PAYROLL INSIGHT
Simon Parsons MSc FCIPPdip MBCS, director of payments, benefits & compliance strategies, SD Worx UK Limited
the regulations and clearly there remains much work to do to improve guidance and education from BEIS and HMRC. However, several areas continue to challenge and trip the unwary employer; these include but are not limited to: types of work (i.e. salaried work, time work, output work and unmeasured work); working time; TOIL; elements of pay that don’t count towards minimum pay; uniforms or clothing policies; deductions from pay; employer-provided accommodation. Simon Parsons: The guidance is comprehensive and clear. However, it is also large in content covering complex combinations of impacting rules which are little understood. There are many areas of compliance which are difficult, especially around what time to count, what pay to count, when is school leaving age reached, the impact of deductions for the benefit of the employer, salary sacrifice arrangements and attachment/arrestment employer fees. In what way(s) do you think the requirement to display (and, so, report/record) hours worked on payslips from April 2019 will help with NMW/NLW compliance? Richard Blackwell: We have been displaying the hours worked with the pay rate being paid for years now and it has not really caused any major issues. We do get queries about the pay rates sometimes, particularly when rates have been increased, but the clarity provided avoids too many long discussions about the issue. Simon Rice-Birchall: It might do so in some cases. The issue will be whether workers understand that they are entitled to be paid for each minute of work they perform. Samantha Mann: Education, education, education. This continues to be needed to ensure good compliance and not only of the employer but also the worker. Much misunderstanding along with many
hours of calls to payroll departments and to ACAS each week could be saved by improving the lines of communication between the employer and the employee/ worker. Understanding what a payslip actually shows the reader begins with the staff handbook and the particulars of employment. Understanding by both the employee and the employer of which pay period is being reported together with any cut off dates that will have affected the figures being reported, is vital to ensure that transparency is achieved. And on a final note – neither of the two amendments being introduced from April will ensure that a worker actually looks at their payslip. There are increasing obligations being placed on the employer but as employment rights stack up in number so to should there be a mirroring duty on the worker to take steps to ensure they understand and engage fully with the pay process. Simon Parsons: The display of hours will have limited impact on minimum pay compliance. It will give employees an opportunity to identify whether the hours they are expecting have been paid; however, it will not assist in the understanding of minimum pay and whether there has been a breach or not. Maria Hartley: More clarity on the payslip will ensure that the employers stay compliant to avoid the chance of a disgruntled employee reporting them to HMRC due to any errors being more evident. The employee can be more pro- active in raising issues earlier to ensure errors are rectified and back-pay paid on hours that have been missed due to deadlines and passing of birthdays. To what extent should payroll and/or HR software check for non-compliance and provide advice and support prior to, during and after each payroll run? In what way could the software be improved? Samantha Mann: Payroll and HR professionals have a key part to play in ensuring non-compliance is revealed, and that processes and procedures are put in place to maximise discovery of such occurrence. But in a complex organisational structure they may be only one (or two) pieces of the jigsaw and so good lines of communications must
straightforward enough to check if any rates are below the minimum values. Having said that, the way that HMRC go about checking all the other aspects of how the minimum rates can be reduced is, in my view, not clear enough to employers. If you have time to trawl through multiple web pages you can probably get to the bottom of it all but that is a very tall order. The unintentional actions of some minor policies at a company can have far reaching consequences for NMW/ NLW rates. Clothing policies are a notable example. Specifying the colour and type of shoes to be worn, often for health and safety reasons, is an area that HMRC seem to home in on. Any requirement to purchase a specific type of shoe can result in the NMW rate being breached in the period when the shoes are purchased. That can affect many staff who are paid quite well over the NMW rate if the shoes cost £50–£75 a pair. Someone earning £9.00 and working 40 hours per week would earn £360 per week. If they purchase shoes at £50, HMRC will deduct the £50 from that week’s earnings and do the calculation; £360 - £50 = £310 ÷ 40 = £7.75 per hour! It is the consequences of this type of ‘unintended’ breach that many employers find difficult to swallow as, to my knowledge, there has not been any significant publication of this type of issue. Simon Rice-Birchall: No, the guidance isn’t. The key areas of difficulty relate to salaried hours, calculating and proving time worked, and expenses. Samantha Mann: There is a wide difference in the guidance produced by BEIS aimed at helping employers calculate the minimum wage – and which is widely pronounced as being the authority of employer guidance – and that produced by HMRC in their internal manual. This demonstrates the wide chasm that exists between policy and the practice. Add to this the increasing concern by the legal profession as to HMRC’s interpretation of
Maria Hartley MCIPPdip, payroll manager, Parkwood Holdings
| Professional in Payroll, Pensions and Reward | October 2018 | Issue 44 36
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