in Payroll, Pensions & Reward PROFESSI NAL Issue 60 May 2020 Official publication of The Chartered Institute of Payroll Professionals
Reward strategies
Payslip statistics report Charting evolution
When we were young A force of nature
Being payroll It’s in our blood
CIPP UPDATE | POLICY HUB | PERSONAL DEVELOPMENT
40 YEARS OF LEADING THE PROFESSION
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It is surely a remarkable achievement that HMRC has built (and hopefully
real time information via PAYE. Payroll professionals and the industry continue to discharge onerous statutory obligations which include amongst other things national minimum wage, real time information and automatic enrolment. Hopefully, CJRS can be added to this list of successful contributions made by payroll professionals and the industry.
successfully tested) in just a few weeks a system to enable and satisfy employers’ claims for reimbursement of wages etc paid under the coronavirus job retention scheme
(CJRS). It is to be hoped that this system – which at the time of writing was expected to be operational several weeks before you receive this issue – is easy to use, robust, and as fraud resistant as possible. The CJRS and the functionality for claims surely would not have been realisable in the absence of the Internet and (probably)
Mike Nicholas MCIPP AMBCS (editor@cipp.org.uk) Editor
Chair’s message
Reward strategies, the theme of this issue, conjures many images. Some will see it as ‘pay’, while others will consider the broader pension benefits available within a business as a key element of compensation. Many individuals have managed a career within
is a smartphone provided and can this be used for occasional personal use? Is the work undertaken likely to provide more kudos than simply salary alone – such as gaining greater skills with class- leading technology or being part of a project taking the business to a new operating model? The latter would be attractive to those who want to ensure personal development goals are achieved whilst delivering business goals. Examples of what larger and more global businesses can offer prospective candidates are career development prospects and the opportunity for international travel. Thinking more broadly, what other help is offered to employees? Well-being initiatives, both financial and mindfulness and strong environmentally friendly policies and support to the community are undoubtedly likely to help a business stand out from the crowd. I do hope you find all the articles of interest and take insight into what your own business may benefit from considering for the future.
the public sector due to very attractive pension benefits available. I expect many more would want to consider the complete view to be a holistic approach that encompasses much more than salary alone. Some may look for what additionally can be earned, either with bonuses or variable pay for extra work. A total reward statement may well encompass all of an individual’s pay components building up to gross pay and then the options taken from what is available to them in consideration of pension, holiday buy-back (or sell), salary sacrifice schemes and perhaps items which attract a taxable benefit such as a company car. When differentiating from employers, a broader even more holistic approach should be taken in considering how each role is supported and whether it attracts the benefits or rewards a candidate may expect. For example, does it offer flexible working arrangements to support a work-life balance? If the role is mobile
Jason Davenport MCIPP MIoD (jason.davenport3@cipp.org.uk) Chair, CIPP
We are living in difficult and unique times. I hope all members and their families are keeping as well as can be, both personally CEO’s message and professionally, and that we can see a way forward when hopefully the work to contain and remove the threat of Covid-19 occurs.
others like webinars and online, and some want ‘bite-sized’ pieces of training and education. We will ensure we continue to adapt to the needs of our members in meeting their requirements. The ‘hasty’ move of some sessions had a sense of process and procedure, and they accelerated more quickly than we had planned. So, I am grateful to the positive response received by members and students in adapting to and taking on board online delivery. Thank you. So, wherever you are when this magazine reaches your letterbox, I hope you and your families have kept well and adapted, certainly in continuing to keep the UK paid. I hope my next message reflects movement back to normality. In the meantime, keep safe.
