Issue 79 April 2022 PROFESSI NAL in Payroll, Pensions & Reward Official publication of The Chartered Institute of Payroll Professionals
Is your head in the cloud when it comes to cyber security?
Holiday pay and leave The complex topic challenging payroll teams Top tips on cyber security Expert advice on how to boost your cyber resilience GDPR: not just an IT issue Do you understand the obligations of the payroll team?
CIPP UPDATE POLICY HUB PERSONAL DEVELOPMENT
cipp.org.uk
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“Cyber security is much more than a matter of IT” Stephane Nappo
Editor’s comment Hello payroll professionals, and happy new tax year month! Hopefully your preparations for 6 April are complete and you’re well- prepared for 2022/23, along with any new challenges and opportunities it may offer.
Kick back, grab a coffee and catch up on developments relating to student loans (page 14) and the new right to work checks that’ll be introduced from the new tax year (page 35). With so much activity in the employment law space linking to holiday entitlement and pay, there are also a variety of articles on that very subject. Head to pages 12, 13 and 24 to learn more.
This issue of Professional centres on something that has gained more prevalence due to the increase in working from home: data security. Many payroll teams transitioned to using cloud-based software, which has placed a clear focus on ensuring confidential pay data and records are adequately protected. A panel of experts discuss this subject on page 18, and the hot topic (page 46) for this month focuses on general data protection regulations (GDPR).
Lora Murphy ACIPP (editor@cipp.org.uk) Editor
Chair’s message
During the pandemic, many employees began working from home, including payroll professionals. Generally, working from home hadn’t previously been an option for the payroll industry, due to the security and confidentiality of
computing, and service providers need to demonstrate that their technical and organisational security measures comply with GDPR when processing personal data, regardless of where that takes place. Cyber-attacks continue to grow in sophistication. Attackers are using an ever-expanding variety of tactics, including social engineering, malware and ransomware. Educating employees on phishing schemes, segregating duties and implementing strong internal controls for payroll checking against fraud are just some of the practices that can be applied to keep employee and company information secure.
data. Many organisations have moved to cloud-based systems to enable employees to work remotely, and with hybrid working now becoming the norm, many organisations are increasingly reliant on the cloud. This provides their staff access to data and services they need while working from home. This issue will cover the lessons learned and practices that can be applied to ways of working in the future. With the cost of cyber- security breaches rising and the detrimental impact on reputations, information security is more important than ever. Organisations depend more on third parties for their cloud
Liz Lay MSc FCIPPdip FHEA ACIPD (liz.lay@cipp.org.uk) Chair, CIPP
Once again, we enter a new tax year and, as you finalise year-end, I hope it all goes to plan. With many changes, it’s the ideal time to keep CEO’s message
chair and latterly, past chair. Jason’s input to the board in these roles has considerably strengthened the CIPP and I know he’ll continue being an active member. Liz Lay enters her second year as chair, and many congratulations to Clare Warrington, who was successfully elected to the board as vice chair. This takes effect from 1 April 2022. In addition, we welcome two new board directors, who will be elected at the Annual General Meeting on 30 March 2022. Their profiles, and how they will represent you as members will be on display following the event at: http://ow.ly/tp3L30sccLH.
on top of what’s happening in the payroll world with our Payroll Update. Did you know that, in the UK, there are over 170 pieces of legislation that can affect payroll processes? Book your place on the next Payroll Update course to keep your knowledge current and ensure your business is compliant. As a CIPP member, you can attend this essential course from just £192 + VAT. At a recent meeting of the board, it was confirmed that we will be celebrating our profession in-person for the Annual Conference and Excellence Awards at Celtic Manor Resort, Wales on 5 and 6 October 2022. You should have received your invite and updates will be available in Professional magazine. This month, I extend a farewell to Jason Davenport after nine years on the board. During his term, he has served as vice chair,
Ken Pullar FCIPP (ken.pullar@cipp.org.uk) Chief executive officer, CIPP
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| Professional in Payroll, Pensions and Reward |
Issue 79 | April 2022
in Payroll, Pensions & Reward PROFESSI NAL Contents April 2022
Also available online at cipp.org.uk
THIS ISSUE’S FEATURETOPIC ISYOURHEAD INTHECLOUDWHEN ITCOMESTOCYBERSECURITY?
