Official publication of The Chartered Institute of Payroll Professionals
in Payroll, Pensions & Reward
Issue 28 March 2017
CIPP Annual Excellence Awards Send your entry now
The payroll manager’s year-end checklist Hand-picked key items
Big deal – big data Collection, selection, submission
The untapped potential of payroll giving Press ahead
CIPP update | Policy hub | Professional development
FREE Employment Law advice
We’re offering CIPP members FREE* access to our experienced team of HR & Employment Law subject matter experts (*T&C’s apply). Call the CIPP/Moorepay Employment Law & Advice Helpline quoting CIPP001 on 0845 1844607.
*T&Cs: Telephone advice & guidance only. The service is available from 9am to 5pm Monday to Friday. A Fair Usage Policy applies (maximum of 3 calls on one ongoing HR case).
Payroll & HR Solutions
“Errors using inadequate data are much less than those using no data at all.” Charles Babbage (1791–1871)
Editor’s comment
Data quality, usage and protection is increasingly important. In the mid-1990s, when editor of the monthly newsletter Payroll Manager’s Review , I penned, on request, an article on data quality and
Data protection will surely become crucial in the workplace in the next few years. See page 34 for an article outlining how the EU’s impending data protection regulations will affect pensions professionals. Data comprises not just figures, but also facts and information which can be just as prone to inaccuracy. It is exasperating that the GOV.UK website’s functionality unfortunately impedes users accessing and engaging with its extensive information. So, though it’s encouraging that work is underway to bring improvements, surely this must not extend to restricting or ‘simplifying’ content (see pages 40–41)
usage which was published by the magazine Personnel Today . I contended that because of their function payroll systems are a well of ‘pure’ information and data as the facts and figures held are subject continuously to ‘auditing’ by employers and payees; accordingly, inaccuracies are quickly identified and amended. I’m sure this still holds true today. On pages 37–39 you’ll find essential articles by David Woodward and Lisa Gillespie who provide insight to how payroll and human resources professionals are engaging with big data. Are payroll professionals more comfortable than their HR colleagues with accessing, manipulating and using data for various purposes?
Mike Nicholas MCIPP AMBCS Editor
Chair’s message
Now we’re a few months into the year, I wonder how you are all doing with the challenges you set yourself for 2017? I wonder whether, whilst thinking about where your payroll career might take you, you’ve thought about looking at
your application. It would be great to see some new faces on the CIPP board. There’s a wealth of payroll and business expertise amongst our membership that would no doubt bring a fresh view to the CIPP and payroll strategy for the future. If any of you want to have a chat about what it has meant for me to be a board director, feel free to drop me an email on eira.hammond@cipp.org.uk .
the requirements to nominate yourself to join the CIPP board of directors. I have spoken to a few of you personally about what being a CIPP board director entails, during both the National Forums and the Annual Conference and Exhibition. So I’m hoping that some of you choose to look into it further now, so that when the application requests are advertised in the magazine in April and May you are prepared and have the backing of your employer to proceed with
Eira Hammond FCIPPdip Chair, CIPP
CEO’s message
Well, have you survived the winter, which is nearly done? Been looking at those holiday brochures dreaming of your summer holiday? The CIPP has been busy planning for this year’s events programme helping you to
attended. ● Our award winning Annual Conference, Exhibition and Excellence Awards taking place at Celtic Manor on 4 and 5 October is the ideal place to learn, network and showcase your excellence. Make this the year you become payroll professional of the year, best in house team or perhaps the best payroll product or service of the year. Competition is always keen so start giving some thought on your nomination. Details of our conferences and awards can be found on pages 4 and 24/25.
stay informed, updated, ahead of the pack and at the top of your profession during 2017. The programme includes the following: ● National Forums, a free dedicated membership benefit held at a variety of locations which are always popular so make sure you book your place early. See page 15 for details. ● National Payroll Week, yes it’s September but we’ve started planning on ways to help you celebrate during 4–8 September. ● Our newly reinstated Scottish Conference which is taking place in Glasgow on 7 September following its highly successful relaunch last year and receiving very positive feedback from those who
Ken Pullar FCIPP Chief executive officer, CIPP
1
| Professional in Payroll, Pensions and Reward |
Issue 28 | March 2017
in Payroll, Pensions & Reward PROFESSI NAL
Also available online at payrollpensionsandreward.org.uk
Contents
March 2017
38
Lisa Gillespie explains the importance and advises of changes ahead Big data – big deal?