At the time of writing – mid-March, the CIPP has been able to accommodate its staff working from home. With the superb support of our IT team CIPP staff have the facility to work remotely, thereby ensuring our members continue to receive services, solutions, learning and advice. The use of technology, enabling a switch from face-to-face delivery to webinars and other online technology to ensure students are still taught and professionals receive training, is also a testament to the resourcefulness and ability of the CIPP team. The movement to online resources – which we have heavily invested in over the last two years – is attributable to addressing the diverse needs of our membership and how they want to be trained and educated. Though many still like face-to-face events,
Ken Pullar FCIPP (ken.pullar@cipp.org.uk) Chief executive officer, CIPP
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| Professional in Payroll, Pensions and Reward |
Issue 60 | May 2020
in Payroll, Pensions & Reward PROFESSI NAL
Also available online at payrollpensionsandreward.org.uk
Contents
May 2020
THIS ISSUE’S FEATURE TOPIC IS REWARD STRATEGIES
37
Reward strategies
by Jerome Smail
Features
14
12
16
The future of payroll by Rebecca Mullins
A life in payroll by John Spooner
When we were young by Mike Aldous
17
25
28
Biases, at work by Raafi-Karim Alidina
Lay off, furlough, CJRS by Mike Nicholas
Payslip statistics report by Helen Hargreaves
| Professional in Payroll, Pensions and Reward | May 2020 | Issue 60 2
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Chief executive officer Ken Pullar FCIPP CIPP board of directors Jason Davenport MCIPP MIoD Stuart Hall MCIPPdip Dianne Hoodless MSc ChFCIPP FHEA Editor Mike Nicholas 0121 712 1000 | editor@cipp.org.uk Advertising Jill Bonehill 0121 712 1033 | advertising@cipp.org.uk Design James Bartlett, Nicole Davis and Sam Parkes design@cipp.org.uk Printing Warwick Printing Company Ltd
The right to work in the UK by Lora Murphy
Business risk reviews by Peter Minchinton
41
40
True value of a company pension by Gareth Stears
If we should live that long by Henry Tapper
42
44
Liz Lay MSc FCIPPdip Carole Pearson MCIPP Katie Sharpe ACIPPdip
Cliff Vidgeon BA (Hons) FCIPP CMA ACIS Clare Warrington MSc FCIPPdip AFHEA
Useful contacts
PCP, job offer, SOSR by Nicola Mullineux
Progressive leave policies by Danny Done
Membership membership@cipp.org.uk 0121 712 1073 Education education@cipp.org.uk 0121 712 1023 Training admin@cipp.org.uk 0121 712 1063 Events events@cipp.org.uk 0121 712 1013 Marketing and sales marketing@cipp.org.uk 0121 712 1033 General enquiries enquiries@cipp.org.uk 0121 712 1000
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Supercharging the payroll engine by Richard Dutton
Data analytics to identify top performers by Brad Winsor
Regulars
01 Editor’s comment, and
24 Payroll news 25 Compliance 36 Industry news 37 Reward 46 Technology Additional online content 20 Employees’ internal motivation
Chair’s andCEO’smessage Events, news and developments
04 CIPPupdate 05 My CIPP
cipp.org.uk @CIPP_UK
Articles Please support this magazine so that it can continue to be a part of your membership package. Trademarks The CIPP logo, the initials ‘CIPP’ and the words ‘Professional in Payroll, Pensions and Reward’ and ‘CIPP Consult’ are trademarks of the Chartered Institute of Payroll Professionals. Copyright: The Chartered Institute of Payroll Professionals 2020. The Chartered Institute of Payroll Professionals, CIPP, Goldfinger House, 245 Cranmore Boulevard, Shirley, Solihull, West Midlands, B90 4ZL. Switchboard 0121 712 1000 Fax 0121 712 1001 Copyright This magazine is published by The Chartered Institute of Payroll Professionals in whom the copyright is vested. All rights reserved. No part of this publication may be reproduced, stored in a retreival system, or transmitted in any form or any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. The views expressed in this publication are not necessarily those of the CIPP or the editor. The information and comment contained in this publication are given in good faith, their accuracy or completeness cannot be guaranteed.
Being payroll, Policy hub: On your behalf, and Advisory
10 COVID-19 news 12 Personal development Diary of a student, CPD 21 Events horizon 22 Movers and shakers
23 Employee or independent contractor (USA) 34 Payroll in a crisis – four steps to avoid panic
Full issue including additional online content available at payrollpensionsandreward.org.uk
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| Professional in Payroll, Pensions and Reward |
Issue 60 | May 2020
CIPP update
Celebrating 40 years of supporting payroll professionals THE CIPP’S business development director, Vickie Graham DipM ACIM, who has been trawling the Institute’s archives, writes about “this incredible journey learning about our heritage and history. I am truly touched to receive so many messages from our members who were involved in the early days of creating and supporting our Institute. “I want to thank Roy Roach who reached out after reading March’s magazine and commented: ‘I really enjoyed reading your article … about the ‘birth’ of [APSA] as I was one of the few. I remember clearly that first meeting at Kensington and Chelsea Town Hall and perhaps especially the £5 (cash) we all paid as our inaugural fee (which we could not claim back on expenses). ‘Although very small at the outset the new organisation to represent pension and payroll was very professionally run and it was not long before we received our membership cards. I remember my membership number was 009. ‘One of the highlights of the early days was the monthly magazine which as I recall was mass produced in someone’s front room on a stencil machine. … On the back page … was a crossword which offered the winning entrant a treasured engraved brass paperweight. One month I was one of those lucky winners [and it is] sitting on my desk at home.’ Vickie is currently reading through those APSA newsletters, some of which Vickie observes “were indeed produced on a stencil machine in the early days” and that the “crosswords certainly seemed to provide some light entertainment”.
Congratulations to newly accredited PAS organisations
CIPP staff witness new world record
THE CIPP Payroll Assurance Scheme (PAS) is our flagship payroll audit solution, the gold standard for your processes and people and the prestigious award to covet in the payroll industry. It consists of two distinct elements: one will audit your payroll processes and the other will audit the learning and development of the staff within the payroll function. Congratulations to our most recently accredited organisations: ● ESOS Ltd
THE CHARTERED Institute’s Jason Clark, training and quality assurance manager, and Vickie Graham, business development director, recently witnessed (obviously before the lockdown)
Vickie, Jason, the surveyor, and Ellie Chamberlain and Jemma Henninghan of Aston University
● FMP Payroll Services Ltd ● Payroll As You Go Limited ● The Chartered Institute of Payroll Professionals
the making of a new Guinness World Record. On 12 March, they attended the creation, counting and measuring of what is officially the ‘longest line of sanitary pads’ which consisted of 20,320 pads measuring 1,888.9 metres. The line was completed by the girls’ netball team at Aston University to raise awareness for period poverty. All the pads were donated to Aston University and to Birmingham and Solihull Women’s Aid.