Features
11
Hot topic – How has GDPR impacted payroll departments? By Stuart Hall 46
Are you payrolling your benefits offering? By Lora Murphy
12
The Court of Appeal overturns previous decisions on holiday By Justine Riccomini
14
16
13
Holiday pay and entitlement By the CIPP policy and research team
Electric dreams By Peter Minchinton
Student loans By Samantha Johnson
18
22
24
Feature – Is your head in the cloud when it comes to cyber security? By Jerome Smail
The risk of claims go beyond the employment tribunal system ByNicolaMullineux
Annual leave request considerations By Danny Done
| Professional in Payroll, Pensions and Reward | April 2022 | Issue 79 2
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26
Editor Lora Murphy 0121 712 1018 | lora.murphy@cipp.org.uk Advertising Daniel Cull 0121 712 1021 | advertising@cipp.org.uk Design James Bartlett and Nicole Davis design@cipp.org.uk Printing Warwick Printing Company Ltd
Understanding the April 2022 changes to teachers’ pensions By Henry Tapper
When I’m 64 By Tim Kelsey
3 6
35
Chief executive officer Ken Pullar FCIPP CIPP board of directors Jason Davenport MCIPP MIoD Louise Gray ChMCIPPdip
Stuart Hall MCIPPdip Helen Higson ACIPP Dianne Hoodless MSc ChFCIPP FHEA Liz Lay MSc FCIPPdip FHEA ACIPD Jeremy Montgomery BA(Hons) FCIPP
The three top cyber tips for SMEs By Tony Jarvis
Are you ready for changes to right to work checks? By Mathew Akrigg
Carole Pearson MCIPP Katie Sharpe MCIPPdip
Cliff Vidgeon BA(Hons) CMA ACG ChFCIPP Clare Warrington MSc FCIPPdip AFHEA
Regulars
Useful contacts
Education education@cipp.org.uk 0121 712 1023 Events events@cipp.org.uk 0121 712 1013 General enquiries enquiries@cipp.org.uk 0121 712 1000 Marketing and sales marketing@cipp.org.uk 0121 712 1033 Membership membership@cipp.org.uk 0121 712 1073 Training training@cipp.org.uk
01 Editor’s comment, and
34 Payroll news
Chair’s andCEO’smessage
Catch up on all the latest developments in the world of payroll
04 CIPPupdate
Events, news and developments
35 Technology
05 My CIPP
Cyber security checks and digital right towork checks
On your behalf, Advisory, Spotlight on..., The CIPP’s climate change update
38 Movers and shakers Changes to the policy and research team 41 Wordsearch What are payroll’s obligations under the general data protection regulations? 48 Confessions of a payroll manager Read all about Penny’s latest payroll adventures Take a break with our monthly wordsearch 46 Hot topic
10 Personal development BePayroll 11 Compliance
Everything fromelectric cars to holiday pay to student loans
0121 712 1013 cipp.org.uk @CIPP_UK
18 Feature topic
Read all about the theme of this month’s issue
Articles Please support this magazine so that it can continue to be a part of your membership package. Trademarks The CIPP logo, the initials ‘CIPP’ and the words ‘Professional in Payroll, Pensions and Reward’ and ‘CIPP Consult’ are trademarks of the Chartered Institute of Payroll Professionals. Copyright: The Chartered Institute of Payroll Professionals 2022. The Chartered Institute of Payroll Professionals, Goldfinger House, 245 Cranmore Boulevard, Shirley, Solihull, West Midlands, B90 4ZL. Switchboard 0121 712 1000 Copyright This magazine is published by The Chartered Institute of Payroll Professionals in whom the copyright is vested. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. The views expressed in this publication are not necessarily those of the CIPP or the editor. The information and comment contained in this publication are given in good faith, their accuracy or completeness cannot be guaranteed.
