MY CIPP
The CIPP's Advisory Service team provides answers to popular questions
Q: An employee in respect of whom we operate ‘C’ category for calculating National Insurance contributions (NICs) has recently been absent from work due to sickness. Is statutory sick pay (SSP) payable if earnings reach the NICs lower earnings limit? A: SSP will be due if the various criteria are met, including the earnings test. Note that secondary class 1 NICs are due on an employee’s earnings even if the person is over state pension age. Q: An employee who was on statutory maternity leave (SML) has recently returned to work on reduced hours. Unfortunately, we have now had to place her on furlough leave. When calculating the furlough payment, should we use: ● the amounts of statutory maternity pay (SMP) that were paid to her in February, or ● the earnings for the reduced hours or for the hours she worked before SML, or ● average of earnings 2019/20? A: Guidance advises that employers are not to use the SMP payments when calculating furlough pay; instead, they should use the amount that the employee would have been paid if she was not on any type of parental leave. Unless the change to the employee’s hours came into force before the end of her leave, you should use the contractual amount of pay to which the employee was entitled, to gain your 80% applicable to the furlough payment. You should check with your human resources team regarding this as any change of contract would need to have been advised to the employee via written correspondence. There is guidance on how to calculate the grant under the Coronavirus Job Retention Scheme (CJRS) at https:// bit.ly/2z23LAE. The section ‘Employees returning from family-related leave’
explains what to do in these circumstances.
first day of the SPBP period (or where not reasonably practicable, then as soon as reasonably practicable). The employee must provide evidence of entitlement in writing at the same time, which must contain a written declaration that the person meets the qualifying conditions for SPBP as well as the specified information, which will need to include; ● the name of the person claiming SPBP ● the date of the child’s death (or date of birth for a stillborn child) ● the period or periods in relation to which statutory parental bereavement pay is to be paid. It is important to note that this is the notice period for the pay element only and that notice for the leave differs, giving more flexibility due to the nature of the leave that may be requested. Detailed guidance on this can be found here: https://bit.ly/2zXXqXd. Q: I have a query regarding a long service award given to an employee who has completed over twenty years’ service. It is my understanding of the award being made that the employee cannot buy the gift themself, but someone else must buy it to give as a gift. If the employee buys the gift themself and claims back the cost of this gift, what are the tax and NICs rules around this? A: If you give the employee cash to buy the gift this payment counts as earnings and therefore would be subject to income tax under pay as you earn and to class 1 NICs as normal through the payroll. The guidance, found here: https://bit. ly/2BohPFf, explains that a non-cash award made to an employee is exempt both from tax and NICs liability and from reporting by the employer if all of the following apply: ● the employee has worked for the employer for at least twenty years ● the award is worth less than £50 per year of service
Q: I run the payroll for two preschools, which receive funding for three- to four- year olds. Does this funding count as ‘de minimis state aid’ for the purpose of claiming employment allowance? In both cases I have indicated that state aid rules do not apply, but I cannot find any guidance on the GOV. UK website. For one group I think it is relatively straightforward as it is a registered charity and last year their NICs ‘bill’ was well below the £100,000 limit. The other is a registered company which similarly receives some grant funding under the same rules, and had NICs liability for the year below the £100,000 threshold. In both cases the total allowance was not used. A: State aid must be considered so you must check the rules. The links below give further advice on this; however, charities will not have state aid and if the NICs levels are correctly under the £100,000 limit the two preschools will be eligible to claim the employment allowance. ● The State Aid Manual – https://bit. ly/302wobW ● GOV.UK: Employment Allowance https://bit.ly/2S4wb3n. Q: For the purpose of paying statutory parental bereavement pay (SPBP) is it necessary to have the actual date of birth of the child; and are you also able to confirm the notice period that is required by the employee? A: In answer to your first question, generally you will not need the child’s date of birth to process SPBP unless the claim is for the death of a stillborn child. Based on the guidance, the date of birth is required so that you can confirm that the employee/claimant is eligible for SPBP. The guidance also advises that an employee must give their employer ‘notice’ for SPBP in writing within 28 days of the
The CIPP Advisory Service is available 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m. to 4.30p.m. on Fridays. Call 0121 712 1099 or email advisory.service@cipp.org.uk.
| Professional in Payroll, Pensions and Reward | July/August 2020 | Issue 62 14
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