Welcome to new CIPP board member THE CIPP is delighted to welcome Carole Pearson MCIPP who has been Ken Pullar, CIPP chief executive officer, said: “We are thrilled that so many organisations, including our own, have achieved this prestigious accreditation. It is imperative that organisations comply with government legislation and the Payroll Assurance Scheme is designed to help companies do just that.” Email compliance@cipp.org.uk to find out how the Payroll Assurance Scheme can benefit your organisation.
roles before moving to X-changing HR services as operations director and then Experian as a HR shared services and payroll consultant. During her time working for these organisations, she gained in-depth knowledge and experience in generalist HR, HR transformation, change management, HR shared services, payroll, HR systems, and HR outsourcing. Carole has worked for Marks & Spencer for eleven years and is a member of the HR senior leadership team. She is head of colleague services and HR transformation, accountable for developing and delivering the colleague services strategy and services to over 70,000 employees across the UK. The next phase of the HR transformation programme focuses on moving to a cloud-based technology solution which will further transform the way the business manages its people in the future.
co-opted to the board based on her experience within strategic HR, effective from 1 April 2020. Carole has gained a breadth of
experience in senior leadership roles focussing on the development and delivery of HR strategy and people proposition, and on leading and driving the delivery of the business strategy. Her appointment to the board will be of direct benefit to the CIPP team internally, as well as to members who are on a similar career trajectory. In the early part of her career, Carole held several generalist roles in BAE Systems and progressed to senior generalist HR
| Professional in Payroll, Pensions and Reward | May 2020 | Issue 60 4
My CIPP
Being payroll
David Rees FCIPP, strategic account director, ADP , discusses the benefits of being part of the CIPP
When and why did you join the CIPP? I actually joined a long time ago, in 1988. Part of the reason I joined was because I was one person working in a payroll team who had no contact with anyone else. It was the concept of keeping up to date with legislation other than looking at the Inland Revenue books that came through, as well as talking to other members and understanding some of the challenges that they had and developed some of the ideas back into what I was doing. As I say, I was pretty much on my own at the time with no one else I knew in the industry. Which benefits of the CIPP membership appeal to you the most? I think from my point of view, the magazine is useful for me to develop my ideas with my team and talking points as well as the support team. I use that quite a lot when I’m really stuck on questions that I can’t go to let’s say directly to HM Revenue & Customs, and I think that is pretty much it. How has the CIPP membership helped you in your career? It’s given me a professional qualification. I’m probably slightly unique in that I work directly in the payroll industry for a company
that provides software so within my industry I can talk to people at peer to peer level and understand some of the challenges I’ve got. It’s also a recognition that if I need a payroll manager from another company they know as a standard that I have fellow membership. Tell us about a time when you or your department found benefit from the support of the CIPP That’s quite easy: some of the challenges we get arise when we’re unsure on a position, so this is where the Advisory Service is invaluable to us. This is a good example of where we’ve used the services of the CIPP. Tell us about the day that you realised that the CIPP membership was a real value to yourself From my view it’s from the first day that I joined the CIPP. Because I have worked on my own in an industry where I had no contact with anyone else, being able to actually speak to somebody in the same industry and understand some of the challenges they’ve got, helped me through the complexities of payroll when I first joined the industry. For someone who is thinking about joining as a member, what would your advice be to them about what they could gain? It’s the expertise in the industry. It’s working with people who are like-minded and just any insight into what they are doing in terms of daily basis because not one payroll is the same as another – so although when we look at payrolls there are some basics, actually how people operate payrolls is very different – so that’s quite useful. Why is it important to you that you are a member of the CIPP? It’s certainly important because working in the industry it’s absolutely invaluable when I talk to people at a peer to peer level.
If you would like to be part of the being payroll series, please email info@cipp.org.uk
BE PROFESSIONAL. BE VERSATILE. BE ACCURATE. BE PASSIONATE. BE PAYROLL
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| Professional in Payroll, Pensions and Reward |
Issue 60 | May 2020
MY CIPP
The CIPP's policy and research teamprovide an update of developments and consultation exercises Policy team update On your behalf
T he CIPP’s policy and research team endeavour to respond to various consultations, using as many thinktank roundtable meetings as possible, in order to help shape the future content of government policies which have implications for the payroll profession. We are currently living in unprecedented times, and although we are trying to maintain a sense of normality and adopt a business-as- usual approach wherever possible, it is unavoidable that the coronavirus outbreak has changed the way in which we operate. Accordingly, the CIPP is investigating ways in which it can offer ‘virtual’ thinktank roundtables and will continue to respond to consultations of interest for the duration of this period of disruption. This will serve to ensure that we can still act as the voice of payroll on behalf of our members and the wider profession and continue to prompt change that will improve government policy delivery. SSP and Coronavirus Job Retention Scheme As you might expect, the Advisory team at the CIPP have been inundated with calls, emails and webchat relating to the temporary changes to statutory sick pay (SSP) and the Coronavirus Job Retention Scheme, announced by the Chancellor, Rishi Sunak. The news and guidance in relation to measures that aim to help businesses and workers through the COVID-19 outbreak is constantly changing, in order to keep up with the speed at which the virus is spreading, and the impact it is having on individuals in both an economic and a
...looking into options to host thinktanks in virtual formats until we are advised that it is safe to host them face-to-face...
