in Payroll, Pensions & Reward PROFESSI NAL Issue 64 October 2020 Official publication of The Chartered Institute of Payroll Professionals National Payroll Week 2020 Keeping the UK paid
Goodbye CJRS, hello JRS bonus Developments
Mastering software Observations
Annual leave and term-time workers Methodology
CIPP UPDATE | POLICY HUB | PERSONAL DEVELOPMENT
40 YEARS OF LEADING THE PROFESSION 40 YEARS OF LEADING THE PROFESSION
INTEGRATED Human Resources, Payroll and Talent Management In-house or Cloud you choose
0845 370 3210 firstname.lastname@example.org www.frontiersoftware.com
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“Chaos is roving through the system and able to undo, at any point, the best laid plans.” Terence McKenna (1946–2000) (https://bit.ly/3hxEJtg)
This issue provides extensive coverage of the 2020 National Payroll Week (pages 11– 17). Though the role of payroll professionals – keeping people paid, and maintaining the flow of colossal amounts of revenue to the Treasury – has not generally been acknowledged
I am delighted that this issue features the return of ‘Confessions of a payroll manager’, with our heroine, Penelope Fortham, being urgently recalled from her overseas secondment (page 52). And to lighten the mood even further in these dreadful times, this issue also features a selection of payroll horror stories using Halloween as a timely excuse/medium (pages 24-26).
widely, surely the industry deserves status as a key strategic sector of the UK economy? Although I left the payroll processing frontline long ago, I am pleased and proud to be part of the payroll profession. This issue achieves a first-ever: a Wordsearch puzzle, related to the feature topic of mastering software (page 17).
Mike Nicholas MCIPP (email@example.com) Editor
This issue’s key theme is around mastering software. I am firmly a believer that technology should be an enabler. It must be simple to use – which means intuitive; so, should be built with the Chair’s message
flexible products for the consumer. Wearable technology is where a lot of new products are developing currently – with internet enabled watches that connect to phones and other devices. I am sure the technology gurus are considering how best that can support developments in the future. Of course larger enterprise resource planning applications have to service many different functions of a business and its customers; and whilst these can become very large and complex, the same simple approach needs to be applied to support the end-user in both processing and extracting the information into meaningful management information. Whether your needs are large or small, I hope you and your software work well together, and am confident you will enjoy reading the articles contained herein.
end-user in mind. Just like the software in a car (you don’t care how it works, you want it to be available when you need it), the software in a payroll, pensions or human capital management system should be available to you wherever and whenever – and ease of use is important. This need to access from anywhere has been driven to the forefront since the pandemic, with those more able to work remotely quickly more able to keep processing requirements on schedule. For those in the profession looking at different routes than the traditional management route, then if you have a tendency towards software engineering and development, there are fantastic opportunities to be had, with an ever-expanding legislative requirement as well as the need to build ever more
Jason Davenport MCIPP MIoD (firstname.lastname@example.org) Chair, CIPP
The CIPP team are in the midst of a busy autumn season of CIPP virtual events. We celebrated the 22nd anniversary of National Payroll Week online on the 7 September, supported by our chair, Jason Davenport. In CEO’s message
breakout discussion rooms and 1-2-1 meeting requests. The CIPP and our members and guests are looking forward to the highlight of our year with the Annual Conference and Annual Excellence Awards on 15 and 16 October. We have a high calibre agenda (created to be presented online) with highly recommended and professional keynote and motivational speakers and some excellent workshops and roundtable discussions lined up to ensure the continuous professional development of our members. Normally in November we would hold our Graduation Ceremony for those who have successfully completed our university approved qualifications, but due to the current situation the decision has been taken to postpone the event until November 2021, when we will hold two ceremonies on the day for the classes of 2020 and 2021. Here’s hoping the world looks a safer place this time next year for meeting colleagues face to face in all of our events!