22 Reward 26 Pensions
The latest round-upof employment lawcases
Learn about pension schemes across theworld and the teachers’ pension scheme
32 Industry news
What do recent surveys and research show?
Full issue including additional online content available at cipp.org.uk
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| Professional in Payroll, Pensions and Reward |
Issue 79 | April 2022
CIPP update
Top up your technical knowledge APRIL SEES the first intake for the Payroll Technician Certificate Advanced. Building on the Payroll Technician Certificate, this qualification covers: ● data protection audit considerations ● automatic enrolment and pensions principles ● administering salary sacrifice for payroll. This is in addition to the core modules from the Payroll Technician Certificate: ● calculating National Insurance contributions and gross overpayment apportionments ● taxable pay and pay as you earn income tax calculations ● statutory sick pay calculations and administration ● child-related statutory payment calculations and administration ● administering statutory deductions and additional payroll obligations. If you’ve already completed the Payroll Technician Certificate, but wish to complete the new modules, you can enrol on the Payroll Technician Certificate Top Up here: http://ow.ly/9xhf30scbZi. If you haven’t completed the Payroll Technician Certificate and are interested in enrolling, visit: http://ow.ly/2APW30scbZo.
CIPP among the best companies towork for WE’RE DELIGHTED to have, once again, appeared within the Best Companies lists for Q1 of 2022. Announced during an online event on18 February 2022, the CIPP achieved 39th place in the best small companies to work for list, 37th in the best companies to work for in the West Midlands and 5th within the best not-for-profit organisations to work for. Each of these positions marked an improvement on our positions last year. The best companies lists acknowledge excellence in workplace engagement and are given based on the results of an employee engagement survey. Speaking about the CIPP appearing in the Best Companies listings,
Ken Pullar, chief executive officer, said: “The CIPP is committed to delivering quality and excellence in everything we do, aligning us with the Best Companies lists. It’s only through achieving excellent employee engagement we can deliver quality and excellence in our services to members. The fact our employees have been engaged enough to respond to the survey and are motivated and committed to the CIPP’s mission and values speaks volumes, and I thank them for their hard work and dedication. We couldn’t have achieved this accreditation without them.” The best companies to work for lists have been recognising excellent employee engagement since 2001. The accreditation programme was modelled on the Michelin Guide star system, which means it stands for quality and excellence.
Award-winning BeKnowledgeable events are back!
Looking for newpayroll software? THE CIPP can help! Our annual Payroll Software Directory is now available and provides a useful starting point when looking at new software. The directory lists providers and includes a tick list of functionalities to help you narrow down solutions based on your requirements. Once you have established a short-list, we recommend doing further research before engaging with a provider, and we can support you with this through CIPP Consult. You can find out more at: http://ow.ly/zYL430scbZw.
FOLLOWING THE success of the 2021 programme, we kick off the 2022
BeKnowledgeable event series this month with a session on national minimum wage (NMW). With
complex rules and a range of factors impacting compliance, organisations often fall foul of NMW legislation without even realising. This essential webinar is free to CIPP members and shouldn’t be missed. Book online at: http://ow.ly/aiKn30scc2v.