financial distress. Working at pace to develop the systems to support and deliver the reimbursement process, HMRC announced in early April that it was planning to launch the mechanism from 20 April. The CIPP’s policy team will continue to provide regular updates as soon as we have them, via News Online , and a range of social media platforms to ensure that our members are kept informed of the changes as they are announced. The CIPP hopes that the effects of the coronavirus are as minimal as possible, and that normal service will resume relatively soon. The Chartered Institute will also adhere to government advice to ensure that its employees and members are protected and kept safe. We will be looking into options to host thinktanks in virtual formats until we are advised that it is safe to host them face-to-face again. Minimum/living wage rates The Low Pay Commission (LPC) has launched its annual review in response to being tasked by government with recommending rates of the national minimum wage (NMW) and monitoring the progression of the national living wage (NLW) rate to achieve its target of reaching two-thirds of median earnings by 2024. You will be aware that, in addition to this, the reach of the NLW is being expanded, with the intention that it will apply to those aged 23 and over from 2021, and to anyone aged 21 plus from 2024. The ambition is that the other NMW rates will be increased as much as possible without having adverse effects on employment.
social capacity. At the time of writing, what we
definitively know is that SSP is payable from day one, as opposed to day four, of absence for anybody self-isolating due to being symptomatic of, or diagnosed with, coronavirus. The government will refund up to two weeks’ worth of SSP per eligible employee to companies that employed less than 250 staff as of 28 February 2020. The mechanism for this reimbursement has not yet been established, and the repeated official advice is that this it will be worked on over the coming months. The Coronavirus Job Retention Scheme has been established to provide financial support to workers who otherwise would have been made redundant or laid-off. The government guidance confirms that any impacted employees will need to be reassessed as ‘furloughed workers’, and their details along with earnings information will need to be sent to HM Revenue & Customs (HMRC). Employers can then reclaim up to 80% of furloughed workers’ wage costs, up to a maximum cap of £2,500 per month, in order to avoid these individuals being placed in situations of
| Professional in Payroll, Pensions and Reward | May 2020 | Issue 60 6
*please see summary at cippmembership.org.uk for details.
E - L E A R N I N G
Policy hub
CAN YOU AFFORD FINES OF £10,000 * A DAY FOR NON-COMPLIANCE?
...specific focus on criteria used to determine the definition of who/what a ‘carer’ should be...
The Certificate in Pensions Administration has been developed with pension practitioners to ensure that it meets the needs of the industry. It provides payroll and pension staff with relevant training so businesses can safeguard against the financial risk for non-compliance. CERTIFICATE IN PENSIONS ADMINISTRATION
The review focuses on sourcing evidence from a wide range of contributors and aims to look at the effect of recent increases to the NMW and NLW on both employers and employees. Views relating to business conditions and the economic outlook are welcomed and will be of particular relevance this year, due to the outbreak of coronavirus. More broadly, the LPC wants to hear about the effect on employment and hours, pay and benefits, productivity, prices, and profits in relation to the increases to NLW/ MW. Of particular interest to the LPC are: ● the affordability and effects of the proposed increase of NLW to £9.21 from April 2021 ● views on the impact of increasing the NLW to a rate of £10.69 per hour by April 2024 and lowering the NLW age threshold to 21, and ● feedback relating to potential changes to the apprentice rate and its effect on younger apprentices. The CIPP will be hosting a virtual thinktank roundtable covering this topic, so please contact policy@cipp.org.uk to register your interest. Carer’s leave consultation As announced at Budget 2020, the Department for Business, Energy and Industrial Strategy (BEIS) has launched a consultation in relation to carer’s leave. The consultation explores the government’s proposal to provide unpaid carers with a new statutory entitlement to a week of unpaid leave each year to help them balance working life with caring for somebody. BEIS is requesting feedback centred around: ● how carers use existing employment rights ● who should be eligible to take carer’s leave ● what the leave can be taken for ● how the leave would be available to take ● the process to follow in order to take the leave, and
● the costs and benefits to both employers and employees. There is specific focus on criteria used to determine the definition of who/what a ‘carer’ should be, and therefore those individuals eligible to take the leave. This will be based on: ● the employee’s relationship to the person to whom they are providing care ● whether the employee has caring commitments that are longer term or apply to specific situations where the need is significant
● whether the carer should have a qualifying period of continuous employment with the employer.
