O N L I N E L E A R N I N G
Payroll
Learn how to process a number of common termination packages correctly, from redundancies to contractual breaches, retirement and death-in-service. Termination payments
After two days on calculations, a BACS file had been created and sent for payment – phew! As soon as I pressed the button, I had a call to say the system was now updated. Typical. Although the task of manual calculations was tedious, I am happy to say that my figures matched those produced by the system, and everyone was happy… including my children, who had survived on takeaways for the previous two days. ...the software decided to place each and every employee on National Insurance category letter C... The payroll gremlin People often refer to ‘gremlins in the system’, and within payroll, software can do some weird and wonderful things. It is the poor payroll teams, and software developers, attempting to understand what has gone wrong and where, that suffer most when this happens. In my scenario, it seemed like any other payroll run, and the team went about processing the payroll as normal, blissfully unaware of the chaos that was about to ensue. For some unknown reason, the software decided to place each and every employee on National Insurance (NI) category letter C, which is reserved for those who are state pension age and above. The team suspected this was the case when scanning individual payslips and finding that no employee NI deductions were being taken, but it was confirmed 100% when the gross to net report revealed total employee NI liabilities as £0.00 for the month. There had recently been an update to the payroll software, so the payroll manager contacted the software support team, who we had a good working relationship with, to see what on earth was going on. After many profuse apologies, the support team explained there had been an issue with the latest update and managed to rectify the situation, and harmony was restored (along with
employee NI contributions). The real horror story would have been if the payroll department hadn’t carried out sufficient checks on employee pay or applied their working knowledge of NI, as there would have been a workforce in receipt of much higher net pay than they were entitled to, and Her Majesty’s Revenue and Customs (HMRC) would have been, quite rightly, asking questions. The incredible vanishing woman Payroll teams are often expected to have a crystal ball and know all about the day-to-day occurrences in every area of a business, without being informed. Obviously, this isn’t what happens, and this common misconception frequently leads to very big problems. This terrifying story begins with an employee leaving a business to embark on a new career path. Nothing particularly worrying there, you might think. But then you realise her area manager did not notify anybody that this lady had left, which meant she continued to receive her FULL PAY for several months following her departure from the organisation. Now you start to see how this tale is so frightening – overpayment is the dreaded O word that no payroll professional ever wants to hear. This is because they can be so complex and time consuming to resolve. The team were required to recalculate the payroll for the months following the employee’s leave date and contact her to request the money back. Fortunately, this horror story has a happy ending – the employee was co-operative and agreed a repayment plan with the company, which she stuck to. Business-wide training was also rolled out to demonstrate the importance of communication between departments and to prevent the same situation from arising in the future. This has proven to be effective, as there don’t appear to be any other leavers that we haven’t been notified of… or are there…? Do you have any payroll horror stories to share? After the turbulent eighteen months payroll departments have endured, are you doing anything for Halloween for some light relief? Do you have any payroll horror stories you would like to share? Get in touch with the policy team, at policy@cipp.org.uk . n
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CPD 3 points
29
| Professional in Payroll, Pensions and Reward |
Issue 74 | October 2021
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