Features
20
16
18
Holiday pay guidance – the quest goes on Helen Hargreaves provides an update on this key issue
Office holders Peter Minchinton outlines historic and prospective taxation
Scottish income tax ahead Diana Bruce outlines impending changes
22
28
23
The untapped potential of payroll giving Peter O’Hara reveals plans to make payroll giving a social norm
The payroll manager’s year- end check-list Liz Walton provides a handy checklist
Redundancy, TUPE, stress Nicola Mullineux reviews three cases
| Professional in Payroll, Pensions and Reward | March 2017 | Issue 28 2
30
34
Editor Mike Nicholas 01273 412 836 | editor@cipp.org.uk Advertising Jill Bonehill 0121 712 1033 | advertising@cipp.org.uk Design James Bartlett and Nicole Gumery design@cipp.org.uk Printing Warwick Printing Company Ltd
Shared parental pay discrimination Danny Done discusses implications of a recent case
Pensions and the GDPR Anna Copestake outlines effects
37
35
Chief executive Ken Pullar FCIPP CIPP board of directors
Time for payroll to get into analytics David Woodward reveals a golden opportunity
Seasonal workers Henry Tapper asserts they should have the same pension rights
Gordon Cresswell FCIPP Jason Davenport ACIPP Eira Hammond FCIPPdip Ros Hendren MSc FCIPP, Mgr, FCMIdip, FHEA Paul Rains MCIPP Karen Thomson MSc FCIPP, FHEA Cliff Vidgeon FCIPP Ian Walters Msc, FCIPP, FHEA Ian Whyteside MCIPP, FMAAT, ATT
40
42
The power of real-time tools for payroll professionals Adam Reynolds explains how they make a difference
Useful contacts Membership membership@cipp.org.uk 0121 712 1073 Education education@cipp.org.uk 0121 712 1023 Training admin@cipp.org.uk 0121 712 1013 Events events@cipp.org.uk 0121 712 1013 Marketing and sales marketing@cipp.org.uk 0121 712 1033 General enquiries
GOV.UK’s content headache Mike Nicholas comments
Regulars
01 Editor’s comment, and Chair’s and CEO’s message 05 Membership focus On your behalf, Advisory, Five minutes with PAS accreditations, CIPP takes centre stage 12 Professional development Diary of a student, CPD Events, news and developments 11 CIPP update
28 Reward insight 32 Pensions insight
Employment law cases, shared parental pay
The Pensions Regulator
36 Pension news 37 Feature articles Big data 40 Technology insight 43 Industry news 47 Confessions of a payroll manager
info@cipp.org.uk 0121 712 1000
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 2017. 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.
14 Event Horizon 16 Payroll insight 27 Payroll news
Plus additional content: 44 Taking back control 46 Understanding time worked
3
Issue 28 | March 2017
| Professional in Payroll, Pensions and Reward |
Choose your workshops and create your own programme based on your learning and development needs Learn about the forthcoming changes to payroll and pensions legislation Have the opportunity to hear from, and ask questions of, industry ‘experts’ Network with other payroll and pension professionals Find out what new services the CIPP is working on and which consultations we are attending on your behalf Attend the prestigious Annual Excellence Awards 2017 The CIPP’s Annual Conference & Exhibition 2017 4-5 October | Celtic Manor Resort, Wales P P P P P P BOOKINGS NOW OPEN
For the latest announcements relating to the annual conference follow @CIPP_UK on Twitter #cippace17
Full programme now available at cipp.org.uk
SESSIONS INCLUDE: l Devolution and Brexit and the impact on payroll l The latest from The Pensions Regulator l Global terrorism l Creating an expenses policy (procedures and advice)
l Update on benefits in kind l Global strategic management l Managing communications between payroll and pension providers l Shares and share options
Book your place before 30 June 2017 to get the early bird rate * of £800+VAT for members or £1,000+VAT for non members Attended in 2016? Visit cipp.org.uk for information on your loyalty discount.
Following feedback from our previous delegates, this years conference concludes with the awards ceremony and starts slightly later on the Wednesday than in 2016.
* Rates above include two night’s accommodation on 4 and 5 October. Visit cipp.org.uk for more information.
Main conference sponsor
Thank you to our conference and award sponsors
For details on the sponsorship opportunities still available please contact advertising@cipp.org.uk .
| Professional in Payroll, Pensions and Reward | March 2017 | Issue 28 4
Policy hub
On your behalf
Policy team update
The CIPP policy team provide an update
Making Tax Digital forum The Making Tax Digital (MTD) project is set to change the face of tax administration as we know it, or so it appears to be aspiring to. And so (and in advance of the publication of government response to the six MTD consultation papers) the Making Tax Digital Forum began its 2017 programme of events. The first meeting was attended by a cross-sector of representatives, who in their various roles speak on behalf of all affected stakeholders in the MTD transformation: small business, large employers, professional bodies, employees, low-paid taxpayers and pensioners. Samantha Mann attended this meeting to establish how we could feed-in to a transformation that promises to be hitting the headlines for some time to come with its ambitious targets and timetables. ...how RTI data would be used in a far wider-ranging way... The introduction or real time information (RTI) back in 2013 came with a fanfare of the benefits to the universal credit process, and so publicity at the time focussed on the ultimate benefits to those in receipt of work-related benefits. Also mentioned, but possibly not emphasised with as much vigour at the time, was how RTI data would be used in a far wider- ranging way – and we have already begun to see its impact simply on new policy development, a prime example being the apprenticeship levy. But on a smaller, less invasive and more relevant scale is the fact that from
2017–18 HM Revenue & Customs (HMRC) will be using real time data to assess, in year, whether an individual will be likely to end the tax year owing tax. Much press time is spent each year, criticising how ineffective the pay as you earn (PAYE) system is and most certainly there are elements that can, and should be, tweaked and improved. However, the PAYE system works for the vast majority of the 43,000,000 taxpayers (employees and those in receipt of pension) leaving about 7,000,000 who due to their slightly more complex affairs will end the tax year with a balance to pay. It is how PAYE was designed to work, and back in 1944 it worked very effectively for a large percentage of taxpayers caught by it. Simply put, an underpayment of tax that remains owing at the end of the tax year can either be coded out – by way of an adjustment to the following year tax code – or be paid in full. From April 2017, HMRC will be looking to the data that has been submitted using RTI full payment submissions (FPSs) by employers and pension companies and assessing during the tax year whether a customer looks to be on-target to owe a balance at the close of the tax year. Where this happens, HMRC will amend the taxpayer’s tax code to make collection before and not after it arises. More will follow from this forum and from the consultation responses, which
at the time of writing, have not yet been published.