Tackling CIS abuse HMRC is seeking feedback on plans to change the rules that prevent tax loss via the operation of the construction industry scheme (CIS), and would like to hear from anyone working within the construction sector, but particularly sub-contractor employers that set-off CIS deductions in-year against their employer liabilities. Specifically, HMRC is seeking information relating to responses to the new measure designed: ● to ensure CIS deductions claimed by employers are permitted only in circumstances where satisfactory supporting evidence has been provided ● to identify rules within CIS that require further clarification to reduce misinterpretation and abuse ● to obtain further comments on supply chain measures which are currently in the early stages of development. n If you have any comments or experiences you would like to share on any of the subjects raised please get in touch by email to policy@cipp.org.uk . The CIPP's policy and research team intend to submit a written response to this consultation and are in the process of creating a survey which we plan to follow-up with via a virtual roundtable meeting. To take part in this, please contact policy@cipp.org.uk .
ENROL TODAY
*correct at time of publication
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Call: 0121 712 1023 Live chat with us
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| Professional in Payroll, Pensions and Reward |
Issue 60 | May 2020
MY CIPP
The CIPP's Advisory Service team provides answers to popular questions
Q: An employee has arranged for himself to undergo work-related training at the request of his line manager. The company has agreed it will reimburse the cost of the training to the employee. Can you advise if this is required to be reported as a taxable benefit in kind (BiK)? A: Providing the training is work-related and falls within the exemption of section 250 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), there will not be any taxable benefit to the employee and so does not require reporting. It does not matter whether the employer directly incurs the expenditure or reimburses the employee. The exemption covers amounts that would otherwise be taxable as earnings, as a BiK. Please see https:// bit.ly/2Jph7bE.
exemption would need to be reported as a BiK. If the employer decides to put the awards in a PSA instead you would need to apply to HM Revenue & Customs (HMRC) in advance of them being given. Q: An employee who is a company car user (and had the same vehicle all tax year) has been issued with a company fuel card, with effect from 1 March. We are aware that this is a taxable benefit; however, can you confirm the value that needs to be reported? Do we pro- rata the car fuel benefit for when it is available? A: Unlike company cars that are taxed on when they are available to an employee, if an employee is issued with a fuel card relating to a company car that they are already in receipt of, the employee is taxed on the full annual charge of the car fuel benefit charge. It is only if the employer withdraws the use of a fuel card can the annual charge be pro-rated to the days the fuel card was available. If the employee has a new car mid-year and a fuel card was issued for that specific car, then the days that the new car was unavailable can be considered to reduce the benefit charge. Best practice would be to not issue a fuel card to this employee until the start of the new tax year. Q: We have found that it would reduce business travel costs to provide certain employees with railcard passes which they would be able to use also for personal travel. Would a taxable benefit arise? A: In normal circumstances, as the
employee would have personal use of the card, the full cost of the travel pass would need to be reported as a BiK; however, there is an exception. Guidance on providing travel cards in this situation advises that if it makes better business sense to provide a travel card which is predominantly used for business but can also be used for personal travel, the employee should not be penalised. For the card not to be reported as a BiK, the employer should analyse the cost of individual reimbursement of all business travel against the cost of providing the card. If the cost of the card equates to less than reimbursement, then this would not be reported as a BiK. All travel should still be documented so that spot analysis can be actioned to ensure that the above applies on a regular basis. If the provision of the card is more than what would have been reimbursed, the difference between the cost of the card and reimbursement would be reported as a benefit to the employee. Details and examples of both situations can be found here: https://bit.ly/346cAoc. Q: Our company offers employees healthcare cover, and meets the costs. We also invite employees to add their spouse and dependants to this cover. If an employee takes up the offer to add additional policy holders, we ask that the employee covers this cost and payroll deducts this from the employee’s net pay each pay period. When completing P11D returns for those who have additional policy holders, what figure should be reported?
Q: Should we add long-service awards to our pay as you earn
(PAYE) settlement agreements (PSA) calculations? These awards are an online credit card that can purchase anything but are only exchangeable for goods. The value of the award varies from £250.00 to £5,000.00. A: The award would be deemed as a non- cash award. You do not have to report or pay tax on non-cash awards if all of the following apply: ● the employee has worked for you for at least twenty years ● the award is worth less than £50 for each year of service, and ● you haven’t issued them a long-service award in the last ten years. Anything that didn’t meet the above
The CIPP Advisory Service is available * 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m. to 4.30p.m. on Fridays. Call 0121 712 1099 or email advisory.service@cipp.org.uk .