virtual attendance were Chartered and fellow CIPP members, as well as an excellent turn-out including many distinguished guests. It was a pleasure to support this key week celebrating the payroll profession with other organisations playing an active part in promoting and educating payroll professionals from the Global Payroll Association, Reward Strategy and the Payroll Centre. We recognise the need for ably taught and educated payroll professionals and it was great that for the second year running we were able to collaborate and celebrate NPW. The week culminated in our virtual National Payroll Week Conference and Exhibition (originally planned to take place in Glasgow) on Thursday 10 September. This was managed extremely well with a greater than planned attendance and everyone enjoyed live sessions, question and answer sessions and networking through
Ken Pullar FCIPP (email@example.com) Chief executive officer, CIPP
| Professional in Payroll, Pensions and Reward |
Issue 64 | October 2020
in Payroll, Pensions & Reward PROFESSI NAL
Also available online at payrollpensionsandreward.org.uk
THIS ISSUE’S FEATURE TOPIC IS MASTERING SOFTWARE
45 Cloud and clear by Jaspal Randhawa-Wayte
When we were young by Gordon Cresswell
Scary stories to tell in the dark
NPW – What did we learn? by Helen Livesey
Goodbye CJRS, hello JRS bonus by Samantha Mann
Annual leave and term-time workers by Sudeep Ganguli
The problem with safeguards by Gareth Stears
| Professional in Payroll, Pensions and Reward | October 2020 | Issue 64 2
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 | firstname.lastname@example.org Advertising Vickie Graham 07775 564 352 | email@example.com Design James Bartlett, Nicole Davis and Sam Parkes firstname.lastname@example.org Printing Warwick Printing Company Ltd
The end of the company pension scheme? by Henry Tapper
Redundancy, impairment, vicarious liability by Nicola Mullineux
Still making do with a Nokia 3210? by Louise Ankers
Furlough fraud penalties by Danny Done
Liz Lay MSc FCIPPdip Carole Pearson MCIPP Katie Sharpe ACIPPdip
Cliff Vidgeon BA (Hons) FCIPP CMA ACIS Clare Warrington MSc FCIPPdip AFHEA
Membership email@example.com 0121 712 1073 Education firstname.lastname@example.org 0121 712 1023 Training email@example.com 0121 712 1063 Events firstname.lastname@example.org 0121 712 1013 Marketing and sales email@example.com 0121 712 1033 General enquiries firstname.lastname@example.org 0121 712 1000
Mastering software by Jerome Smail
How do you master software? by Stuart Hall
01 Editor’s comment, and 04 COVID-19News 06 CIPPupdate 07 My CIPP Policy hub: On your behalf, Advisory, Being payroll 11 National PayrollWeek 17 Wordsearch 19 Personal development Diary of a student, CPD
28 Compliance 33 Payroll news 34 Industry news 35 Reward 41 Technology 52 Confessions of a payroll manager Additional online content 15 Additional NPWcontent 20 The emotional impact of physical distancing in the workplace 21 Leveraging the advantages of interviewing via audio 26 Hell fest (additional scary payroll story)
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 retrieval 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.
Full issue including additional online content available at payrollpensionsandreward.org.uk
| Professional in Payroll, Pensions and Reward |
Issue 64 | October 2020
Kickstart scheme launches DETAILS ABOUT the scheme, which was announced in the 2020 summer mini- budget as part of support measures for businesses during the pandemic, have been released (https://bit.ly/2ZCQw3B). Employers can use Kickstart to create new six-month job placements for young people who are currently on universal credit and at risk of long-term unemployment. The placements: ● should support the participants to develop the skills and experience they need to find work after completing the scheme ● be new jobs, that do not replace existing or planned vacancies or cause existing employees or contractors to lose or reduce their employment. The roles must be: ● for a minimum of 25 hours per week,
for six months ● paid at least the national minimum wage (NMW) for their age group, and ● should not require people to undertake extensive training before beginning the placement. Funding is available following a successful application process for 100% of the relevant NMW for 25 hours a week, plus associated employer National Insurance contributions and employer minimum automatic enrolment contributions. There is also £1,500 per job placement available for setup costs, support and training. Applications must be for a minimum of thirty placements, but employers unable to offer this many can partner with other organisations to reach the minimum number. A representative applying on
behalf of a group of employers can get £300 of funding to support the associated administrative costs of bringing together the employers. Although the scheme, which is available in England, Scotland and Wales, is not an apprenticeship, participants may move on to an apprenticeship at any time during or after placement. Once a job placement is created, a second person can fill it once the first successful applicant has completed their six-month term. The Department for Work and Pensions will choose the applicants for the jobs and youngsters will be referred into the roles through their JobCentre Plus work coach. The government expects the first placement to begin at the start of November.
CJRS fraud and errors IN EARLY September, Jim Harra, head of HM Revenue & Customs (HMRC), informed members of parliament on the Public Accounts Committee that the department has “made an assumption for the purposes of our planning that the error and fraud rate in [coronavirus job retention scheme] could be between 5% and 10%. That will range from deliberate fraud through to error.” This estimate suggests up to £3.5bn may have been claimed fraudulently or paid out in error.
Reskilling and retraining ACCORDING TO a recent study by CV- Library, a leading job board, 59% of Brits have said they’re willing to reskill and retrain in a new line of work following the coronavirus pandemic. The study reveals that the most common reason for people wanting to reskill was because they want to make themselves more employable Recent pandemic statistics THE OFFICE of National Statistics (ONS) is regularly publishing experimental data on the impact of the coronavirus on the UK economy and society. These faster indicators are created using rapid response surveys, novel data sources and experimental methods. Wave 12 of the ONS’s Business Impact of
(51.8%); followed by the fact that they can’t find a job (32.4%); and because they want better job security (32%). In addition, 30.3% say they want to do a more meaningful job, 29.1% want a role with a higher salary and 18.5% say they simply want to change industries. Lee Biggins, founder and chief executive Coronavirus (COVID-19) Survey (for the period 10 August to 23 August 2020), which was released on 10 September 2020, reveals that: ● of those businesses which had not permanently ceased trading, 11% of the workforce were on partial or furlough leave, 36% were working remotely, and 49%
officer of CV-Library, comments: “The job market is going to be impacted by the pandemic for a long time… [and] going forward, employers will need to be more open to hiring people from different sectors and professionals must be more open to opportunities outside of their traditional remit.” were working at their normal place of work ● the arts, entertainment and recreation industry had the highest proportion of their workforce on partial leave or on furlough leave at 41%, followed by the accommodation and food service activities industry at 29%, and the administrative and support service activities industry 18%.