No meeting with ‘digital’ in the title is going to pass without mention of the personal tax account (PTA) and that over 7,000,000 customers have already accessed their PTA. The clear message is that MTD will work better if an individual engages with their PTA sooner rather than later. Are you promoting the PTA within your organisation? Optional remuneration arrangements During December 2016, a significant number of publications appeared on GOV. UK amongst which was the summary of responses to the consultation on salary sacrifice for the provision of benefits in kind (http://bit.ly/2khVtYX). HMRC produced a briefing sheet (http://bit.ly/2jQHnOu) to highlight how the treatment of items provided under a salary sacrifice arrangement would be changing. Included in the briefing sheet was the following: “If you provide benefits to your employees in exchange for salary sacrifice/salary exchange or have a flexible benefits package where your employee can choose a benefit or cash, or where you provide benefits but offer your employee a cash alternative then you will be affected/need to know about these changes.” We have italicised text in
5
Issue 28 | March 2017
| Professional in Payroll, Pensions and Reward |
MEMBERSHIP INSIGHT
staff payroll – 70% ❍ new payroll but with the same PAYE reference as the main staff payroll – 20% ❍ new payroll with a new PAYE reference – 10%. If this subject has somehow missed your radar, and it affects your role, again all the relevant information can be found hourly pay entitlement – The Low Pay Commission (LPC) recommended in its National Minimum Wage Low Pay Commission Report Spring 2016 (http:// bit.ly/2jYU4Jb) that the Government review the current obligations on employers regarding provision of payslips and consider introducing a requirement that payslips of hourly-paid staff clearly state the hours they are being paid for (see ‘Enabling Enforcement and Improving Awareness – Better Hours Information’). The report said that a cross‑cutting problem impeding workers bringing national minimum wage (NMW) cases, and HMRC enforcing the minimum wage, is uncertainty regarding the hours for which they are being paid. This issue was raised in written and oral evidence and during the LPC visits around the UK in 2016. According to previous research, under-recording of hours is a particular issue in NMW compliance for apprentices (in relation to recording training hours) and in social care (in relation to travel time). At oral evidence, UNISON argued for clearer pay statements, so that workers could be assured they had been paid at least the national minimum/living wage. This statement would set out information on how pay had been calculated – especially the critical area of hours – and demonstrate how it was NMW compliant. Both UNISON and the GMB highlighted section 12 of the National Minimum Wage Act 1998 and urged the Government to use its provisions. UNISON called on the Government to make regulations as provided for under that section requiring employers to provide their workers with a statement demonstrating compliance with the NMW. The GMB said employers should provide workers with a written NMW statement in order to assist the worker to determine whether they have been remunerated at a rate equal to or above the NMW. However, in our CIPP Policy News Journal . ● Payslips should contain hours worked for easier calculation of
case you may not have been focussing on the detail of the consultation because you do not enter in to salary sacrifice arrangements. The draft Finance Bill 2017 refers to such arrangements (including salary sacrifice) as ‘optional remuneration arrangements’, and whilst a technical consultation is ongoing, it is clear that where there is an element of choice between cash or a benefit in kind (BiK), it is likely to be captured under the new rules due to begin from 6 April 2017. A common example could be the provision of a company car, but the employer offers a cash allowance in the event the employee chooses to provide their own car for business purposes. Where the cash allowance is taken there will be no impact as a result of the new rules; however, once the new rules take effect the taxable value of the benefit will be the higher of the current value of the BiK or the cash foregone. At the time of writing guidance is expected to be published by HMRC at the end of January to help us all to understand how these new rules will be applied. If you have any views, thoughts or concerns that you would like us to raise, please contact Samantha Mann at policy@cipp.org.uk. If you have been overlooking this subject because you don’t operate salary sacrifice, but you do offer a cash alternative to some/all BiKs, you might want to review all current publications; full details are available through the CIPP Policy News Journal (http://bit. ly/2jdXT9e) under ‘General expenses, benefits & reward news’. CIPP quick polls ● If you could choose your Christmas reward…what would it be? – Our poll revealed that the majority would opt for a taxable cash equivalent of a Christmas party/meal. We ran a festive poll in the lead up to Christmas where we asked what would you choose if you were given a choice of the following: christmas party/meal, taxable cash equivalent payment, or equivalent donation to charity. There were 648 respondents. Only 14% opted for a donation to charity, whereas 56% went for the taxable cash equivalent – bah humbug, or just plain practical? Is the staff Christmas event not
as popular as it once was with just 30% choosing this option? But then some employers aren’t necessarily in a position to provide any reward at all. ● How are you planning on processing your IR35 workers? – Originally announced at Budget 2016 and then at Autumn Statement 2016 and following consultation over the summer, the Government will legislate in Finance Bill 2017 to reform the off-payroll rules (often known as ‘IR35’) in the public sector from 6 April 2017. The rules remain unchanged for the private sector. ...taxable value of the benefit will be the higher of the current value of the BiK or the cash foregone Responsibility for operating the off- payroll working rules, and deducting any tax and National Insurance contributions due, will move to the public sector body, agency or other third party paying an individual’s personal service company (PSC). The 5% tax-free allowance for general business expenses, available to workers currently applying the rules, will be withdrawn for PSCs working in the public sector. This will simplify administration and reflects the fact that PSCs no longer have responsibility for applying the rules. Public sector bodies will be responsible for determining whether or not the rules apply and will be required to share this information with agencies in order for them to operate the rules correctly. To address concerns about acting in good faith on incorrect or false information, transfer of liability provisions will be introduced to provide protection. Public sector bodies in scope are those subject to the provisions of the Freedom of Information Act 2000 and the Freedom of Information (Scotland) Act 2002. In light of these changes we ran a poll in January asking public sector payroll professionals how they are planning to process their IR53 workers. At the time of writing the poll was still running but the results showed as follows: ❍ adding IR35 workers to the main