| Professional in Payroll, Pensions and Reward | May 2020 | Issue 60 8
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Policy hub
THE BA IS BACK
Designed for ambitious payroll and pensions professionals who aspire to progress to senior positions within their respective industries and stand out amongst their peers. BA(HONS) BUSINESS MANAGEMENT
A: Healthcare cover provided by an employer is a taxable benefit reportable in the P11D return for each year it is provided. The employer also pays class 1A National Insurance contributions (NICs) on this benefit. When completing the P11D, it is advised that the whole cost of cover is reported; however, the taxable and class 1A NICs liability value can be reduced by any payments the employee makes towards the costs of provision of the benefit, if the contributions have been made after tax and NICs. In the case in question, the employee’s contribution relating to additional policy holders have been made via a net pay deduction, so the taxable benefit can be reduced by this value. Q: From April 2020 we have opted to payroll our BiKs which include benefits that attract class 1A NICs. With the new indicator for class 1A NICs on termination payments being introduced in the latest software update, enabling us to process the class 1A NICs via real time information (RTI), can we also report the class 1A NICs on other BiKs using this function? A: The ability to report and pay class 1A NICs on termination payments via RTI is not extended to class 1A NICs due on benefits. Class 1A NICs on benefits are different to those due on termination payments and will still require you as an employer to complete a P11D(b) return. This must be completed and paid to HMRC by 19 July following the tax year to which it relates, even if you have processed your benefits via payrolling. Q: We are looking at introducing a tech scheme via a salary sacrifice benefit for our employees. We are aware that this must be reported in a P11D, but what must we report for each employee? A: You will need to report the amount of cash forgone by the employee to be provided with this benefit. As the employee is giving up an amount of cash to be in receipt of a non-cash benefit, optional remuneration arrangement rules would apply. As the equipment is being provided via a salary sacrifice scheme, I would also advise that at the end of the scheme the employee will not own the equipment to which the salary sacrifice arrangement applied. This is because
the employee has not purchased the equipment – you as an employer have provided the employee with use of the equipment in exchange for them giving up a sum of their salary. At the end of the scheme, the employee can purchase the equipment from you at a second-hand cost. Any salary forgone cannot reduce the purchase amount; however, payments that have been ‘made good’ can. ‘Made good’ payments relate to deductions from the employee’s net pay that have already been adjusted by tax and NICs. If the employee does not wish to have a deduction for the second-hand cost, but the employer is willing to give the equipment to the employee, the employer must report the second-hand value of the equipment in a P11D under a transfer of asset. This value can be reduced by any ‘made good’ deductions or payment the employee makes. Q: We now process all BiKs via payrolling. A new employee started with us in February 2020 and has use of a company car but unfortunately this information wasn’t passed onto us in payroll until April. The BiK for the care should have been payrolled for the time the car was available in the last tax year. How do we correct this? A: As you have registered to payroll your benefits, you are able to carry over any un-payrolled amounts into the next tax year. If you have already made your final full payment submission for the tax year, then you can carry forward the amount by adding it to the employee’s first wage payment in the new tax year. Although you can carry the cost into the new tax year for the employee, you are unable to do the same for any employer’s class 1A NICs that may be due. You will still need to include the amounts in your P11D(b) return for the tax year to which it relates. n Correction The answer to the second question of the Advisory page in the April 2020 issue (page 8) advised to "use the pre- salary sacrifice pay". This should have said "use the post-salary sacrifice". Thank you to all those who drew this to our attention.
ENROL TODAY
Delivered in conjunction with
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| Professional in Payroll, Pensions and Reward |
Issue 60 | May 2020
COVID-19 news
Working at home THE ADVISORY, Conciliation and Arbitration Service (ACAS) (www.acas. org.uk/working-from-home) advises employers to: ● talk to their employees and workers about how they might improve working from home arrangements ● continue to consider which roles and tasks can be done from home – this might involve doing things differently and not assuming a role cannot be based at home ● support employees to adjust to remote working ● consider individual employee’s needs, for example anyone with childcare responsibilities, a long-term health condition or a disability ● write down the arrangements that have been agreed so everyone’s clear. Employers are responsible for the health and safety of all employees, including those working from home. Although it’s very unlikely that during the coronavirus pandemic, employers can carry out usual health and safety risk assessments at an employee’s home, they should still check that: ● each employee feels the work they’re being asked to do at home can be done safely ● employees have the right equipment to work safely ● managers keep in regular contact with their employees, including making sure they do not feel isolated ● reasonable adjustments are made for an employee who has a disability. If changes are needed, employers are responsible for making sure they happen.
COVID-19 – A compilation of sources of information and advice THERE IS extensive information currently available online relating to the coronavirus outbreak in the UK, and how employers can help support their employees. To help direct employers, and employees, to relevant guidance, the CIPP’s policy and research team has compiled sources of information etc. (Please note that in the tables below lengthy URLs have been shortened to assist with typing.) The CIPP’s News Online , which is updated several times a day, provides the latest information: www.cipp.org.uk/resources/news.html . As the situation relating to coronavirus is continuously evolving – as is the guidance and the support measures that are being offered – it is advisable to frequently check for the latest position to ensure that you are as up-to-date and informed as possible.