Congratulations to the newly accredited PAS organisations
THE CIPP’s Payroll Assurance Scheme (PAS) is designed to test payroll processing and compliance, along with people skills and development opportunities. One of the most crucial elements is ensuring business continuity plans are in place and effective, should they be required. Congratulations to all organisations that have achieved this accreditation and been able to put those plans into action. Special congratulations to our recently accredited organisations: ● Kreeston Reeves LLP ● Midland Heart Ltd ● North Kesteven District Council ● Telefónica UK Limited Ken Pullar, CIPP chief executive officer, said: “Congratulations to those organisations that have attained PAS accreditation. They’ve clearly demonstrated their sound payroll processes, knowledge and skills. This is imperative in the payroll profession, as reacting quickly to ever- changing legislation and guidance is crucial.” The PAS is still operating, with assessments currently operating virtually. To find out how the PAS can benefit your organisation, email compliance@cipp.org.uk.
| Professional in Payroll, Pensions and Reward | April 2022 | Issue 79 4
Policy hub
On your behalf
Policy teamupdate
The CIPP’s policy and research team provide an insight intowhat they’ve been up to recently
And then therewere four… Policy is delighted to confirm that we have some new team members! Maaz Naeem joined on 2 March 2022 as a policy and research officer. He is excited to get involved in writing articles, presenting and engaging with CIPP members. Maaz is extremely passionate about payroll and aims to raise the profile of the profession in his new role. Samantha O’Sullivan has also joined the team as policy lead, as we bid farewell to Samantha Johnson in mid-April. Samantha brings with her a wealth of payroll knowledge and over a decade’s worth of experience of working in the profession. Find out more about both new team members in Movers and Shakers on page 38.
Insurance (NI) contribution rates from 6 April 2022. The panel also spoke about the new employer NI reliefs, available to claim via payroll for tax year 2022/23 – one for eligible veterans and the other for eligible freeport employees. (The employer NI relief for veterans came into effect from 6 April 2021 but can only be claimed retrospectively from April 2022 onwards. Claims for 2022/23 onwards can be processed in real time.) As holiday pay is such a hot topic and case law is constantly developing, this was the third topic the panel covered. The session closed with discussion of the recent private member’s Bill which has proposed that the lower earning threshold be removed, and automatic enrolment extended to all individuals 18 and over. Although the Bill has been delayed for this Parliamentary year, it’s an area which could have a substantial impact on payroll in the future. BeKnowledgeable: national minimumwage (NMW) Building on the success of last year’s award-winning BeKnowledgeable series, policy lead, Samantha Johnson is back with a bang to discuss the ever-popular topic of NMW. This session will cover some of the nuances of calculating and paying the NMW, with a key focus on compliance. The consequences of non-compliance could result in substantial fines and your organisation being on the Department for Business, Energy and Industrial Strategy's 'name and shame' list. Be sure to sign up to learn more about NMW. Forums update There were several forums that the team attended in March. The first was the collection of student loans consultation
group. Payroll professionals will be eager to receive an update on the future of student loans, given the announcement that all new borrowers from September 2023 will begin to repay their student loans once they earn £25,000 and above. The repayment term will also be extended to 40 years. The group confirmed that a new student loan plan type would be introduced, but didn't give any exact dates. The employment and payroll group also met to discuss any problems with administering payroll obligations and general employment tax issues. The agenda was as follows: ● health and social care levy update ● hybrid/homeworking expenses ● raising standards in the tax advice market ● child maintenance ● freeports employer NI contributions (NICs) relief and NICs holiday for employers of veterans.