| Professional in Payroll, Pensions and Reward | March 2017 | Issue 28 6
Policy hub
Enrol before 31 March and save
Foundation Degree in Payroll Management
the GMB’s experience was that payslips are not always clear, and so it thought they should show an hourly rate. Also at oral evidence the Association of Labour Providers suggested the national living wage might lead to higher non‑compliance through various malpractices, including paying well below the minimum wage through falsely under‑recording worker hours, or sometimes in collusion with workers establishing false records to claim benefits. ... and considers introducing a requirement that payslips of hourly- paid staff clearly state the hours they are being paid for Incorrect recording of hours worked, and therefore subsequent underpayment, is likely an important driver of non‑compliance (both measured and unmeasured), and it is a problem which wider structural changes in the labour market are set to keep centre-stage, with more use of variable hours and other kinds of flexible contracts where hours change day to day. The LPC is therefore attracted to the kind of solution proposed by some stakeholders, and think it is worth investigating seriously. So they “… recommend that the Government reviews the current obligations on employers regarding provision of payslips and considers introducing a requirement that payslips of hourly-paid staff clearly state the hours they are being paid for.” The report goes on to say that in implementing this requirement the
Government should take into account the implications for different pay arrangements, such as for those workers on term‑time only contracts receiving a standard level of pay for each pay period, but working nil hours outside term‑time. In order to arrive at a level of pay for workers, businesses already need to know how many hours individuals have worked. So this is about sharing the assumptions made more explicitly than at present, thus increasing transparency, rather than imposing new burdens on firms. As well as providing a key piece of information for the worker to help reconcile hours and pay this step would also help in cases where HMRC is seeking to enforce the NMW. It would also have relevance in sectors such as care and for particular groups of workers, e.g. apprentices. According to the LPC’s report, the Government is still considering this option (and not for the first time), so we await further news. However, the LPC continue to urge the Government to act on this recommendation. The Policy team ran a poll in November 2016 to get a gauge on current practice and received a high number of responses: 933 in total. In response to the question “If you have hourly-paid workers, do you include the number of hours for which they are being paid on their payslip?”, 88% of respondents said yes they do include the number of hours, with the remaining 12% saying they do not. This was of course a single-question poll with no facility to elaborate; so, if you have views or experience with providing payslips/itemised pay statements that you would wish to feed in to any future consultation on this subject, please email Samantha Mann at policy@cipp.org.uk. n If you would like to take part in our latest poll it is situated to the right of all of our news items on the CIPP website.
Join over 15,000 qualified payroll professionals in the UK. Covering a comprehensive range of topics, the Foundation Degree in Payroll Management offers students a work-based learning experience to gain knowledge, understanding and confidence in their role, and provide a fundamental grounding in payroll administration.
Delivered in conjunction with:
Enrol now at cippqualifications.org.uk or email info@cipp.org.uk for more information
cipp.org.uk @CIPP_UK
7
Issue 28 | March 2017
| Professional in Payroll, Pensions and Reward |
MEMBERSHIP INSIGHT
occupation under schedule 1 of the Apprenticeships, Skills, Children and Learning Act 2009 and studying one of the courses within the framework, or ● where the individual is an athlete who has completed an elite sports framework in respect of a sport specified in schedule 2 of the Regulations with a view to participating in the olympics, winter olympics, paralympics, or commonwealth games. Q: Does an employer include the earnings of an employee who is under age 16 years when calculating the annual pay bill for the apprenticeship levy? Also, how would you approach the situation when the employee turned 16 part-way through the pay period? A: Firstly, the employer would not include earnings for employees who are under 16 years old, and if an employee is paid monthly, then it is dependent on when the employee reaches 16 as to whether the earnings should be included. If on payday the person is 16 years of age, the whole earnings will attract Class 1 NICs which means they would be included in the employer’s pay bill calculation. If the employee is not 16 years old on payday then no NICs are due on these earnings and they will not be included in the calculation. Further guidance can be found in the software developer’s guide on the apprenticeship levy which can be found via the following link: https://goo.gl/kShkfG. Q: We are a private/independent school and we would like to know if the new salary sacrifice legislation will affect us as we currently offer an arrangement for school fees. A: Yes, these changes will affect all employers; but if a salary sacrifice agreement is already in place as at 6 April 2017 for school fees, then the arrangements will be ‘grandfathered’. This means that any employee who has already entered into an agreement to salary sacrifice for school fees prior to 6 April 2017 will be able to benefit from the tax and NICs advantages until renegotiation, revision or renewal, or by 6 April 2021 whichever is the sooner. A summary of responses to the Government consultation and changes on salary sacrifice and provision of benefits can be found via the following link: https://goo. gl/CmPAbr.
