Payrolls, clear and transparent

As a human resources manager, you know how important it is to deliver clear and accurate payrolls. Not only to comply with regulations, but also so that workers have confidence in their remuneration. However, many companies tend to simplify or group concepts in payrolls, which has generated conflicts and legal problems. Recent court rulings, such as National Court Ruling No. 73/2024 and Supreme Court Ruling No. 31/2019, have placed special emphasis on the principle of transparency in payrolls. But what does this imply and how can you adapt them in your company?

What does the law say about payroll transparency?

Labor legislation establishes clear requirements regarding the preparation of the salary statement. Article 29.1 of the Workers’ Statute requires that the payroll must contain, in a clear and separate manner, all the perceptions of the worker, as well as the legally applicable deductions. In addition, the Ministerial Order of December 27, 1994, as amended by Order ESS/2098/2014, specifies that the payroll model must provide clarity and separation in the different perceptions and deductions.

Companies can adjust the payroll model according to their needs, as long as they maintain these fundamental principles. The objective is that the worker can understand, without the need for additional calculations, each concept that makes up his or her remuneration.

The transfer principle in payrolls

Recent rulings by the Audiencia Nacional and the Supreme Court focus on this principle. In practice, this means that pay slips must allow the employee to clearly know the origin of each concept. National Court Ruling No. 73/2024, for example, establishes that pay slips that do not break down items such as “variable vacation” or “arrears” violate this principle of transparency. The ruling stresses that the company cannot delegate to the employee the task of collating dates, concepts and amounts paid.

Even if the company provides computer tools to facilitate this information, the payroll must be clear from the outset without requiring additional operations by the employee. It is not enough for the employee to have access to information on his or her working hours or days off work; the payroll must clearly specify each item.

What can happen if payroll is not clear?

The lack of clarity in payrolls can lead to conflicts and claims by workers. In the case addressed by National Court Judgment no. 95/2017, the company did not properly break down the perceptions when workers extended or reduced their working day. As a result, workers had to perform complex calculations to verify whether the remuneration was correct, which was against the regulations. The Court concluded that this type of pay slips did not meet the transparency standards required by law.

Supreme Court Ruling No. 31/2019 ratified the obligation to deliver payslips with due separation and clarity of the concepts. The ruling makes it clear that it is not enough for the worker to know information about his working day or his days of leave due to temporary disability. The company must specify in the payroll the concepts in a precise manner so that the worker can easily verify the accrued remuneration.

How should companies adapt?

Companies are responsible for ensuring that their payrolls comply with the principles of clarity and transparency required by both the Workers’ Statute and case law. This implies a breakdown of remuneration items, such as allowances for temporary incapacity or variables. It is not enough to group these concepts in a single amount; they must be separated and detailed so that the worker can identify them.

In addition, the pay slips must be adjusted so that the worker can, without making additional calculations, verify that the information contained is correct. Otherwise, companies risk facing claims and penalties. As stated in National Court Ruling No. 73/2024, a pay slip that does not clearly specify concepts such as “arrears” obliges the employee to carry out additional operations, which contravenes the principle of transparency.

Conclusion

Recent rulings make it clear that transparency in payrolls is fundamental to the employment relationship. As a human resources manager, your job is to ensure that payrolls comply with these requirements, avoiding that they can generate confusion or require complex calculations on the part of workers.

Implementing a clear and transparent payroll model is not only a legal requirement, but also a way to strengthen trust with employees. Make sure that your company’s payrolls correctly detail perceptions and deductions, and that they comply with legal requirements.

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