The CIPP’s Payslip Statistics Survey
One of the CIPP’s flagship pieces of research, the Payslip Statistics Survey , was launched in March of this year. The response was brilliant, so thank you to everyone who took part. The associated report will be made available in mid-April, and will include a discussion on the results of the survey, including: ● the most popular pay dates ● the information included on payslips ● how payslips are distributed ● how holiday pay is denoted on payslips. CIPP’s technical panel The CIPP hosted another of its technical panels to discuss everything impacting payroll, as well as topics that payroll professionals should keep on their radars. The panel consists of 14 payroll experts, all of whom represent professional bodies, private and public sector payroll or payroll software providers. Of course, there was discussion of the upcoming health and social care levy, as we prepare for the increase to National
Payroll pets Do you have a tax tarantula, a financial fish or a payroll puppy? If so, we want your snaps! Pets are a source of true happiness and are great for helping with mental well- being. To be in with the chance of seeing your pet in the pages of Professional , please email editor@cipp.org.uk . Please include your pet’s name, breed, age and a little bit about them, along with your job title and organisation. n
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| Professional in Payroll, Pensions and Reward |
Issue 79 | April 2022
MY CIPP
The CIPP's Advisory Service team provides answers to popular questions
Pension records retainment Q: We have recently created a new company, and would like to know what the specific retention periods are for pension records? A: By law, employers are required to retain records detailing pension contributions paid to the company pension scheme for at least six years. Employers are also required to retain other types of records for as long as they remain relevant to the running of the scheme and are required for the scheme to operate. Keeping this information provides proof that the correct contributions were paid into the fund should a dispute arise. For reference, see: https://bit.ly/35tAFdq. NMWunderpayments Q: My client has recently discovered several national minimum wage (NMW) underpayments. Can you confirm if we’re required to report these underpayments to Her Majesty’s Revenue and Customs (HMRC)? Calculations are performed for compliance purposes, but there are occasions where the payroll team aren’t informed of hours worked, so underpayments occur. A: It’s an offence under The National Minimum Wage Act 1998 for employers to pay their employees below the NMW or national living wage (NLW). If employers discover they’ve paid a worker below the correct rate, they’re required to correct this and pay any arrears immediately. HMRC provides an NMW and NLW calculator, which an employer can use to check if a worker has received the correct rate of pay in line with NMW legislation. The calculator can be accessed here: https://bit.ly/35nWsmL. Where a self-review has been carried out, and arrears for underpayment of NMW have been identified and paid, HMRC should be informed. HMRC will then help in confirming that any arrears have been correctly identified. The form used in making a voluntary declaration can be obtained by emailing voluntarydeclaration.nmw@hmrc.gov.uk. Employers can be reassured that, other than in exceptional cases, there’ll be no public
naming or financial penalties associated with any paid arrears that are declared to and accepted by HMRC using the voluntary declaration process. For reference, see: http://ow.ly/msyu30scu3Y. CMS order deductions Q: We understand when calculating the 60% minimum earnings for a child maintenance service (CMS) order, an employer can base the deduction on the net amount after tax, National Insurance contributions (NICs) and pension deductions. Can you please clarify the correct treatment of any unpaid arrears of this CMS order, for example, should unpaid arrears be carried forward and taken in a following month or not? A: HMRC guidance states any unpaid arrears (shortfall) of a CMS order should be carried over to the next period. The employee’s protected earnings rate or protected earnings proportion will remain at the relevant level each pay period, so pay shouldn’t be taken below that amount. For reference, see: https://bit.ly/3pzkPVR. PILONpayment error Q: An employee was made redundant last year via a settlement agreement. It’s been noted that the payment was incorrectly taxed. The pay in lieu of notice (PILON) payment was paid tax-free when it should have been subject to tax. The £30,000 limit had already been used in the redundancy payment. The company would like to pay the tax on behalf of the employee, but would there be any consequences because of this mistake with HMRC? A: If an employer fails to deduct the correct amount of pay as you earn (PAYE) from an employee’s earnings, the employer is liable for the amount under-deducted. The underpayment should be recovered from the employer, not the taxpayer, unless HMRC makes a PAYE direction. Where the employer took reasonable care to comply with PAYE regulations and a mistake was made in good faith, they can make a request for the employee to pay the
tax, however, the employer isn’t required to make this request. Where employers wish to pay the shortfall in tax, the employee’s record should be amended using an earlier year update or full payment submission, and the employer should make a balancing payment to HMRC. If an employer is paying tax on the employee's behalf, it should be grossed up. For reference, see: https://bit.ly/3HvwpqY. What happens to payments of statutory maternity pay when a business becomes insolvent? SMP payments during insolvency Q: A client will cease trading in the coming weeks and currently has employees on maternity leave. What are the company’s obligations and options regarding the future payments of statutory maternity pay (SMP) for these employees? A: If a business ceases to trade, they must continue to pay any outstanding SMP payments until the employee has received their full entitlement, or their entitlement ends for some other reason. If a business becomes insolvent after the beginning of the qualifying week, and before the start of the employee’s pay period, HMRC will pay the employee’s SMP. If a business becomes insolvent during the SMP pay period, then HMRC will pay the employee’s SMP from the week in which the business became insolvent. Employees should be advised to contact HMRC, and the business, liquidator or similar should tell HMRC to ensure employees are paid as soon as possible. For reference, see: http:// ow.ly/3T3k30scunu. The apprenticeship levy Q: Our client is asking about apprenticeship levy calculations. Is the calculation based on the gross pay (including expenses) or on the gross taxable pay for each pay period? We would really appreciate any guidance you can provide on this topic.
