clear picture of their income, or they don’t bother to look at them at all. It’s essential, particularly in these times of financial hardship, that payroll data is set out in an easy to read and easy to understand format.

Many payslips are still formatted in legacy layout and many aren’t available to view online. According to National Numeracy, numeracy skills are declining in the UK, with only 22% of working adults having numeracy skills equivalent to GCSE ‘C’ grade or above. This has declined since 2003, when the proportion of working adults with the equivalent skill was 26%.

Numeracy also declines with age.

Combined with the proportion of adults with the equivalent literacy skills of a GCSE grade ‘C’ or above – currently 57%, it’s more important than ever that payslips are easy to read and understand.

It's not just poor numeracy skills that impact the working population. Discalculia (maths dyslexia) or maths anxiety also effect large numbers of people.

High numeracy has benefits. It’s connected both to better health and well-being, as well as to better employment, higher wages and improved financial resilience for the future.

The stats from Plain Numbers are even more concerning. They say that approximately half of all working age adults have the numeracy skills that are expected of a primary school child.


So, what does this mean to employees?

Firstly, employees may not fully understand their payroll data – what it is and what it means - so they can’t check that they’ve been paid the correct amount. They also may struggle to make sure their employer is using the correct tax code, which is communicated by HMRC.

Understanding their tax code means they’ll have a better grasp of how this affects their pay. Employees also need to understand how much National Insurance contributions (‘NIC’) they’ve paid and any other deductions such as pensions and benefits. If they have poor numeracy skills, combined with an outdated look and feel of legacy payslips, employers run the risk of their employees not bothering to look at their payslips at all, so have less ability to manage their money.


What is Plain Numbers?

Plain Numbers is a social enterprise that helps businesses communicate numbers more effectively to their customers. By using a Plain Numbers approach, research shows that double the number of customers are able to comprehend the communications they’re receiving. This leads to them making more informed decisions about their finances and ultimately benefitting from greater financial well-being.

Plain Numbers offers Partners and Associates support in embedding a Plain Numbers Approach into their organisations. In the case of Payroll, this ensures that payslips are helpful and informative, making them easier for employees to understand as well as giving tools to understand the numbers better.


PayCaptain works in partnership with Plain Numbers

PayCaptain has become the first payroll provider in the world to partner with Plain Numbers – in a programme designed to give workers the confidence to understand their payslips. As the cost-of-living crisis and soaring energy prices impact households across the UK, managing money has become more important than ever.

The partnership is designed to give employees access to tools and strategies that make understanding their payslips easier and to give employees the ability to make more informed spending and saving decisions – an important part of improving their financial resilience.

PayCaptain’s award-winning App gives employees greater control of their pay, as well as how they receive it.  The App contains a host of innovative functionality to improve understanding and financial resilience. This functionality includes:


-       Interactive payslips – these are graphical payslips which break down payments and deductions for employees. Employees can click on Help icons for more information on how their deductions have been calculated so they know exactly how their pay has been worked out. Help icons explain tax, NICs, student loan and pension calculations directly on the payslip

-       On demand pay – where companies can give their employees access to payments when they need them, even if it’s outside of their regular pay period

-       Payment splitting – where employees can make payments direct from their net pay to family members, landlords, loans, credit cards, etc – eliminating the risk of missing an important payment

-       Savings - employees can pre-plan the amount to save and is automatically transferred from net pay. This builds some resiliencefor times of financial hardship

-       Money planning tool – where employees can create a personal budget

-       Personalised financial guidance – trusted, impartial and confidential financial guidance from Money Helper can be accessed directly through the PayCaptain app

-       PayCaptain has an AI Chatbot that can answer the most frequently asked questions raised by employees about their pay. If the employee needs to speak to an expert, they can be transferred to a member of the PayCaptain team for more guidance and support. When the employee calls PayCaptain, their last payslip automatically comes up on screen for the advisor so they can handle the enquiry quickly and efficiently

-       Pensions – to make provision and build better financial resilience for later life


Anna Buckle, PayCaptain’s Head of Employee Experience says, “Poor numeracy is the most common consumer vulnerability, with around 20 million working adults impacted daily. We want to build a payroll solution that’s easy for people to use and enables them to confidently review their pay and decide what they want to do with their hard-earned cash. We’re delighted to be alongside the FSCS, Aviva and More Than in the Plain Numbers community.”


In summary, the partnership between PayCaptain and Plain Numbers is a way to improve the financial security for thousands of workers by giving them better understanding of their payslips. PayCaptain joins household names such as BUPA, the Bank of England and DirectLine Group in becoming partners of Plain Numbers.

To learn more about how PayCaptain can help your business and improve the financial well-being of your employees, please contact us for an informal, no-obligation chat. We’ll be happy to demo PayCaptain for you.