Support available for employers and individuals Business support site
www.businesssupport.gov.uk/
https://bit.ly/34jgIB4 https://bit.ly/2R6yYIF
COVID-19 support for businesses Coronavirus Job Retention Scheme
www.gov.uk/employers-sick-pay
Statutory sick pay (SSP) guide for employers Support for those affected by COVID-19
https://bit.ly/2JJJhOM https://bit.ly/3e1WqAx or https://bit.ly/39StKH3
Coronavirus Business Interruption Loan
Steps employers should take to protect employees from the spread of COVID-19 and how individuals can protect themselves COVID-19: guidance for employees, employers and businesses https://bit.ly/2x1T549 COVID-19: guidance for employees https://bit.ly/2UNrInc Coronavirus (COVID-19): what you need to do www.gov.uk/coronavirus Staying at home and away from others (social distancing) https://bit.ly/2UTHbT3 Coronavirus (COVID-19): advice for employers and employees https://www.acas.org.uk/ coronavirus
https://bit.ly/3e1WqAx or https://bit.ly/39StKH3
Coronavirus Business Interruption Loan
Information specific to devolved nations Information for individuals and businesses in Scotland
https://bit.ly/2V8e6Ca
Information for individuals and businesses in Wales https://bit.ly/2VnzzqX Information for individuals and businesses in Northern Ireland https://bit.ly/34jcQQF
Shielding and absences
● Shielding – If an employee receives a letter from the National Health Service telling them to start ‘shielding’, they should stay at home for at least twelve weeks. For more about shielding measures visit https://bit.ly/2RjSIc5. ● SSP – Employees and workers must receive any statutory sick pay (SSP) due to them if they need to self-isolate because they have coronavirus or coronavirus symptoms, or someone in their household has coronavirus symptoms, or they’ve been told to self-isolate by a doctor or NHS 111. Employees in self-isolation need to follow their workplace’s usual sickness reporting process. Employees can ‘self-certify’ for the first seven days off work.
| Professional in Payroll, Pensions and Reward | May 2020 | Issue 60 10
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Visit cipp.org.uk/study/ptc to enrol and full details
cipp.org.uk @CIPP_UK
PERSONAL DEVELOPMENT
The future of payroll
RebeccaMullinsMSc FCIPP, UK Payroll &WFMLead, Deloitte , argues that the profession’s future is within our gift and competence
O ur work is being transformed, not only by artificial intelligence and robots, but by forces of change impacting the work itself: who does it and where it is done. It is up to us, as payroll professionals, how fully we embrace this for the future of our profession. Deloitte defines the future of work as a result of many forces of change affecting three deeply connected dimensions of an organisation: work (the ‘what’), the workforce (the ‘who’), and the workplace (the ‘where’). Work: what will it look like? This is not the first time the payroll profession has had the opportunity to change the work we do. Who can remember how happy they were when the P11 deduction worksheets were replaced by technology? It meant no more hours crouched over the huge printed sheets with the tax books open alongside them. What about the implementation of payroll systems resulting in automated statutory calculations? No more tracking absences and calculating statutory sick pay manually; and more recently robotic process automation (RPA/robots) has revolutionised how data is entered,
removing laborious hours of manual manipulation. The World Economic Forum believes that the division of labour between people and machines is expected to continue to shift towards machines, especially for repetitive and routine tasks. As the machines undertake the repeatable tasks, so the work people do becomes less routine. So what is the strategic objective of the modern payroll function, and what are the enduring human skills that are required to meet them? The tasks that remain are those that require advanced expertise in interpretation, for which payrollers are well-suited. Just one examples is the interpretation of how to process the pay of those impacted by IR35 (off-payroll working) legislation. The question is whether payrollers have taken advantage of these advancements to change the perception of their role and value within a business. Or are they still seen as ‘the people who press the big red button once a month’? To make this change happen, payrollers need to show their employer/business the expertise they have and the value they can bring. For example, when a company wins a new contract and payroll will be
required to transfer 200 employees under TUPE (employment protection provisions) onto the payroll next month, it is important for the company and the new employees to have had payroll involved early in the process. How many of us have truly used the huge amount of data we have within payroll to identify how much both the employer or employee could be saving from having more tax efficient benefits? Or to put forward suggestions for new benefits that could improve employee engagement and loyalty? With technology and cloud services driving financial and human resources (HR) transformations widely in the market, the opportunity is clear for payroll professionals to change their role in business. Early stakeholder management will be key in achieving this. Capturing this zeitgeist moment offers the opportunity to change the face of the payroll function. Workforce: who are the payroll team? The types of workforce businesses seek access to today has evolved – including independent contractors, gig workers, crowdsourcing, managed services and full outsourcing. The new workforce is being used to solve problems, get the work done and help leadership build more flexible and nimble organisations. This flexibility of workforce gives organisations the opportunity to be more efficient and creative in managing talent and cost. So, what does it mean for the
...whether payrollers have taken advantage of these advancements to change the perception of their role and value...
| Professional in Payroll, Pensions and Reward | May 2020 | Issue 60 12
The future of payroll
management technology payroll will no longer have to enter the data as it is entered at source, meaning that payroll no longer receive physical piles of confidential data to input, check and keep locked away. These checks can be done digitally anywhere the technology can be accessed, such as at home. However, a drawback to this is that team connections can be lost when everyone is working outside of the traditional office environment and payrollers could lose their connection to the business and its culture. Maybe in the same way there are HR business partners, payroll business partners are the answer to this. n What is the future of payroll? The future of payroll is one that is open to definition both from a payroller’s and an employer’s perspective, and it’s important to remember the role of employee experience in also defining this. Both sides will need to work together to define the purpose of payroll and ensure it is a value-adding function. The first part of this change will come from payrollers themselves.