Extracts from Wave 12 of the ONS’s Business Impact of Coronavirus (COVID-19) Survey
Business currently trading
Businesses temporarily closed or paused trading
All businesses (excluding those permanently ceased trading)
Proportion of workers on furlough leave and receiving pay top-ups Workforce of furlough leave 11%
62% 45% 64%
11% 40% 63%
Businesses providing top-ups on top of CJRS
Proportion of furloughed workforce receiving top-ups
Percentage of businesses applying for governemt schemes Coronavirus job retention scheme
Not applied for any of the schemes
| Professional in Payroll, Pensions and Reward | October 2020 | Issue 64 4
TheWinter Economy Plan FACED WITH the emerging threat of a second wave of coronavirus, on Thursday
24 September the chancellor of the exchequer, Rishi Sunak, announced the government’s action plan for jobs over what will inevitably be a challenging winter. (The plan can be read here: https://bit. ly/3i1KZKe.) The government’s plans have changed significantly since March, when the coronavirus job retention scheme (CJRS) was announced, and must adapt to the changing effects that COVID-19 has had both on our lives and the economy. Sunak stated: “Our approach to the next phase of support must be different to that which came before. The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.” ● Job support scheme – As widely anticipated, the decision to close the CJRS at the end of October 2020 remains unchanged. However, from 1 November 2020 the CJRS will be replaced by the job support scheme (JSS) for a period of six months. The intention behind the new scheme is to protect viable jobs within organisations that are seeing a drop in demand due to the pandemic. The main principles of the scheme are as follows: ❍ In order to support only viable jobs, to be eligible for the scheme, employees must be working at least a third of their usual hours. Employers must pay for those hours worked. ❍ For hours not worked, the government and the employer will each pay one third of the employee’s equivalent salary. ❍ The level of the grant from the government will be calculated on the basis of the employee’s standard salary but capped at £697.92 per month. ❍ The scheme is available to many organisations in the UK, and there is no requirement for them to have previously used the CJRS to be deemed eligible.
❍ The scheme is aimed at only businesses that need it the most – all small- and medium-size firms will be eligible, but larger companies can only claim if their turnover has fallen by a third. ❍ Businesses can utilise both the JSS and the jobs retention bonus. ● Self-employment income support scheme – The government has also confirmed that it will continue to support the self-employed by extending the self- employment income support scheme (SEISS). An additional grant will be given to those currently eligible for SEISS and are continuing to actively trade but are seeing less demand due to the pandemic. The first lump sum will relate to the period November 2020 to January 2021 and be worth 20% of average monthly profits up to a maximum of £1,875. A fourth grant will be made available but will be tailored to respond to the ever- changing situation with the pandemic and cover the period from February 2021 to April 2021. ● Additional measures – Several additional measures were announced in order to help the UK return from the economic turbulence created by the pandemic, including the following. ❍ A pay-as-you-grow flexible repayment system will allow those businesses that took out a bounce back loan a longer
period in which to repay the loan. The length of the loan period will be extended from six to ten years. Interest- only periods and payment holidays will also be offered to help businesses that may struggle to repay. ❍ Coronavirus business interruption loan lenders are able to extend the maximum length of loans from six years to ten years, to help businesses repay their loans. ❍ The duration of the temporary value added tax (VAT) cut to 5% is extended. Businesses in the tourism and hospitality sectors – which are the sectors most impacted by the pandemic – will see the temporary 15% VAT cut extended until the end of March 2021. ❍ A new payment scheme will give businesses that deferred their VAT bills the option to settle the amounts due in smaller instalments. As opposed to paying a lump sum at the end of March 2020, they will be able to make eleven smaller interest-free payments in the financial year 2021/22. ❍ Self-assessment taxpayers will be given a separate additional twelve- month extension from HM Revenue & Custom via the ‘time to pay’ facility. This means that payments deferred from July 2020, and any due in January 2021, will now not be payable until January 2022.
