Approximately half of adults in the UK have the numeracy skills that are expected of a primary school child – yet few products or services take this into account. This leaves a disconnect between what’s being communicated and a large percentage of the population.
Payslips are a vital tool for employees to understand their income and deductions. Studies by the Chartered Institute of Payroll Professionals (‘CIPP’) show that over 26% of employees were found to struggle to understand their payslips, with consequences including:
- Poor financial management: If employees don't understand their payslips, they're less likely to be able to manage their incomings and outgoings effectively. This can lead to debt and significant financial stress which impacts health and wellbeing
- Lack of savings: Employees who don't understand their payslips are less likely to save money. This can have a negative impact on their long-term financial security
- Reduced financial resilience: Employees who don't understand their payslips are less likely to be able to cope with unexpected financial shocks, such as job loss or illness
Employers and payroll software companies can take action to make payslips easier to understand for employees. These include:
- Using plain language: Payslips should be written in plain language that’s easy for everyone to understand. This means avoiding jargon and using simple explanations
- Providing clear explanations: Payslips should provide clear explanations of all the different deductions that are made from employees' wages. This will help employees to understand why they're being deducted money and how it affects their take-home pay
- Using interactive tools: Interactive digital payslips allow employees to explore their pay information in more detail. This can be helpful for employees who want to understand their pay better or who want to track their spending
Making payslips easier to understand helps both employees and employers. It supports employees in managing their finances better, which can lead to greater financial security and resilience. It also helps employers to build trust with their employees, creating a more positive workplace.
What are numeracy rates in the UK
Studies show that over 20 million people in the UK have poor numeracy. According to a recent study by the National Numeracy Trust, only 38% of adults in the UK have the numeracy skills needed to manage their everyday finances, leaving over 60% of adults in the UK struggling with understanding things such as percentages, calculating interest rates and managing their finances.
The lack of numeracy skills in the UK has several negative consequences. It can lead to people making poor financial decisions, such as taking out high-cost loans, or failing to save for retirement because they're failing to manage their personal budgets.
How poor numeracy impacts employees understanding their payslips
Poor numeracy and a lack of understanding of traditional payslips has many negative consequences for employees' financial wellbeing. Employees may be unable to:
- Calculate their take-home pay: Creating difficulty in budgeting and tracking spending
- Identify opportunities to save money: Making it difficult to build up savings for the future
- Understand the different deductions that are made from their pay: Leading to confusion and errors or disengagement with the payroll process
- Plan for unexpected financial shocks: Making it difficult to cope with unexpected expenses, such as a job loss, illness or financial emergencies within the home
How does PayCaptain help?
In a three-year partnership, PayCaptain is working with Plain Numbers, a social enterprise that exists to help companies improve their communications to increase their customers’ understanding.
By using a Plain Numbers approach, research shows that double the number of customers can understand the communications they’re receiving. This leads to them making more informed decisions about their finances and ultimately benefitting from greater financial wellbeing.
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 data better.
Key members of the PayCaptain team, including Anna Buckle, Director of Operations and Impact and Sheryl Steel, Director of Operations and Business Performance are Plain Numbers-certified Practitioners. This means the Plain Numbers approach has high profile within the company and is being embedded in everything we do.
PayCaptain launches the world's first Plain Numbers-certified payslip
In a world-first, PayCaptain has launched a Plain Numbers-certified Payslip, making it easier for employees with lower numeracy skills to understand their payslip and reach their financial goals.
The new PayCaptain payslip has been assessed by Plain Numbers and found to have reached the high standard of clarity for how numbers are communicated, deductions are laid out and take-home pay is explained.
Working closely with Plain Numbers, PayCaptain has adopted best practices for communicating information to increase understanding and resilience for employees being paid through the cloud-based outsourced payroll solution.
PayCaptain now offers employees three choices for viewing their payslips through the PayCaptain payroll app - graphical, traditional or the new Plain Numbers format.
Mike Ellicock, Chief-Exec and Co-Founder of Plain Numbers - ‘It’s been fantastic to support PayCaptain in applying the Plain Numbers approach to such a relevant communication. We all get payslips, yet they’re something so few people really understand, and most people don’t question how they could be better. The changes PayCaptain have made are stark, and I’m confident this work will give employees the understanding they need to enhance their financial well-being.’
Simon Bocca, Founder of PayCaptain - ‘Most people have a payslip that looks like it's from the 1980’s - terribly-designed, confusing and totally uninspiring. PayCaptain is helping thousands of people have real confidence in their income by applying a unique and innovative approach to the payslip. We want people to have the best possible ‘getting paid’ experience so working with Plain Numbers to ensure maximum engagement with a payslip was obvious. PayCaptain goes beyond payroll, and we provide inclusive and accessible tools to support employees in becoming more confident with their money’.
In summary, making payslips easier to understand for employees is an important step towards improving their financial wellbeing. By providing clear and concise information, employers can help employees to make better financial decisions and to plan for their future.
By working in close partnership with Plain Numbers, PayCaptain is helping tens of thousands of employees to understand their payslips better – leading to better engagement with the payroll process and giving employees more tools and information to improve their financial health.
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