PAYROLL INSIGHT
It’s Christmas! Bah, humbug
SamanthaMann CIPPMAATMCIPPdip, CIPP senior policy and research officer, discusses various aspects, particularly early pay days
I n Charles Dickens’ A Christmas carol , Ebenezer Scrooge says: “What’s Christmas time to you but a time for paying bills without money; a time for finding yourself a year older, but not an hour richer?” Whether this resonates with you, let’s consider the impact that earlier payments can have on the benefits system, on the cash flow of employees, and on the scheduling to accommodate processing in December. Payroll cut-off dates Whether you deliver your payroll services in-house or to external clients as an outsource provider you will have a cut-off point beyond which you will not be able to accept further changes. Everyone has a different cut-off – there is no hard-and- fast rule. In December it is common practice for employers to consider requests for an early pay day to help employees plan for Christmas. Factors for supporting such a request can include: ● the normal pay day date ● the impact of bank holidays on payment schedule e.g. BACS ● company or payroll department close- down dates ● company cash flow (this can be an issue particularly in times of austerity) ● custom and practice ● company ethos regarding employee
financial management. Conversely you may use the services of an outsourced provider and find yourself applying their chosen processing dates. Do those dates suit you and your employees, and would you prefer a later date? ...common practice for employers to consider requests for an early pay day... Good communication is key to ensuring that any alteration to the usual process is made known to all affected parties, especially employees, who may experience a delay in receiving payment for overtime or extra shifts as a result of an earlier processing cut-off date. On or before The introduction of real time information (RTI) was hailed to be one of the biggest changes to the income tax pay as you earn (PAYE) process since its introduction in 1944. The mantra at the time was (and continues to be) that the FPS (full payment submission) must be made on or before the date that the employee is paid.
The October 2019 edition of the Employer Bulletin (http://bit.ly/2VTxNNP) once again highlighted the action that should be taken in the event that the contractual pay day falls on a non-working day. The date to be used in the FPS must be the normal (contractual) pay date and not the date when the payment is made, even where the payment is being made earlier (or later) because of the impact of a non-working day. By ‘non-working day’ I mean a weekend or bank holiday. The piece reiterates the guidance that can be found at section 1.8 of the Employer further guide to PAYE and National Insurance contributions (http:// bit.ly/2GrBbcq). It is critical that the employer uses the correct pay date. Universal credit (UC) The driver to the delivery of RTI, so we were told at the time, was to enable the successful delivery of a ‘flagship benefits system’ otherwise referred to as universal credit (UC). Delay, and more delay, has dogged the roll out of UC which has resulted in much criticism of this system. However, by far the biggest area of concern is the impact that early payments can have on the eligibility and payment of UC. The basis of a UC-claim is the monthly assessment period set by the Department for Work and Pensions (DWP). Four times a day DWP systems communicate
| Professional in Payroll, Pensions and Reward | December 2019 - January 2020 | Issue 56 16
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