Concerns The announcement quickly prompted comments from many businesses and sectors:
● Musab Hemsi, partner at LexLeyton, said: “Many features of the scheme also require a great deal of clarity before it goes live. At present we do not know which companies qualify and the meaning of ‘viable jobs’ and the qualifying criteria for a ‘large employer’.” ● Anne-Marie Winton, partner at Arc Pensions Law, said: “These new changes have the results to generate significant additional confusion amongst already stressed and confused employees and employers about how to correctly operate automatic enrolment.”
| Professional in Payroll, Pensions and Reward |
Issue 64 | October 2020
CIPP celebrates 40 years of supporting payroll professionals OCTOBER IS officially our anniversary month as the first meeting of the Association of Payroll and Superannuation Administrators
grips with their studies, passing their exams, becoming better at their jobs because of their studies and making progress in their careers.” What do you think has been the
(APSA) was held on 10 October 1980 in London. And, 40 years on, October 2020 would have seen us hosting our Annual Conference and Exhibition at the Celtic Manor Resort in Wales. So, we thought it appropriate to contact some of the founder members of both APSA and the British Payroll Managers Association (BPMA) which formed in 1985, to ask what they think the Institute’s biggest achievements have been. Ged Dale, founder member of APSA, provided the following comments. “I was a founder member of APSA, and later the chair of the North-West and North Wales Region from approximately 1986 to 1992. With the CIPP I wrote and maintained the Diploma unit on the disclosure of pension information, circa 2012–2016.” What was your motivation for being involved with the Institute? – “Pensions is a large and important area of work. It was crying out for the professionalism that APSA/CIPP could bring to bear, especially via formal qualifications.” What was your proudest moment working for the Institute? – “Not so much pride as delight in seeing colleagues get to
We hope that those of you who took part enjoyed celebrating the payroll profession during National Payroll Week and appreciated the contents of the downloadable pack. We loved seeing and sharing your images and thank you for your support and participation. We are now starting to look ahead to our Annual Conference on 14 and 15 October and are excited about what new opportunities the online event can offer to us all. We look forward to seeing you there and listening to the insights from the speakers and hearing your thoughts at the various roundtables taking place across both days. It’s a great way for all of us to stay up to date with the fast-paced changes that have taken place this year, to share our knowledge and to prepare for the future, whatever it may hold. biggest change for the profession over the last forty years? – “Automation. In 1980, in the Local Government Pension Scheme new membership certificates were still being completed by hand, with the office copy coming via interleaved carbon paper. We still had typing pools and pensions were calculated using pen, paper and calculator. Annual benefit statements didn’t exist as without the necessary computerisation they couldn’t be calculated. And forty years ago, a website was where a spider lived.” What would you like to see the CIPP achieve in the future? – “First of all, it needs to continue with its education programme – if we don’t have payroll and pensions professionals who know what they are doing, then we have nothing. Long live the CIPP!” Thank you, Ged. We’ll feature further responses in future issues of Professional magazine. Ken Pullar, CIPP chief executive officer, said: “Never has it been more important for businesses to have good payroll processes, knowledge and skills that enable them to implement new government legislation and guidance quickly. “Congratulations to those organisations that have recently demonstrated just that.” The Payroll Assurance Scheme is still operating, with assessments currently operating online. To find out how the Payroll Assurance Scheme can benefit your organisation, email email@example.com.
Raising standards and recognition from Parliament IF THE pandemic has taught us anything, it’s the need to be prepared for whatever might come our way. Here at the CIPP, we are focussing on how we can help the payroll industry stay up to date with the fast-paced changes and needs of the sector. This may be through our updated and new training courses, our topical policy webcasts or via our annual Future of Payroll survey which was released in early September. Our aim is not only to raise the standard of the payroll
profession, but to raise its external profile too, which is why we are extremely pleased to have received a letter of recognition, on behalf of the payroll industry and backing our National Payroll Week initiative, from both Jesse Norman MP, minister with strategic oversight of the UK tax system, and Julian Knight, MP for Solihull.
Congratulations to the newly accredited PAS organisations THE CIPP’s Payroll Assurance Scheme (PAS) is designed to test your payroll processes in relation to payroll processing, compliance and the people skills and development opportunities.
One of the most important elements is ensuring business continuity plans are in place and effective should they be required. Given recent events, congratulations to all organisations that have achieved this accreditation and will have been able to put those plans into action. Congratulations to our recently accredited organisations: ● A2+B ● PPG Industries UK Limited
| Professional in Payroll, Pensions and Reward | October 2020 | Issue 64 6
MY CIPP - Policy hub
Policy team update On your behalf
The CIPP’s policy and research teamprovides an update on developments
T he CIPP’s policy and research team have been kept busy, as always, attending virtual meetings and responding to consultations to feed into government policy and legislation that will affect the work and roles of payroll professionals. Concurrent with a welcome shift towards more normality in life, so too do we recognise more activity in the business- as-usual sphere. As opposed to discussion of coronavirus and the measures to help businesses and people through the pandemic, attention has turned to other areas of interest. Pensions tax relief The Treasury has published a call for evidence as it investigates the longstanding issue that affects workplace pension savers who earn below the standard income tax threshold. Where they are in a net pay arrangement (NPA) pension scheme, they do not receive in full the tax savings that other pension scheme members do. A relief at source (RAS) pension scheme will see the pension saver benefitting from a tax relief top up from HM Revenue & Customs (HMRC) paid to the pension saver’s scheme. In such schemes the deduction from pay is at 80% of the pension amount, with the government topping up the additional 20% direct to the scheme. This means that some employees are being penalised based on the pension scheme type that their employer chooses to operate. Research has revealed that this disadvantages more women than men. The CIPP is a member of the Net Pay Action Group (NPAG), alongside former pensions minister, baroness Ros Altmann. The NPAG has urged the government to address this issue.
