What makes payslips hard to understand?
What is the impact of a lack of confidence with numbers?
Insights from our experts
There is a wide range of reasons why many employees find payslips difficult to comprehend. Primarily, it's the heavy use of acronyms or financial terms, but crucially also because they aren’t presented with sufficient explanation or access to help.
Many people admit that they don’t really know what they should be checking on their payslip and they’re not sure how to tell if the figures shown are correct.
Others point to their lack of confidence around numbers in general as a barrier to understanding. For an increasing number, anxiety around their personal finances makes them feel uncomfortable even looking at their payslip.
A lack of confidence with numbers and numeracy skills will have profound impact on people’s ability to understand their pay and manage their finances, but also on their broader confidence, productivity, and wellbeing.Remarkably, amongst people who report having low levels of confidence with numbers, almost half (45%) claim that this lack of confidence can cost them money. They report being unable to tell if they are being overcharged or getting into debt. More than a third also admit that this alienation from understanding makes them feel less confident (37%) and less productive (34%) at work.
While many employers have made the move to digital payslips and easy, mobile access to HR information, this has not significantly helped increase understanding in a generation that has grown up with computers.
Confidence levels around understanding payslips are significantly lower amongst employees under the age of 35, compared with employees aged 55 and above. Notably, female employees are more confident about their ability to understand and identify an error on their payslip than their male counterparts.
Given the disproportional impact these errors can have on younger, lower-wage, and more vulnerable people, employers should be addressing this issue urgently.
Chief Innovation Officer, Zellis
By educating their employees around pay, employers are actually mitigating risk. It’s in their interests to make sure that employees have the necessary knowledge to check payslips and immediately flag errors. It means they are more likely to be able to resolve concerns quickly and avoid high profile issues which can do serious damage to their brand. Ultimately, we need to emulate what happened when mobile banking become widely available. The more regularly people used apps to access their banking, the more aware they became of their spending and the more confident they became in managing their money [8]. Similarly, as people start checking their payslips more, and are given better access to information and support, they will become more aware and knowledgeable about pay, and better-equipped to check their payslips and spot errors.
Head of Impact and Inclusion, Wagestream
It's important to meet people where they’re engaging. If over half your workforce is checking every payslip, that’s an opportunity to engage and help them. Employers should feel comfortable communicating – even if it feels like over-communicating – about financial concerns. Hosting even 10-minute workshops every payday, to go through and explain what people are seeing and the help available to them, can make a big difference. Helping people understand their finances also depends on how and where you serve them that information. When designing financial wellbeing programmes, you have to consider the best channel to serve all your people, not just those at desks or working remotely. The best solutions reflect how we consume technology now. They should be bite-sized, intuitive, and as low-complexity as possible.
Non-Executive Director, Zellis Chief People Officer, EMIS Health
In the current climate, people are naturally going to be giving more attention to their income and spending. The problem is, many people still don’t have a good enough understanding of how pay works, particularly younger people.It’s easy for older employees to lose sight of what it’s like to be in your first full-time job. Many of us just assume that people understand tax, National Insurance and pensions because we’ve been dealing with them for so many years. For those just entering the workforce, the reality is that they haven’t been taught these things in school.Employers need to work hard to communicate with younger employees in the right way. You need to be offering information and advice at the point that people need it, and to recognise that style and tone are extremely important. We have somebody in our comms team in her mid-20s who offers input into all of our communications to make sure they are more likely to resonate with that younger audience.
