As this month’s featured service is Payroll, I thought I would cover some of the common misconceptions that we come across regularly with clients in respect of payroll and associated HR issues.

1) My employee has only been here a couple of weeks so won’t be due to any holiday pay as they have now left…

INCORRECT – An employee’s right to holiday pay accrues from the moment they start their employment with you and is not subject to a minimum period of time or whether they are still on their probationary period. The statutory minimum is 28 days per year which can include bank holidays (contract terms may be more but not less). Therefore if someone has been employed for 2 weeks and then leaves, they are entitled to 1 day holiday pay. Calculated as 28 days divided by 52 multiplied by 2. From this entitlement, you would deduct any holiday or bank holidays that may have been taken. For example, if they had taken a bank holiday Monday and Tuesday during this period as a holiday the employee would owe you 1 day’s holiday as they would have taken 2 days.  This extra day could be taken from their pay.

 2) My employee doesn’t work Mondays or Fridays so I don’t need to include the bank holidays in their holiday entitlement calculation…   

INCORRECT – The holiday allowance is calculated based on a minimum of 28 days (which can include bank holidays) which is pro-rated for part-timers.   Therefore an individual that works Tuesday to Thursday would be entitled to 16.8 days holiday a year. This is the same for an employee that works Monday, Wednesday and Friday. However, it is likely that the latter will have more days that are used on bank holidays than the former. It is important that for the purposes of calculating holiday pay that there is no distinction or additional allowances made for the bank holidays, they are included in the 28 days (unless the contract states otherwise).

3) My employee is contracted to work 30 hours a week but sometimes I don’t have enough work for them so I can just pay him for the hours they work…

INCORRECT – Where the contract of employment states that an employee is entitled to be paid for 30 hours then this is the minimum number of hours that the individual must be paid for. For example for one week there are only 10 hours of work available to them, they would still be entitled to be paid for 30 hours per their contract and not the 10 hours they worked. If your work is subject to fluctuations in hours it is important to seek guidance from an HR expert in order that the contract can be worded to allow variations in pay.

4) I don’t need a PAYE scheme as I only employ part-time and casual staff…

POSSIBLY – If all the relevant circumstances apply but it may also be incorrect in they don’t. You do not need to register for PAYE if none of your employees is paid more than £113 or more a week or none of your employees gets expenses or benefits or none of your employees has another job or get a pension. If any of these conditions apply then the business must register for a PAYE scheme.

5) My employee will want to opt out of auto-enrolment pension so I don’t need to bother about enrolling them.

INCORRECT – If an employee has been assessed as eligible, they will have to be enrolled in the workplace pension scheme. They do have the option to leave the scheme (opt-out) at any time but this has to be their choice and they will need to opt out directly with the scheme. If they opt out within 30 days they will be entitled to a refund.  Employers are not permitted to exert pressure on employees for them to opt out.

If you are concerned about any of the points highlighted please contact our payroll bureau for assistance.  Please do not act without seeking advice, as the solutions above should take into consideration any contract of employment that is in place.

Lisa Greenwood

 

Posted by Lisa Greenwood

 

 

Disclaimer
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.

Lambert Chapman Chartered Accountants

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