The policy and research team will launch a survey to collect feedback from members prior to submitting our written response. In addition, the team plan to host a virtual roundtable think tank to allow members to enter into extended discussion with others from the payroll and pensions professions but also to liaise with the Treasury directly on the matter. Think tank roundtable invitations are issued to full, fellow and Chartered members. Readiness for a return to work In recognising that many businesses are bringing their employees back from working remotely and into their standard workplace, we wanted to assess how comfortable employees are with this transition. We frequently use ‘Quick Polls’ on the News Online page to gauge opinions of and reactions to hot topics that are affecting the payroll profession. Using this medium, responses to our question “How is your employer treating a return to the workplace?” were as follows: ● dependent on individual circumstances: 32% ● compulsory: 24% ● no intention to return to the workplace and work will be performed remotely: 18% ● optional: 13% ● nothing confirmed as yet: 13%. Tackling CIS abuse HMRC recently launched a consultation, which ran from 19 March 2020 to 28 August 2020, looking at the issue of tax loss from the operation of the construction industry scheme (CIS). It also provided details of the new powers that are to be given to HMRC enabling the department to correct CIS deduction amounts claimed
by sub-contractors in employer returns where it is believed that the off-set amounts are false. The consultation also explained some of the changes to CIS rules to clarify their meaning and discussed preliminary ideas relating to industry supply chains, in an attempt to assess whether work in this space would also help to prevent tax loss. To inform the written response which we submitted in August 2020, we ran a survey for all stakeholders of the payroll profession to gather views and opinions on the proposals. To gather more qualitative and in-depth responses we also hosted a virtual roundtable think tank, which was attended by officials from the HMRC CIS team, payroll professionals, software developers and tax professionals. This prompted thought-provoking and useful views that HMRC could take away from the meeting and supported many of the views expressed within the survey. Key findings of the research are as follows: ● proposed timing of corrections to be made is not long enough; fourteen days was deemed too short to enable any amendments or to gain evidence to back up what had been submitted ● majority agreed with the evidence requirements ● members raised concerns over how non-compliance will be notified ● questions around how HMRC would determine that a claim was not legitimate (i.e. what would instigate an investigation) ● software providers should be consulted to develop solutions as to how non- compliance is actioned and communicated ● further guidance on compliance should be issued ● survey results suggested subcontractors were happy with compliance checks already performed, and that further official testing would be detrimental. It is proposed that the new powers will be operational from April 2021. We will bring news of the outcome of the consultation when published. n
...penalised based on the pension scheme type that their employer chooses...
| Professional in Payroll, Pensions and Reward |
Issue 64 | October 2020
The CIPP's Advisory Service team provides answers to popular questions
Q: Employees have had to work late nights to meet our deadlines, so we have provided at least sixteen taxis for them to get home safely. Does this incur a taxable benefit? A: Section 248, subsection 2, of the Income Tax (Earnings and Pensions) Act 2003 provides an exemption for late night journeys paid by the employer if all of the following conditions are met (see page EIM10210 in the Employment Income Manual (https://bit.ly/3m5nHGC)). ● the journey occurs because the employee is required to work later than usual, and until at least 9pm, and ● late working is irregular, and ● by the time the employee finishes work, public transport is either unavailable for the journey home, or it is unreasonable to expect the employee to use it, and ● the transport paid for or provided by the employer is by taxi or similar private road transport. However, this exemption covers only the first sixty taxi journeys per employee in a tax year (see EIM21831 (https:// bit.ly/3jYnL9e)). If more than sixty taxis journeys are provided in a tax year, a tax liability arises under the pecuniary liability principle (see EIM00580 (https://bit. ly/3jXLztL)) where the employer pays the employee’s debt. Also, if the sixty- journeys limit is exceeded in a tax year, this will not disqualify the first sixty from the exemption. Q: The private roads into our sites can be littered with nails and other. Are we able to reimburse our employees for the cost of replacing or repairing tyres on their own cars when punctures occur when commuting to work at these sites? A: If you were to reimburse the employees you would be settling their personal debt (see EIM00580 https:// bit.ly/3jXLztL et seq). The amount reimbursed would have to be processed as a notional payment through payroll for class 1 National Insurance contributions (NICs) and for income tax purposes reported via the P11D return.
