This article concentrates on several changes that have occurred over recent months that all Employers should be aware of and should have already implemented together with common issues we come across within the payroll department.
1. From April 2018, increase in the pension contribution percentages for both Employers and Employees under Auto Enrolment. The current percentages are 2% for the Employer and 3% for the Employee. Please note that with effect April 2019 these percentages increase further to 3% Employer and 5% Employee. It is important that Employers notify their employees of any increases and ensure that they regularly review the pension scheme reports, as it is believed that many employees are likely to opt out as the percentage increases. Businesses also need to ensure that they have a strategy for dealing with the increase in terms of the effect on profits and
2. At the end of May
3. National Minimum Wage (NMW) Whilst many businesses are now paying NMW correctly as most software deals with the updates as required, there are a couple of areas where Employers may fall foul of the legislation due to the “small print”. One area relates to termination payments and the deduction of costs and expenses. Whilst you may have a contract of employment in place with an employee stating that various costs can be deducted on termination, this is still subject to their payment post deduction complying with the amount needed under NMW. The other area relates to “stay in’s or sleepovers”, there has recently been a case where it has stated that the time spent in respect of sleepovers may not be subject to NMW. This may look like good news however I feel that businesses involved in these type of sectors which are mainly surrounding the care industry will find it difficult to get quality employees if they are not remunerated correctly. If you feel either of these areas
Finally, this is just a reminder that the HMRC website does contain very good calculators in respect of statutory deductions such as SSP, SPP and SMP as well as a very good holiday calculator. Holiday for starters and leavers still appears to be the number one area that Employers do not fully understand. We often see confusion surrounding the impact of bank holidays and part-time employees, many not accounting for the bank holiday elements correctly. I would therefore always recommend using the holiday pay calculator on HMRC to work out the holiday allowable: https://www.gov.uk/calculate-your-holiday-entitlement
For any advice surrounding the operation of Payroll please don’t hesitate to contact our Payroll Bureau.
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.