...work together to define the purpose of payroll and ensure it is a value- adding function
operation of payroll? The immediately obvious challenge is that of managing compliance and risk. To what extent does the responsibility of the payroll function start and end around the engagement and payment of independent contractors? How can the payroll function gear up to respond in an agile fashion to the plethora of ways in which the modern workforce is engaged, deployed and paid? Employee experience is driving further change in payroll. The old adage of ‘paying people correctly and on time’ is table stakes. Employees expect more from a job than a payslip and an employee’s experience with pay (the delivery of it, not just the quantum) is directly correlated to how they feel about the organisation. Payroll holds myriad useful data on employee pay, but is this being leveraged? The drive for employee experience is going to drive change in the output of payroll.
Are you ready for: ● pay on demand ● personalisation of pay data ● smart integrated user interfaces
● using pay data to drive initiatives on financial wellness in the organisation? Smart organisations are gearing up now to get ahead of the curve. Workplace: where does the work get done? Don’t worry, I’m not going to re-open the issue of where a payroll should sit within an organisation! This will be more of a look at the physical location of the work. The traditional model of having a payroll team within an access-controlled office, within an office, is becoming a thing of the past. The advancement of digital communications and technology is changing the model significantly. For instance, in cloud human capital
HOLIDAY PAY AND LEAVE
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HALF DAYCOURSE
Case law continually produces changes to employees’ statutory holiday leave and pay entitlement, which are covered in this informative course, alongwith the various types of leave and the calculation of pay.
This course covers: l Understanding the legal framework l Calculating entitlement and handling requests l Calculating holiday pay l What to include in holiday pay l Handling part-time, shift, casual and agency workers l Sickness absence
Book online at cipp.org.uk/training or email enquiries@cipp.org.uk for more information.
cipp.org.uk CIPP_UK cipp.org.uk @CIPP_UK
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| Professional in Payroll, Pensions and Reward |
Issue 60 | May 2020
PERSONAL DEVELOPMENT
When we were young
Mike AldousMCIPPdip, AFHEA, CIPP tutor , remembers his early days in the payroll profession, recalling the world of payroll in the 1970s
I joined the payroll profession in July 1972 when at the age of sixteen I was appointed as a junior clerk with the then County Borough of Ipswich Council. At that time many employers added young and inexperienced members of staff with the aim of training them to become valued employees by moving them from department to department so they understood the business and could see what aptitudes they had and how best they would fit in! My first department was Payroll, Creditors and Superannuation; and my first tasks were – yes, you guessed it – in the payroll part of the team. It seems that just after my arrival the local Government Act of 1972 was published, which meant Ipswich was to become a district council with effect April 1974. Why did that affect me? Well, the movement around departments ceased and I remained in payroll – and so began my long payroll career. In the first part of my first week, my mentors – Ernie, Cliff, Harry and George – introduced me to the delights of weekly timesheets. I was sorting them into order for my mentors to complete, then batching them ready for the data prep team to key them on to tape which was then fed into the computer for processing. So the payroll was run, and now it was
time to get ready for payday. The weekly task of making up the cash packets ready for distribution, required thimblelets (see image) at the ready to count the cash and fold the payslips. I can still clearly recall sitting under the stairs at the Education Department on that first Thursday waiting for the schools’ caretakers to arrive. They would line up and sign for the packets we had prepared to go back to their schools and pay their assistant caretakers, cleaners, and the canteen staff. ...made do with a penknife and would carefully scratch the paper to remove the error... It was rather surreal in that on that morning some six days after leaving school there I was paying the caretaker of my old school. At that time, we provided a pay on-site service which was the first of the pay-rounds for the week. This was followed by other pay-rounds in the afternoon and on Friday; paying the weekly staff at their places of work such as the
cemetery, old people’s homes, painters/ decorators, refuse collectors, and the rest of the building trades. Can you imagine being asked now to undertake these pay distribution tasks by being driven around in the town in a taxi? The one that sticks in my mind was a Robin Hood taxi which stood out as it was a Ford Zephyr Six Estate painted in green and white squares! Today, should we make a mistake we can always turn to correction fluid to paint over the error and correct it, but in the early 1970s it was either not available or just not allowed. So, we made do with a penknife and would carefully scratch the paper to remove the error as best we could to write over it. Those years were plagued with strikes – none more so than those affecting the supply of electricity. Prime minister Edward Heath introduced a three-day working week, and there were scheduled times when you were without power for up to three hours daily. As you will imagine it proved difficult to continue producing our weekly payroll, but the council was fortunate to have its own generator to keep the mainframe running. This meant the payroll team camped in those rooms making sure we completed the timesheets and of course produced
| Professional in Payroll, Pensions and Reward | May 2020 | Issue 60 14
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