Q: As an employer if I want to introduce a salary sacrifice scheme for fully electric cars available for personal use to my employees what and when must I report details to HM Revenue & Customs (HMRC)? Also, what are the appropriate percentages for fully electric cars? A: A salary sacrifice scheme is a contractual agreement to give up the right to cash in exchange for a benefit. Under optional remuneration arrangements (OpRA) some salary sacrifice arrangements no longer benefit from the income tax and NICs advantages previously available (see EIM44131 (https://bit.ly/3hbPnG3) for items excluded from the exemption). In general, OpRA rules involve tax being charged on the higher of the benefit in kind value or the amount of the salary sacrificed by the employee. The rules do not apply to cars with CO2 emissions of 75 grams or less per kilometre. Such cars continue to be taxed on the cash equivalent of the benefit without having to make a comparison with the salary foregone. However, all zero emission company cars will attract a reduced appropriate percentage of 0% in tax year 2020/21, 1% in 2021/22, before returning to the planned 2% rate in 2022/23. Q: We employ some 1,700 cleaners. We want to change their pay frequency from fortnightly to four-weekly. What do we need to consider? A: Employers can change pay frequency, but they would have to consult with the employees and give valid, honest reasons why they need to do this. Employers should also give them a reasonable notice period of from when these changes will become effective as this will be a change to their contractual terms and conditions. The employees will have to change direct debit/standing order mandates to manage their finances. You may also want to consider offering loans to employees as there will be a gap in receipt of earnings in the
transition. You should also be aware that running a four-weekly payroll may involve running a week-56 payroll as there will be some tax years when there is an extra pay day. You must also inform HMRC if you intend to pay your employees less often (see https://bit.ly/3bA0N5e). Q: What divisor should we use for calculating the national minimum wage (NMW)? A: Under regulation 21(3) of the National Minimum Wage Regulations 2015, a worker is entitled under their contract to be paid that salary or salary and performance bonus in respect of a number of hours in a year, whether those hours are specific in or ascertained in accordance with their contract. Neither the Department of Business, Energy and Industrial Strategy (BEIS) nor HMRC promote a specific divisor that employers should use. The guidance is that it is for employers to ascertain how the annual number of hours that the salary represents are calculated. BEIS guidance states that for a salaried-hours contract, if a contract sets out the weekly number of hours, the hours for the whole year cannot be determined by multiplying the number of weeks in a year because the days in a year cannot be divided by 52. Q: Can the £1 admin fee deducted when operating an attachment of earnings order affect NMW compliance? A: Regulation 12(1) of the National Minimum Wage Regulations 2015, states that deductions made by the employer in the pay reference period, or payments due from the worker to the employer in the pay reference period, for the employer’s own use and benefit are treated as reductions except as specified in paragraph (2) and regulation 14 (deductions or payments as respects living accommodation). Therefore, by deducting an administration fee for handling the transaction for the worker, this will reduce
| Professional in Payroll, Pensions and Reward | October 2020 | Issue 64 8
PAYROLL ASSURANCE SCHEME DON’TWAIT UNTIL IT’S TOO LATE Can you afford penalties of up to £10,000* per day for non- compliance? Make sure your people and processes are working, and get ahead of any nonconfirmities before they become a problem.
the worker’s NMW pay as it is made for the use and benefit of the employer. BEIS released guidance on calculating the NMW: see https://bit.ly/3h8rQ8P. Q: When calculating redundancy payments, which weeks do we use for those employees furloughed? A: Section 222 of the Employment Rights Act 1996 refers to the relevant period of twelve weeks. This means that you would take twelve weeks of worked hours immediately prior to the date notice was given. Where an employee is furloughed, you would have to go back to the week where they were working as you cannot include furlough pay in the calculation. This is provided for by regulation 3 (Calculation of a week’s pay in relation to furloughed employees) of the Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020 (https://bit. ly/2CorT1X). Q: If an employee works on an hourly basis, is statutory sick pay (SSP) calculated daily or hourly? A: SSP payments are paid based on qualifying days in which the employee is absent. It is a weekly rate but with daily rates derived. See https://bit.ly/2ZhopXk for guidance. Q: If a mother gives binding notice that she intends to curtail her statutory maternity leave (SML) and statutory maternity pay (SMP) in April, can her partner take their portion of statutory shared parental leave (SShPL) and pay (SShPP) before this date? A: For entitlement to SShPP to arise, the mother must have ended or given binding notice to curtail her SML and SMP, which allows payment of SShPP to start for the partner before the date the mother intends to end her maternity pay period (MPP). The mother can revoke this notice at any time up until six weeks after the birth of the baby. Revocation means that she can change the dates of the binding notice or withdraw it altogether. However, the conditions are that the planned end date must not have passed, and the mother must not have already returned to work. One of the following must also apply: ● it has been discovered during the eight-week notice period that neither