| Professional in Payroll, Pensions and Reward | April 2022 | Issue 79 6
Policy hub
Gain a detailed overviewof national minimumwage (NMW) and national livingwage (NLW) including the current rates payable. Learn to identify who is eligible, the calculation steps needed, record-keeping and compliance activities required. National minimumwage and other worker entitlements
A: The apprenticeship levy charge is based on the employer’s ‘pay bill’ once this has reached £3 million. The annual 'pay bill' is all the payments to employees that are subject to employer class 1 secondary NICs. The levy allowance works much like a cumulative tax code. For each month following the first month of the tax year, take the following steps: ● calculate your total pay bill for the year to date (YTD) ● total your monthly levy allowances for the YTD ● subtract your levy allowance for the YTD from 0.5% of your total pay bill for the YTD ● subtract the amount of the levy you’ve paid in the YTD ● pay over the difference. For more information on what a ‘pay bill’ is, see: https://bit.ly/3sgbELt. For further guidance on how to calculate the apprenticeship levy figure, go to: http:// ow.ly/IcQ630scukk. Employment allowance eligibility – company directors Q: A client has a company which only has two directors on the payroll. The directors earn £12,000 per annum and £36,000 per annum respectively. Would the business be entitled to claim the employment allowance? A: From 6 April 2016, limited companies where the director was the only employee paid earnings above the secondary threshold (ST) for class 1 NICs were no longer able to claim employment allowance. To establish entitlement for a company with more than one director, the additional employee test would need to be applied. If both directors earn above the £8,840 ST limit for NICs for 2021/22, the company will be eligible to claim the employment allowance for the whole tax year. The employment allowance for tax year 2021/22 is £4,000 and can be offset against any employer’s secondary class 1 NI due in the year. For reference, see: http:// ow.ly/rNqy30scuiv. Employment allowance eligibility – domestic staff Q: A client employs domestic staff for their family and household. Would they be eligible to claim the employment allowance in this situation? A: HMRC guidance states that employers of domestic staff (e.g., cleaners, gardeners or nannies) will be unable to claim the
employment allowance, as the employees are all being employed in a personal capacity, to support the running of a household. Other guidance on employing personal and domestic staff indicates the allowance is only available where the employee is providing personal care to someone who needs support due to age or physical / mental illness. For reference, see: http://ow.ly/NNCJ30sf1j1. Caps on pension contributions Q: Employees are enrolled into the company’s workplace pension, but their contributions are capped at a pensionable pay of £3,669 per month which is £4,189 less £520. As a result, the maximum 5% employee contribution is £183.45 per month. What is this cap and what exactly does it mean? A: These are the earning levels for automatic enrolment ‘qualifying earnings’. Employers may choose to use this definition of qualifying earnings for their workplace pension scheme. Under this definition of qualifying earnings, employees won’t begin paying a pension contribution until they’ve earned £520 of pensionable earnings in a month (the qualifying earnings band lower level for 2021/22), and these pensionable earnings are also capped at £4,189 (the qualifying earnings band upper level for 2021/22). Therefore, if an employee earns more than £4,189, then pension contributions from both employee and employer are based on the difference between the limits, and so pensionable pay would be a maximum of £3,669. For reference, see: http://ow.ly/ F2q230se2gK. Coronavirus-related SSP Q: As the country has ended isolation requirements, has the waiver of statutory sick pay (SSP) waiting days for Covid- related absences ended? A: It was announced that the SSP waiting days amendment would end on 24 March 2022, when the Coronavirus Act provisions end. From 25 March 2022, those who are off work with Covid-19 will receive SSP under the normal statutory conditions. Employers should also be aware that SSP can no longer be reclaimed through the coronavirus SSP rebate scheme for coronavirus-related absences or periods of self-isolation that occur after 17 March 2022. Claims must be submitted by 24 March 2022. n
Visit cipp.org.uk/training to book your place
CPD 7 points
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| Professional in Payroll, Pensions and Reward |
Issue 79 | April 2022
MY CIPP
Spotlight on...
