REWARD
Top payroll queries so far in 2024
Danny Done, managing director of Portfolio Payroll, discusses some of the burning payroll questions raised by professionals so far this year
G iven that it appears the long journey and uncertainty around holiday entitlement for part-year and irregular hours workers has now concluded, it naturally raises many questions about the current position. So, let’s explore this and some other top payroll queries. What holiday entitlement should I give my irregular hours and part- year workers? The Supreme Court’s decision in Harpur Trust v Brazel meant that annual leave could not be pro-rated for permanent part-year workers. This was because it held that the Working Time Regulations 1998 just didn’t allow for it, but this produced an odd result. It meant that part-year and irregular hours workers were entitled to receive 5.6 weeks of paid annual leave per leave year – the same as those working full time – even though they weren’t working the same amount as them. This was great for the part-year and irregular hours workers, but it did seem unfair to individuals working full-time because it wasn’t reflective of the hours of work they had put in. Consequently, the government stepped in and passed legislation, the Employment Rights (Amendment Revocation and Transitional Provision) Regulations 2023, to correct the situation. This meant that irregular hours and part-year workers would accrue holiday proportionate to the hours they work. Therefore, holiday will accrue, on the last day of the pay period, at the rate of 12.07% of hours worked in that pay period. Employers can only implement this for leave years which start on or after 1 April 2024, so if an organisation has a January to December leave year, it will have to wait until 1 January 2025. It’s also important to note that if it means there will be a change to the worker’s terms, their agreement should be sought first.
Can I use rolled-up holiday pay for term-time workers? For holiday years starting on or after 1 April 2024, rolled-up holiday pay is once again lawful for irregular hours and part-year workers. In practice, it means adding on an extra 12.07% of total pay for work done in the pay period and awarding it in each pay packet. The worker must still take the annual leave; they just don’t get paid for it when they’re on holiday. However, it’s up to the employer whether they want to use rolled-up holiday pay. If they don’t want to then they can still pay the worker for the holiday when they take it. Can I require an employee to pay for their uniform? Generally, employers can require that their employees pay for their uniforms providing the contract allows them to do so. Care is needed though when an employee is paid the national minimum wage or national living wage, or close to it. This is because the deduction for uniform cannot take the wage below this minimum rate. “Even when an employee isn’t in work for various specific reasons, for example, lay off or sickness, they may still be entitled to be paid in full for the statutory notice period where the notice pay is protected”
When is notice pay protected? When an employee resigns or is dismissed and they continue to work during the notice period, they’re entitled to pay in the normal way. Even when an employee isn’t in work for various specific reasons, for example, lay off or sickness, they may still be entitled to be paid in full for the statutory notice period
where the notice pay is protected. This pay protection, however, is
overturned when the employer’s notice to terminate employment is a week or more higher than the statutory notice period. If it is then the employee isn’t entitled to be paid during the statutory notice period and they will receive no pay except for any statutory payments which are due, for example, statutory sick pay or statutory guarantee pay. It doesn’t matter whether the employee resigned or has been dismissed; it’s always the employer’s notice period that determines whether protection applies or not. Do I have to give notice pay if a job offer is withdrawn before someone’s employment starts? If an employer offers someone a job and then withdraws it before employment begins, then reasonable notice pay is due. This is because the contract of employment is in place at that time and, therefore, termination attracts notice pay. If notice has already been agreed because, for example, it has been included in an offer letter, then that should be followed. Otherwise, the amount of notice pay isn’t a defined amount. It will depend upon what’s reasonable notice in the circumstances and could be several months. Factors to consider include the: l seniority and pay of the individual l what’s usual in the industry l whether they’ve had to relocate. n
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| Professional in Payroll, Pensions and Reward |
Issue 102 | July - August 2024
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