MY CIPP
The CIPP’s Advisory Service team provides answers to popular questions
Calculating redundancy payments Q: We have a scenario which involves calculating a redundancy payment, where the notice date is 23 March 2023 and the leave date is 14 June 2023. Which weekly cap applies in this case – would it be the maximum for tax year 2022/23 or the one applicable in 2023/24? A: The redundancy rate to use would be the one applicable at the leave date when the employment is terminated.
Payments following death in service Q: An employee has sadly passed away but is due holiday pay and a final salary payment. The employee’s daughter has closed the employee’s bank account. Do you have any advice regarding payment of the outstanding amounts? A: Firstly, the termination date should be entered as the date that the employee passed away, with leaving reason selected as ‘employee deceased’. No NI is to be taken on the final pay, which should include all salary and any accrued untaken holiday pay up to the date of death. A P45 should not be issued. Most companies ask employees to complete a nomination form, on which they confirm details of their beneficiaries. It would be advisable to contact the human resources department, to see if a nomination form was completed, to establish who the next of kin is. If there is no such form, then a will should be requested from the family. If there is no will, ask if there was a family member or friend who was given power of attorney when the employee was alive. Ultimately, it is the employer’s responsibility to make sure this is paid to the deceased employee’s personal representative, which is usually the executor of the estate. Chief executive officer (CEO) pay ratio reporting Q: We didn’t complete CEO pay ratios for 2021. Do I need to now complete two years: one for last year and one for this year? How would I report this, as the information isn’t provided
to work. It would be advisable to discuss this with the employee prior to the start of their maternity leave. When do national living wage (NLW) rates apply from? Q: Does the NLW increase take effect from 1 April 2023, or is it from the commencement of the pay period following 1 April 2023? A: The National Minimum Wage Regulations 2015 state: ‘The single hourly rate of the national minimum wage at which a worker is entitled to be remunerated as respects work, in a pay reference period, is the rate which applies to the worker on the first day of that period’. This means checking the start date of the pay period and applying the rate of pay in force then. So, if payment is made weekly, and the pay reference period spans from Sunday 2 April to Saturday 8 April, then the new NLW rates would apply for that week. However, the revised rates would not apply to the previous week (Sunday 26 March to Saturday 1 April), as the rates do not increase until 1 April 2023, and the start of the pay reference period falls before that date.
What are the considerations when calculating redundancy payments?
Give as you earn (GAYE) deductions during maternity leave Q: Should GAYE deductions continue when an employee is on maternity leave and in receipt of statutory maternity pay only? A: GAYE isn’t a salary sacrifice arrangement in which an employee gives up the right to cash in exchange for a benefit. It is deducted prior to the calculation of tax, but after National Insurance (NI) has been taken. An employee can continue to have GAYE deductions taken from her during her period of maternity leave, or can suspend the contribution until she returns
When does the NLW actually apply from?
| Professional in Payroll, Pensions and Reward | March 2023 | Issue 88 10
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