TheCIPPsales team
Luke Butters, Carla Lilley, Anna Oldfield, Caitlin Butler, Hayley Dugmore and Joseph Tongue
Please describe the sales team for us – who are they, what do they do and what are their backgrounds? Luke Butters is the sales executive and is responsible for the sales performance across all areas of the CIPP, along with day-to-day management of the account leads. Carla Lilley, the senior account lead, is responsible for training the account leads and managing her primary accounts. Anna Oldfield, Caitlin Butler and Hayley Dugmore are the account leads. They’re responsible for dealing with training and qualification queries and creating a supportive relationship with their primary accounts through training support. Joseph Tongue, membership service representative, is responsible for supporting our members with updates on the membership service and renewals, and returning members to the CIPP. What are the priorities of your roles? Howdo they fit together? The sales team can only function with all members working closely together. The account leads support each other with workloads and customer relations, but they also work with all departments at the CIPP, so our customers receive the best products possible. The account
leads’ goals are to provide our customers with the correct courses and information, so organisations get proper support and develop their payroll departments. What skills does a sales team member need? In many organisations, sales teams are found working in a constant hard-hitting sales environment. This is not the case at the CIPP, as it comes down to the quality of sales and placing customers on the correct course for their careers or their organisation. This means the account leads need to have sound knowledge of our products and pass this on to the customer, so they have confidence the team has directed them to the correct course. The account leads also need to be adaptable and actively listen to their primary accounts, to provide the best service possible. You also need to have resilience as regularly being told no can be challenging. This, and listening to Luke’s terrible jokes, which can make the day feel longer. What do you think you and your teamcan bring to the future strategy of the CIPP? As front-line staff, we hear all our customers’ opinions and thoughts on the payroll industry and its growth over the last few years. We
can make sure this feedback is passed on to the relevant departments to ensure we move with the times, and provide the best products and services. A recent development focuses on understanding that payroll professionals need as much support as possible. With our voice, we can explain the benefit of the CIPP and how we can support everyone working in the payroll, pensions and reward industry. Every day, you’re speaking to customers about what the CIPP offers – howdo you lead them in the right direction? The sales team are there to provide a service to our customers. This is done by having meaningful conversations with them to discover what the best option for them and their department is to learn and feel supported by the CIPP. We also have regular discussions with our primary accounts to get a feel for what payroll departments are dealing with on a day-to-day basis, so the CIPP can supply proper support to those in the profession. Before starting with the CIPP, the account leads wouldn’t have thought payroll was an industry that needed help. From our experiences, we all know now how much support and development is needed for all payroll professionals. n
| Professional in Payroll, Pensions and Reward | April 2022 | Issue 79 8
My CIPP
2 0 3 5 CIPP COMMITMENT TO CLIMATE CHANGE
CIPP’s climate change update: Top tips for being more sustainable
The CIPP’s business support coordinator, Amir Aziz ACIPP, encourages everyone to try and becomemore sustainable, and provides the top five tips to help in doing this