Advisory Service is available 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m.
to 4.30p.m. on Fridays. It is free to all CIPP members * , students and attendees of approved CIPP courses and conferences in the last six months. Call 0121 712 1099 , email advisory.service@cipp.org.uk or visit cipp.org.uk for frequently asked questions.
Advisory
*please see summary at cippmembership.org.uk for details.
Q: An employee (the partner) has requested shared parental pay and leave (SShPP/SShPL). The mother is self-employed and although she is taking 27 weeks of maternity leave, she is not exercising her right to claim maternity allowance (MA). The employer has informed the employee that he is not entitled to SShPP, only SShPL, but the employee is disputing this. Can you offer advice? A: The legislation covering SShPP and SShPL is found in the Statutory Shared Parental Pay (General) Regulations 2014, the Shared Parental Leave Regulations 2014 and section 35(3A) of the Social Security Contributions and Benefits Act 1992. For the partner (the employee) to be eligible to receive SShPP s/he and, in this case, the mother must satisfy all relevant criteria. Where the mother is self- employed, one of the criteria is that she must be receiving MA. It isn’t enough that the partner has satisfied the earnings test; the mother must curtail her payment of either statutory maternity pay (SMP) or MA for her partner to have any entitlement to SShPP. By curtailing her right to SMP or MA the mother would pass that right to the partner; therefore, the partner is only entitled to SShPL and not SShPP. As a self-employed person the mother would need to satisfy the earnings test, which is that she must have been an employed or self-employed earner in Great Britain for a total of 26 weeks (not necessarily continuously), in the period of 66 weeks leading up to the week in which the child is due, and must have earned an average of £30 a week in thirteen of those
26 weeks (not necessarily consecutively). HM Revenue & Customs (HMRC) have published further guidance which can be located via the following link https://goo. gl/b6pRSx. Q: Can you confirm whether salary sacrifice would reduce the earnings subject to Class 1 National Insurance contributions (NICs) which are used when calculating the apprenticeship levy? A: We confirm that the apprenticeship levy is based on the total amount of the employee’s earnings subject to Class 1 NICs. So, if an employee’s salary or wage is reduced by the employee entering into a salary sacrifice arrangement then yes the NIC-able pay will be reduced when calculating the apprenticeship levy. Q: We run a payroll bureau and a client is asking whether an apprentice can be self-employed. Please advise. A: An apprentice cannot be usually self- employed unless the individual comes under the Apprenticeships (Alternative English Completion Conditions) Regulations 2012 (‘the Regulations’); otherwise the individual would have to be an employee. The apprenticeships common funding rules and paragraph B9 in particular explain that normally funding is only available where an apprentice is an employee. To access the apprenticeship common funding details please use this link: https://goo.gl/m5YS2X. To check whether the Regulations should be applied for your apprentice please refer to this link: https://goo.gl/ ox95Br. The Regulations apply: ● to individuals who were in a specified
| Professional in Payroll, Pensions and Reward | March 2017 | Issue 28 8
Reach the top with the CIPP
Policy hub
This link to the Tax Information and Impact Note on the GOV.UK website also provides guidance: https://goo.gl/HtMEh3. Q: Our organisation has an employee who is paid on a monthly basis and receives a cash allowance instead of being provided with a company car. They also wish to take part in the cycle-to-work scheme and they intend to cycle to work a number of days each month. I believe HMRC have a rate of 20p per mile for using a cycle to complete a business journey; can this rate be applied to these business journeys and would the car allowance the employee is receiving have any impact on the rate? A: The 20p per mile rate for cycle payments for business travel is referring to motor cycles not bicycles, and there is no mileage rate for using a bicycle for business miles. In many cases a car allowance is usually given to employees to assist them in buying and/or replacing the existing car or as an alternative to an actual company car. This car allowance would usually not affect any payment for business journeys but it depends on how the employment contract of employment is written as to what elements are covered in respect of the car allowance. Q: We have received a request from our human resources team in regard to a long-serving employee who is retiring and for whom the company wishes to pay this exiting employee a £50,000.00 retirement gift in the form of a cheque. Please can you advise how we should deal with this scenario? A: Where the employer gives the employee cash as a ‘gift’, this amount will need to be processed via the payroll as it is subject to pay as you earn (PAYE) income tax and Class 1 NICs. Even if the employer had a long-service award scheme in place, the fact that this payment