partner is eligible for either SShPL or SShPP ● the employee’s partner has died ● it is less than six weeks after the birth (and the mother gave notice before the birth). Any amounts of SShPP paid between the birth and the revocation up to week six could be correctly paid despite the revocation as there was an entitlement in those weeks. If, for example, the mother gave binding notice to curtail her SML in week 20, her partner claimed SShPP and SShPL for weeks 2–8, and the mother revoked her notice in week 4 then any SShPP paid up until week 4 is correctly paid. However, if the employer continued to pay SShPP in week 5 after the revocation of notice when there was no entitlement in this week, this would be an overpayment that would need to be recovered. The mother and partner will still have the option to start SShPL and SShPP again later but the SShPP up until week 4 reduces the total SShPP due. Q: Is it a breach of data protection for payroll staff to see sick notes detailing the reasons for sickness? A: It would not be a breach as the document is being used for what it was intended – to process SSP. Data protection is the fair and proper use of information about people. Ordinarily payroll do not need to know the reasons for sickness as it would have no effect on SSP; however, during COVID-19 SSP is now payable on day one so payroll need to know if the sickness is COVID-19-related to process SSP correctly. Q: Can employees transferring under the ‘TUPE’ (transfer of undertakings protection of employment) rules, continue after transfer to be eligible for the tax and NICs exemption for childcare vouchers? A: A specific condition is that the exemption is only available to an employee who was employed by the employer immediately before 4 October 2018 and continues to be employed by that employer on or after that date. However, this condition may be regarded as met where the employee has transferred to an employer on after 4 October 2018 under the TUPE rules as this is deemed as being the same employment (see EIM22017 (https://bit.ly/35eCZCM)). n
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| Professional in Payroll, Pensions and Reward |
Issue 64 | October 2020
Michelle Sutton MCIPPdip, head of compensation and reward, Suez Recycling and Recovery UK Ltd , discusses the benefits of being part of the CIPP Being payroll
So, what attracted you to CIPP membership? I heard about CIPP through a recruitment agency in the early 2000s and it seemed to be what employers wanted. So, I thought I’m going to do the qualification and then become a member. It’s like a family – you get to network and to know everything that’s going on in payroll. You get advice – great advice – and share information via the networking, the information groups and the consultations; and it’s just about becoming more professional.
Which benefits in particular attracted you to membership of the CIPP? The benefits that attracted me the most to the CIPP membership package were the Advisory Service and the magazine. The Advisory Service is fantastic, with a really quick response to all your queries, and they help you get things right first time, which is really important. I get the magazine posted and online regularly. It has a wealth of information about what’s happening now and what’s coming. So, it keeps me on top of my game. Also, the fact that by becoming a qualified member it gives employers trust in you, as a professional. What would your advice be to someone who was thinking about joining as a member of the CIPP? If someone was thinking about joining as a member of the CIPP, and wanted to know more about membership – I would be a real ambassador because I just think that it is the only way to really keep on top of your job and all the changes that occur in the industry. We are in charge of so much in our departments – as payroll managers and heads of department – and you have just got to use that network around you in order to be on top of the work. Legislation is changing all of the time, and the CIPP are out there in front, in the consultations, telling you what’s going to happen, what’s going to change and the impact on you and your business. So, it’s a no-brainer, you have got to join. Why was it important for you to be a member of the CIPP? It was important for me because I wanted to be qualified and become an expert in my field, and the CIPP offer the benchmark qualification in payroll so for me it was an easy decision. I loved it, and embraced it, and I make sure I continue with my continuing professional development because I want to be the best in my field.
If you would like to be part of the being payroll series, please email email@example.com
BE PROFESSIONAL. BE PATIENT. BE COMPLIANT. BE UNITED. BE PAYROLL
| Professional in Payroll, Pensions and Reward | October 2020 | Issue 64 10
#NPW20 #keepUKpaid #BePayroll
THANK YOU TOALL OUR NATIONAL PAYROLLWEEK SPONSORS AND PARTNERS
| Professional in Payroll, Pensions and Reward |
Issue 64 | October 2020
NATIONAL PAYROLL WEEK
The Chartered Institute decided to continue with the theme of ‘keeping the UK paid’ for National Payroll Week 2020 as this year, more than ever, it is a vital sentiment to all the payrollers who have been working exceptionally hard to ensure they have kept the UK paid. Taking place in the first week of September, National Payroll Week was established to raise the profile and awareness of payroll as a profession in the UK. It helps demonstrate the impact the payroll industry has in the UK through the collection of income tax and National Insurance which are expected to contribute some £325.7bn or so to the UK economy in 2020/21. THE ONLINE NPWPACKWAS DOWNLOADED MORE THAN 5,000 TIMES!
THE CIPP FUTURE OF PAYROLL ROUNDTABLE The CIPP launched National Payroll Week 2020 on Monday 7 September with a roundtable discussing the Future of Payroll. The event brought together some of the
industry’s leading experts to discuss the future of the profession following on from the global pandemic we are experiencing. The main outcome reveals how certain trends within the industry have been accelerated by Covid-19, and what they look like now. A good trend is that payroll is becoming more represented at board level within organisations and businesses. A report of the roundtable will feature in the November issue of Professional magazine.
THE CIPP’S VIRTUALWINE TASTING In the evening, following the Future of Payroll roundtable, the CIPP hosted their very first National Payroll Week virtual wine tasting session, which was hosted by Samantha Alder DipWset, of the East London Wine School. Jason Davenport gave a wonderful speech at this invite-only event, welcoming and thanking all for attending, and discussing the meaning of National Payroll Week, as well as celebrating all the hard work that payroll professionals have done which does not go unnoticed. In his opening speech to the session, Jason said that “it is a first for me, and the CIPP, to host a drinks reception virtually, but we are in unusual times and have been forced to think of new and innovative ways to keep in touch and run our events.
