ENROLMENT CLOSE 18 OCTOBER
COMPLIANCE
CAN YOU AFFORD FINES OF £10,000* A DAY FOR NON-COMPLIANCE?
Considerations before recovery The last thing we want to do is
through after the Bacs has been processed, so it’s in your power to reach out to that individual before the money credits their account, to inform them of the overpayment l follow company processes / policies. A process is there for a reason, so follow the steps laid out in said guidance l be as flexible as possible. If the overpayment has occurred over months, seek to recover it over the same time period. For example, if an employee reduced their hours but payroll wasn’t notified until two paydays after the change occurred, so they were overpaid for two months, seek recovery over two months l notify human resources or your client so other functions are aware should the impacted employee reach out to them for guidance or support. The payroll process So now we can think about the nitty-gritty of what we need to do within the payroll. You must: l first calculate the gross value of the overpayment l then calculate the net value. Net value is the most accurate way to recover an overpayment. This is the value which you will seek the employee to repay l amend the gross values to reflect the correct year to date values if the overpayment was made within the current tax year. Show this in your next full payment submission (FPS) l submit a revised final FPS with the correct year to date values if the overpayment was made within a previous tax year. Key point to note Strictly speaking, adjustments should not be processed via the payroll until repayment has been made to the employer. However, HMRC states adjustments can be made to amend year to date values, if the employer has a robust recovery process in place. Now, I must stress this is very much an employer’s choice. Personally, in practice, we wouldn’t amend year to date values until the employee has repaid the overpayment in full. This isn’t to say it’s the right way to do it, but it’s the employer’s choice. Take this as an opportunity for you to review / produce overpayment processes / policies, to determine your / your client’s steer on this.
cause someone financial hardship by recovering a month’s salary, leaving them with nothing. Financial wellbeing is something our research has found people are getting more involved in and we’ve seen an increase in the number of people who believe payroll should be assisting with employee financial wellbeing ( Payslip Statistics Report 2024 , https://ow.ly/LzX850SmiBj). You need to review the reasons for overpayment and what types of pay the employee is due to receive. Once you have done this, it will allow you to determine how you can recover the overpayment. Some overpayments can be recovered without an impact on national minimum wage (NMW), whereas some will impact on NMW. Is there any agreement in place? This could be contractual or written authorisation. We would always suggest obtaining employee consent prior to recovering overpayment, even if a clause within a contract of employment already states this. Considering the above will help you determine which payments you can recover the overpayment from. “You may be informed of the overpayment prior to employee noticing, maybe due to a late leaver notification coming through after the Bacs has been Further learning We offer a fantastic overpayment and recovery half-day workshop if you would like to learn about any element of this article and the topics discussed in further detail: https://ow.ly/p7gr50Smiq1. n processed, so it’s in your power to reach out to that individual before the money credits their account”
CERTIFICATE IN PENSIONS ADMINISTRATION 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.
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| Professional in Payroll, Pensions and Reward |
Issue 103 | September 2024
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