is ‘cash’ means it would always be subject to PAYE and NICs through the payroll. Q: Our bureau has a client who has recently started a business and is now a new employer. What is the automatic enrolment staging date for this client? A: All new employers paying PAYE income for the first time between 1 April 2012 and 30 September 2017 will have a staging date of between 1 May 2017 and 1 February 2018. For example, where a new employer has the first occurrence of PAYE income between 1 October 2016 and 30 June 2017 the staging date will be 1 January 2018. The Pensions Regulator has provided a table of dates which can be accessed from the following link: https:// goo.gl/ekOn4F. Q: I have discovered that on our monthly payroll we have an employee who is set up as a director but for whom for the past four years salary has been processed for Class 1 NICs as a normal employee, rather than operating the annual NICs rule. Please can you advise on how we are able to correct this scenario and previous tax years? A: The employer must apply directors’ NICs correctly to the current tax year now. The method you are currently using could be seen as applying the alternative method of calculation whereby a monthly or weekly earnings period is applied until the final salary payment of the tax year and then the annual earnings period are applied in this final period. This would then correct and resolve the current tax year 2016/17. For previous tax years the employer should: ● recalculate the NICs using the annual earnings period and where appropriate send a RTI earlier year update return for each affected tax year to HMRC to correct the NICs due, and ● pay over any additional NICs due to HMRC as soon as possible. For any years that are prior to RTI the employer will need to send amended P14 and P35 returns for each tax year. The error must be disclosed to HMRC which may mean that there is interest and penalties due for not operating NICs correctly in the first place. Also, the employer cannot recover any primary NICs from the employee for the previous closed tax years. n
MSc in Business and Reward Management
Become a strategic business manager with this qualification, covering: Career development and leadership Strategic management of remuneration
Leading a dynamic organisation Strategic approaches to reward management Strategic business finance Research methodologies Managing international or global remuneration practice
Delivered in conjunction with Delivered in conjunction with
Enrol now at cippqualifications.org.uk or email info@cipp.org.uk for more information
cipp.org.uk @CIPP_UK
9
Issue 28 | March 2017
| Professional in Payroll, Pensions and Reward |
MEMBERSHIP INSIGHT
Providing you with independent and impartial support Consult
5
minutes with…
Services available: Payroll forensic audit Procurement Invitation to tender Supplier demos Project management
Allan Isdale MCIPPdip BSc CIPP National lead for Scotland
Tell us about your career and background in payroll. Following a career as a nurse in both the Army and National Health Service, I decided on a change of direction and undertook a degree in accountancy and law. On graduation I secured a role in with a firm of forensic accountants. Shortly after joining the organisation the young lady who did payroll announced she was going on maternity leave and so I found myself learning payroll. As is often said, “people don’t choose payroll it chooses them” and this was certainly the case with me, I never looked back. I went on to hold a number of roles mainly in the manufacturing sector before joining the CIPP. When did you first become involved with the CIPP? I had been a member of the IPPM which later became the IPP and then CIPP. I always believed in the value of professional memberships in professional development so joining the membership body for payroll was a natural move. When a position was advertised at the Institute in 2006 I decided to apply and the rest is history. What does your role at the CIPP entail? I have a dual role at the moment; I am
responsible for business development in Scotland whilst also driving the Institute’s journey into online learning. What are the benefits of online learning for payroll professionals? Learning and professional development are important to all professionals. The Institute offers a wide range of options to help payroll professionals develop in their roles and beyond. With the advent of mobile technology, people are increasingly looking for learning opportunities which are not constrained by time or location, learning which they can do when and where it suits them; this is what online learning can deliver. It is all about giving the learners a choice. What does the future hold for payroll, pensions and reward? Wow, now where has my crystal ball gone? One thing is certain, it will never be boring. What do you do in your available time to unwind? Everyone needs some work life balance, as a family man available time very much revolves around my teenage children, but when opportunity arises I enjoy walking in the amazing countryside here in Scotland and I have recently taken up falconry. n
Call 0121 712 1000 to discuss your requirements or visit cipp.org.uk for more information.
cipp.org.uk @CIPP_UK
| Professional in Payroll, Pensions and Reward | March 2017 | Issue 28 10
PROFESSIONAL DEVELOPMENT INSIGHT
Claire Davies MCIPPdip Consultant, PS Administration Limited Diary of a student…
where I did feel the pressure, especially when completing my dissertation. I learned not to put too much pressure on myself though as forcing myself to study at times, because I felt that’s what I should be doing, wasn’t the most productive way of learning or making progress with assignments. I found walking away and undertaking other activities for a while to be effective rather than just staring at my laptop and not being able to take anything in. Did the fact that the CIPP is Chartered or recognised within the industry influence your decision to enrol with the CIPP? And were there any particular modules which were of interest prior to enrolling? Yes, I think it was a definite influence as the course is moulded to fit in with the working life of someone from a payroll environment so you can relate more to the modules. Having other students in the same industry on the course was a big help for understanding or when brainstorming for assignments. So, for anyone working in payroll I would recommend enrolling through CIPP as I believe it does help with studies. The modules which were of particular interest to me were managing change and project management, for the reason that in payroll there are always changes and new projects in the pipeline. I felt I could benefit and learn from the content. For someone who is thinking about studying for a CIPP qualification what would your advice be to them? Do not underestimate the work which is involved and make sure you can commit to the time, but I would highly recommend enrolling as it is a valuable and beneficial qualification to have on your CV. You do learn a lot which is all relatable to your area of work. n
