YOUR CIPP | 9
Advisory agony aunt
Salary advances and national minimum wage (NMW) Q: Please could you provide a link to guidance or some advice regarding whether we can give someone a salary advance which they pay back over a period of three months? Does this reduce their pay for the purposes of NMW? A: An employee is protected from an unlawful deduction of wages under the Employment Rights Act 1996. To make a deduction, the employee must have previously agreed to this in writing – this could be through their contract of employment or a repayment plan, for example. An advance or loan repayment will not reduce pay for the purposes of NMW, as per Regulation 12 of the National Minimum Wage Regulations 2015, which can be found here: https://ow.ly/ VQe550XN8jZ.
If the organisation wishes to cover any tax and NI liabilities, the payment would need to be grossed up through the payroll. Further information is available here: https://ow.ly/ccFe50XN8oC.
Q: I’m really struggling to meet multiple deadlines as I’ve recently started processing an increased number of client payrolls. Do you have any tips on adjusting previous schedules which could help, or any more general advice around time management? A: Payroll schedules and cut-offs will generally depend on the needs of the business. However, as you say, multiple deadlines can be hard to manage. I think the first step is to look at the payroll cycle and identify where the pain points are. Once identified, processes and policies can be reviewed to see whether changes in deadlines need to happen, or whether efficiencies could be found to maintain the cycle as it is. In some cases, a reorganisation of the order in which clients are processed can relieve pressures at certain periods within the cycle. If your current system has the functionality, administrative burden can be lessened by using file imports to replace manual input. Self-service systems with automated authorisation flow also allow for less friction within the payroll process and free up time for other critical tasks. With the advent of artificial
Should backpay be processed through the next available pay period or should previous pay runs be amended?
How to process backdated pay rises through payroll Q: A backdated pay rise from 1 May 2025 will need to be included in the next payroll run. Is it correct to include the backpay in the next pay period or should we amend previous payroll runs? A: Backdated pay awards will be processed for tax and Class 1 NI at the point at which the award is settled. For pay as you earn tax, the money is treated as received on whichever is earlier – the date the entitlement arose or the date on which it’s actually paid. Although the arrears relate to an earlier period, if the pay award hadn’t been settled at that point, the entitlement doesn’t arise until it has been agreed and implemented. NI would be calculated at the time the payment is made to the employee. The following link is helpful here: https://ow.ly/Joa150Y5rqV.
Statutory maternity pay (SMP) lump sum payments Q: An employee went on maternity leave in November and is being made redundant on 31 March. We will be paying her remaining SMP as a lump sum payment but wanted to check whether we would include the new rate from 6 April in our calculations, or if the remaining SMP should all be calculated at the old rate and paid as a lump sum? A: You’ll need to assess the increase for the weeks in which the new rate would have been due and make a payment after leaving to the employee. Please see confirmation here: https://ow.ly/ lkbn50XN8nV.
intelligence within the payroll industry, and proliferation of
integrated payroll, finance and human resources systems, there are going to be more opportunities for businesses to streamline their payroll processes and increase the headcount that can be paid by each payroll professional.
What’s the interaction between salary advances and the NMW?
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