COMPLIANCE
working through their breaks, participating in learning and development activities outside their core hours and starting work prior to their shift can all result in an employer not having paid at least minimum wage for working time. The current risks relating to salaried workers are, according to Jeni, particularly underappreciated. Under the current rules, once a salaried employee has worked their basic annual contracted hours, the hours worked for the remainder of the calculation year must be paid at least at minimum wage rate. Therefore, employers require robust time records for salaried employees to determine the point in the year at which contracted hours have been worked. Another ever present payroll compliance challenge for employers is the off payroll working rules. The rules requiring end users to provide an employment status determination to the next party in the labour supply chain for engagements involving qualifying worker intermediaries (most commonly, a contractor’s own limited company) have applied in the public sector since April 2017. The rules were extended to the private sector in 2021.
complex area of statements of work (SoW) and employers being able to distinguish between a supply of labour and the supply of a service. The distinction matters because the IR35 legislation doesn’t apply to users of fully contracted out service engagements, as the SoW provider will be responsible for considering the IR35 legislation. The rules apply where an end client is engaging people, not an output or service. Don’t forget employment law Employment law issues often have implications for payroll. Two such items presented by Rob Riley from EY’s employment law team were Transfer of Undertakings (Protection of Employment) Regulations (TUPE) transfers and holiday pay. While the automatic transfer of assigned employees and liabilities are simple enough principles under TUPE, Rob discussed the practicalities and interaction with other laws which create challenges. For example, the practicalities of data sharing and General Data Protection Regulation. Holiday pay has also appeared to be a perennial discussion point in recent years, something that’s unlikely to change in view of the government’s consultation on the rules. The spotlight is currently on part-year workers, such as term-time and agency staff on periodic assignments. This is further to the ruling in the Harpur vs Brazel case, in which the Supreme Court ruled in favour of the 52-week reference period as opposed to the 12.07% used by some employers for term-time staff. Rob recapped the details of the case and pointed to the government consultation as an upcoming opportunity for fresh clarity in this tricky area. HMRC compliance activity The head of EY’s employment tax team, Sue Robinson and EY senior manager, Nazmeen Uddin discussed HMRC’s current compliance activity. The discussion concentrated on two themes: l the types of employer compliance review HMRC can carry out l employer responsibilities. HMRC reviews can take several forms, which could include: l know your customer l NMW l business risk review+ l employer compliance review.
Each can either be ‘triggered’, such as by a worker complaint in the case of minimum wage, or opened randomly, irrespective of circumstance. David Spencer, EY payroll advisory lead, and EY senior manager, Elliott Mason underlined that employers are ultimately liable for their own compliance. It doesn’t matter, for example, if employers choose to outsource payroll to a commercial vendor; employer payroll teams should still ensure adequate processes and controls exist to identify significant compliance breaches. Pensions dashboards The final session of the day was led by executive chair of AgeWage, Henry Tapper and independent pensions dashboard consultant, Richard Smith. Richard provided expert guidance on the pension ecosystem and explained that access to the pension dashboards will be available via apps that people use every day, for example, via banking apps. Significant progress has been made in the development and it’s hoped that real time access to pension dashboards will be available in the next two to three years. Richard’s helpful description of the dashboard architecture underlined the technical complexity and co-operation demanded of so many organisations to make dashboards a reality. Henry talked about the benefits of pension dashboards from a consumer perspective. This included the opportunity to address the lost pension challenges (a £24 billion problem) and the benefits of being able to see the value of your pensions (including state pension) in one place. A lively Q&A session followed. Summary The chair of the CIPP public sector SIG, Shaun Tetley closed the event, thanking all the speakers for their contributions to the update, and highlighting how important these collaborative events are in keeping up to date on all things payroll and pensions. He also praised EY for their help and support in running such a well- received and successful event. n
EY director and former HMRC employment status policy lead, Rob Burton discussed the importance of employers taking reasonable care to comply with the rules and completing employment status assessments accurately. Of note, Rob said, HMRC is challenging status decisions completed using its check employment status for tax tool when it doesn’t agree an assessment has been completed in line with HMRC’s detailed guidance on status. Rob also highlighted the increasingly
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| Professional in Payroll, Pensions and Reward |
Issue 91 | June 2023
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