Can you give us a brief background into your life? I live in County Durham with my husband and three step-children and our main interest is travelling to different destinations. We are forever searching for our next trip away. As well as that, I enjoy taking our dog for long walks and going to different restaurants to try different types of food. Can you give us an insight into your career and qualifications background? I first started working when I was sixteen years old as a business administration apprentice for my local district council. After securing a permanent job in the finance department I started assisting with the weekly employee payroll which led to the opportunity for me to begin the Foundation Degree in Payroll Management. I really enjoyed the first year, but following a restructure due to the amalgamation of the local district councils with Durham County Council I had to postpone enrolling for my second year until I had secured a position in payroll. This I did the following year and thankfully was able to complete my final two years, graduating in 2012. By this time the payroll section was again being restructured which was the motivating factor to search and apply for the job with my current employer as a payroll administrator for a bureau for pensioner payrolls. I believe having the Foundation Degree in Payroll Management was a contributing factor to being successful in my application for that job. During my five years here I enrolled and completed the BA (hons) in Applied Business and Management, and have
progressed in my role from processing monthly pensioner payrolls. I have responsibility for the successful migration of the payrolls for new clients, and have secured the position as deputy team leader for the client payroll section. Why did you choose to study the BA (Hons) in Applied Business and Management (CIPP)? I chose to study for this as I really enjoyed studying for the Foundation Degree in Payroll Management and found that distance learning mixed with applying work-place scenarios was a way of learning to which I could fully relate and excel in as well as being able to fit it in well around my work and personal life. How important is this degree in relation to your future career? I believe it is very important, especially now I have taken up the position as deputy team leader as it has given me confidence and knowledge in how I can undertake the position to the best of my ability. Payroll legislation is ever-changing so there were modules throughout both the Foundation Degree and BA (Hons) course which helped prepare me for ways of positively adapting to change. How do you cope with the work life balance and include your study? I was very lucky to have a supportive employer who provided study days, and my family would make themselves scarce when needed. Together these made studying and meeting deadlines a lot easier for me – although there were times
| Professional in Payroll, Pensions and Reward | March 2017 | Issue 28 12
Professional development insight
What is continuing professional development (CPD)? CPD is any form of learning or development that benefits you in your professional environment. If you have learned something new then this is CPD, and includes, but is not restricted to: ● reading News On Line, Professional in Payroll, Pensions and Reward or another publication ● networking with new or existing contacts ● attending training courses and/or events. Who needs to complete CPD? Whatever level of membership, you have access to the CPD area of cipp.org.uk . In accordance with the CIPP code of conduct all associate, full and fellow members need ● using the CIPP’s Advisory Service ● taking part in on-the-job learning
to evidence CPD to be able to renew their membership. The CIPP continuously spot check CPD activity so make sure you take the time to log any form of learning or development on your record to ensure your membership level is maintained. Why is CPD important? CPD is a combination of approaches, ideas and techniques that will help you manage your own learning and development. It is about where you want to be and how you plan to get there, an investment that you make in yourself. CPD can help you keep your skills up to date and prepare you for greater responsibilities. It can boost your confidence, strengthen your professional credibility and help you become more creative in tackling new challenges. CPD
makes your working life more interesting and can significantly increase your job satisfaction. It can accelerate your career development and is an important part of CIPP membership. To log CPD follow the steps below: ● log into the members’ area of cipp.org.uk ‘My CIPP’ ● find ‘My CPD’ on the drop down options ● click on the blue box ‘add a new record’ ● complete the form, record your activity and click ‘submit’. n Contact us If you require any help with your CPD please email membership@cipp.org.uk or call 0121 712 1073. If you would like to discuss your CPD further, the CIPP also offer face to face appointments at all of our events.
A smarter way to manage employee expenses
At webexpenses, we’re dedicated to making expenses management quick, simple, and cost-effective. Save up to 30% in T&E processing costs with our feature-rich software and mobile app. www.webexpenses.com
13
| Professional in Payroll, Pensions and Reward |
Issue 28 | March 2017
Events Horizon
Full details of events and training courses can be found at cipp.org.uk or you can email info@cipp.org.uk for more information.