“I have to admit, I do like the fact that this year has forced many organisations to embrace technologies that previously may have been ignored. “I hope that you haven’t started on the wine yet! We have the very experienced Samantha Alder from the East London Wine Company joining
us shortly to explain the origins and flavours so that we will all be experienced connoisseurs by the end of the evening. “But before that, I wanted to welcome you all and say a few words in recognition of payroll and National Payroll Week.
“2020 has been a challenging year for payroll professionals, many of whom have been working twelve-hour days, seven days a week to, quite literally, keep the UK paid. Arguably making 2020’s National Payroll Week the most important National Payroll Week that the CIPP has ever run. And I thank you for being a part of it! “Payroll professionals all over the UK have been working hard to implement the government’s coronavirus job retention scheme, otherwise known as CJRS, along with its various iterations and changes, to ensure that the UK has been paid. So have our colleagues in other countries who have been dealing with their own version of the CJRS. And all of this initially during tax year-end – could it have come at a worse time for payroll? “As such, payroll really has had the profile raised. In Australia, the prime minister gave payroll professionals a public thank you for the work that they had done to keep Australia paid. “Here in the UK, the financial secretary to the Treasury, the right honourable Jesse Norman, has provided the CIPP with a public endorsement [see below] of National Payroll Week. It is excellent to have received this official recognition of the profession in writing, and we will continue to work with government to highlight the work payroll professionals do, not just in these difficult times, but in normal times as well.”
| Professional in Payroll, Pensions and Reward | October 2020 | Issue 64 12
National Payroll Week
Endorsement by Jesse Norman MP, financial secretary to the Treasury “I am pleased to support the Chartered Institute of Payroll Professionals’ annual National Payroll Week. Payroll professionals play an important role in supporting the UK economy by collecting tax and National Insurance contributions, and CIPP’s work in encouraging and educating employers has had a positive impact on implementing wider government policy, including in the difficult times presented by the coronavirus pandemic. “This year the theme for National Payroll Week is Keeping the UK paid, and with over eight million employees having been furloughed at some stage since March this could not be more apt. I am grateful for the dedication of payroll professionals in rising to the challenges COVID-19 has brought. I am delighted to support the week and encourage as many employers as possible to take part.”
NATIONAL PAYROLLWEEK CONFERENCE AND EXHIBITION We are proud to say our first virtual National Payroll Week Conference was a huge success, and the feedback from delegates has been testament to this. Now in its fifth year, the National Payroll Week Conference took place on 10 September completely online.
10 SEPTEMBER | SCOTLAND
The conference was joined by payroll, pension and reward professionals from across the country. With a whole day of insightful sessions and Q&A panels from some of the most knowledgeable industry experts in the profession as well as an incredible motivational session by our very own Dr Sue Smith, education director at the CIPP. This was the conference’s first year under its new name of National Payroll Week Conference and the chair of the CIPP board Jason Davenport started the day introducing the conference and summarising how well National Payroll Week had gone so far. Following Jason’s introduction, HMRC representatives discussed both the coronavirus job retention scheme and the job retention bonus scheme and then entered a live Q&A session with delegates posing burning questions. In the afternoon, the conference featured a CIPP payroll legislation update, and then finished with the CIPP policy team along with Jason Davenport taking and answering questions that had come in from delegates during the day. PORTFOLIO PAYROLL – MAIN SPONSOR This year, we are extremely proud to be sponsoring National Payroll Week during one of the most challenging periods for the payroll profession. As keyworkers, payroll professionals have worked tirelessly to keep the UK paid over the past five months and we want to dedicate National Payroll Week to all the ‘payroll heroes’ who carried on working and went that extra mile. Moving the celebrations online this year gives us the opportunity to embrace new technologies while creating new experiences, and it’s a reminder how far the payroll industry has come as it adapts to the changing world. But most of all we look forward to seeing how the payroll teams up and down the country are celebrating!
Anthony Macey, director
ADP – SPONSOR
ADP is proud to support National Payroll Week which recognises and celebrates the payroll industry. In these difficult times, it is the payroll professionals who are our unsung heroes, who have continued to work tirelessly during the lockdown months to ensure the millions of people who rely on us are paid accurately and on time. We are committed to profession and NPW is a great way for us to celebrate and congratulate the payroll teams across the world who strive to provide excellence on a daily basis.
David Johnson, payroll service director at ADP
CERIDIAN – SPONSOR
Ceridian was proud to sponsor National Payroll Week Conference 2020 and thrilled to be able to take part in this virtual event, despite all the challenges 2020 has brought with it. Brian Sparling, senior manager, global operations at Ceridian, put it very well: “National Payroll Week is always a great way to celebrate what we do. This year, it is more important than ever to celebrate all those people who work in payroll across the globe. 2020 has been a difficult year for all but we have made sure that the world gets paid!”
| Professional in Payroll, Pensions and Reward |
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