Training courses
Course
Date *
Location
Course
Date *
Location
Apprenticeship levy and funding
Bristol
12 April 12 April
Learning day two introduction to statutory payments
York
31 March
London
London
11 April 11 April
Birmingham
3 May
Bristol
Certificate in Payroll Practice
Bristol
13 April 13 April
Birmingham
2 May
Learning day three essential additions to payroll basics
London
Challenges of auto enrolment and re-enrolment Creating payroll procedures Gender pay gap reporting and HR implications
London
19 April
Birmingham
4 May
London
13 April 25 April 26 April
Birmingham
7 April
P11D, Expenses and Benefits
Manchester Birmingham Birmingham
York
31 March
London
Holiday pay and leave
19 April
20 March 21 March 21 March 22 March 22 March 22 March 28 March 29 March
York
29 March
Belfast
London
Introduction to payroll
4 April
Taunton
Birmingham
18 April
Glasgow
Payroll and HR legislation update
Irish basic PAYE and PRSI regulations Irish advanced payroll regulations Learning day one introduction to PAYE and NIC
Dublin
Birmingham
5 April
Truro
Birmingham
6 April
Cambridge
Bristol
Bristol
11 April 11 April
Birmingham
15 March
London
Payrolling benefits and legislation update
Birmingham
2 May
Edinburgh
21 March
London
28 March
* Dates are subject to change
The full list of CIPP training courses can be found at cipp.org.uk/training
| Professional in Payroll, Pensions and Reward | March 2017 | Issue 28 14
The CIPP and AAT hot topics event 21 March 2017, Leeds
This workshop provides educational and interactive sessions on the latest payroll, pensions and reward legislation and the recent changes relating to holiday pay. Why should I attend? ● Gain an update on the forthcoming changes in legislation affecting payroll in practice or business including: tax simplification, tax-free childcare, changes to apprenticeships including the apprenticeship levy and salary sacrifice ● As we approach the final twelve months of staging for automatic enrolment find out how this will become business as usual for us all ● Gain an overview of IR35 processes and the various issues which affect intermediaries and personal service companies
● Network with other members and speakers at the event to learn from their experiences and build your network of support ● Achieve your CPD, and discuss your CPD objectives and requirements with a member of the CIPP team
Thanks to our event partner
Budget update event 14 March 2017, Core Theatre in Solihull, West Midlands
The CIPP’s first face to face budget update for payroll professionals following the Chancellor’s budget statement on 8 March will provide you with a summary of the key items that will impact on payroll, pension and general business activity. Why should I attend? ● Hear about the changes announced in the spring 2017 budget to help you prepare to implement them in your organisation ● Network with other payroll professionals and learn from their experiences ● Network with the CIPP policy team and find out where they represent you and how you can influence future changes to payroll legislation
The CIPP national forums
Available throughout May-July to our associate, full and fellow members, these events are the perfect opportunity for you to receive an update on the latest legislation developments and find out what is in the pipeline for 2017.
Available dates:
Bristol Belfast
09 May (PM) 16 May (PM) 18 May (PM) 06 June (PM) 20 June (PM)
London London London
21 June (AM) 04 July (PM) 05 July (AM) 12 July (AM) 18 July (PM)
Manchester
Glasgow London
Newcastle
Birmingham
Thanks to our sponsors:
BENEFITSDELIVERED
To view the full programme and to book your place please visit payrollevents.org.uk , email events@cipp.org.uk or call 0121 712 1013.
15
| Professional in Payroll, Pensions and Reward |
Issue 28 | March 2017
PAYROLL INSIGHT
Helen Hargreaves MSc FCIPPdip, CIPP associate director of policy and membership, provides an update on this key issue Holiday pay guidance – the quest goes on
O n a blustery afternoon in January 2016, the CIPP held a Policy Think Tank in Leeds to discuss the problems faced by employers when calculating holiday pay and leave. The meeting was attended by representatives from the department for Business, Innovation and Skills, now the department for Business, Energy and Industrial Strategy (BEIS). In the knowledge that the outcome of several high profile cases on this topic were expected over the following few months, the BEIS representatives agreed – perhaps rashly – to come back if we held a further Think Tank once the judgments in those cases had been given. Roll forward eleven months to December 2016 and the BEIS representatives were true to their word; in fact, doubly so as we held two Policy Think Tanks, one again hosted by Helen Hargreaves in Leeds, on an equally blustery December afternoon, and a second hosted by Samantha Mann in London the following week. But, in addition, a representative from the Advisory, Conciliation and Arbitration Service (ACAS) attended the London event as they were looking to develop their guidance to help employers calculate holiday pay and leave.
The position so far One of the reasons why employers are so confused about how they should be calculating holiday pay and leave – notwithstanding the particular circumstances of individual businesses – is that no-one is quite sure what the law says, and even less how it should be applied. This is understandable because there have been innumerable court cases challenging the calculation of holiday pay. Although in most instances the judgement only applies to that specific case, there can often be more widespread implications. The first important case on holiday pay was the Court of Justice of the European Union (CJEU) case of British Airways v Williams in 2012 in which it was judged that holiday pay should put a worker in a financial position which was comparable to periods of work. The CJEU said that paid annual leave should include payment for tasks that the employee was contractually required to perform, but not payments which were “intended exclusively to cover occasional or ancillary costs”. Whilst that decision was directly relevant to the airline industry, the view at the time was that it could have wider implications which could see workers arguing that certain payments such as
commission, bonuses and even non-guaranteed
overtime, should be included in holiday pay. And so it proved to be as rulings in subsequent cases have referred back to that case. Other high profile cases have included Bear Scotland v Fulton & others which has recently re-emerged in the Scottish Employment Appeal Tribunal (EAT). The original EAT ruling in November 2014 decided that people working non-guaranteed overtime could claim for additional holiday pay. The recent appeal centres on the three-month- gap test established at the original EAT, with the claimants appealing the point that any three-month gap in a series of deductions would be fatal to the right of a claimant to bring a claim for earlier arrears. As expected, Lady Wise has reserved judgment, and at the time of going to press, we are still awaiting her decision. In March 2015, an Employment Tribunal held that in Lock v British Gas Mr Lock’s holiday pay should include an element for his commission. It did so by (notionally) inserting these words into regulation 16(3) of the Working Time Regulations 1998 as follows: “(e) as if, in the case of the entitlement under regulation 13, a worker with normal working hours whose remuneration includes commission or similar payment shall be deemed to have remuneration which varies with the amount of work done for the purpose of section 221.” This additional text means that
...holiday pay should put a worker in a financial position which was comparable to periods of work
| Professional in Payroll, Pensions and Reward | March 2017 | Issue 28 16
Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55Made with FlippingBook HTML5