S o, it’s 2022, Covid-19 is finally starting to look like a thing of the past, and the world is starting to turn its attention to resolving its next big crisis. I know what you might be thinking, selecting the next Bond hero is already tearing families apart – better leave that to the experts. However, despite the mammoth task this is likely to be (my money’s on Idris Elba), I meant the other crisis – reducing the world’s carbon emissions and reversing the damage already caused. The CIPP has some positive news to share. The work being carried out towards our net zero targets contributed immensely to the CIPP’s recent success in the Best Companies’ ‘Best Companies to Work For 2022’ Q1 awards. The CIPP surpassed expectations by ranking 34th on the West Midlands regional list, climbing to fifth out of ten companies in the not-for-profit sector, and coming 39th in the small companies category. A huge factor in the company’s success related to the ongoing work being completed around our climate change initiative. Not only were we shown to be taking action towards achieving our net zero goals, but we were setting the example to others of what businesses should be doing to be more socially and environmentally aware. While we have
● innovation: creates new forms of collaboration between like-minded people and businesses ● participation: it provides people with a pathway towards volunteering ● inspiration: it models ideal behaviours to encourage others to follow in your footsteps. 5) Self-awareness Finally, greater self-awareness. Whether you have just started your journey or are making great strides towards change, taking active steps to continuously learn and adapt means you will inspire others to also make positive changes. A great starting point could be with calculating your own carbon emissions. Here at the CIPP, we found a great starting point was the World Wind Fund for Nature’s (WWF’s) ‘For Your World’ individual carbon calculator, which can be found here: http://ow.ly/Lt7Y30sbPJZ. It’s a simple five-minute survey that allowed our staff to start thinking about their own impact on the environment. I’ll leave you with a quote from our favourite green superhero, who has taken a break from defending the world from alien invaders, and turned his attention to more serious issues here on planet earth. Mark Ruffalo (commonly referred to as the Hulk): “Climate change is the greatest threat to our existence in our short history on this planet. Nobody’s going to buy their way out of its effects.” n Get involved We would also like you to get involved. Why not send in what you or your company are doing to admin@cipp.org.uk , and be in with a chance of being featured in our next climate change article update? I look forward to reading all your submissions.
mere drop in the ocean that we refer to as climate change. Therefore, we recognise that by working together and sharing our knowledge with one another, we better contribute to directing the world to a better (and more sustainable) tomorrow. With this in mind, we thought it’d be nice to share a little of that wisdom with you, our members. Here are our top five tips on what you can do to be more sustainable: 1) Change to clean energy Using clean, renewable energy is one of the most important actions you can take to reduce your impact on the environment. Implementing changes, such as switching to a clean energy provider, changing to light- emitting diode lighting, and ensuring unused appliances are turned off are minor changes that lead to big, long-term savings. 2) Recycle Recycling reduces the need to grow, harvest or extract new raw materials from the earth. Therefore, less disruption to the natural environment will mean trees can continue to produce oxygen, animals are less likely to be displaced in their natural habitats and the natural flow of rivers is far less likely to be disturbed. 3) Transport – walkmore Encouraging more sustainable transport options, including walking, or riding a bike, contributes to a reduction in damaging carbon dioxide emissions, and therefore, to a reduction in pollution. This will mean improved air quality in cities. 4) Volunteer Volunteering in any form assists sustainable development in the following ways: ● inclusion: gives people the opportunity to be part of the bigger picture by helping the wider community
been making considerable progress in our goal of being net zero by 2035, the CIPP understands that our contribution is a
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| Professional in Payroll, Pensions and Reward |
Issue 79 | April 2022
PERSONAL DEVELOPMENT
# Be Payroll Jessica Ferris ACIPP, payroll, benefits and human resources information system officer at ARRKEurope Ltd discusses why she became amember of the CIPP
Why did you choose to become a CIPP member? Being a member of the CIPP allows me to to prove my payroll knowledge to my current and any future employers, and ensures I’m kept up-to-date with ever-changing legislation. Being a member of a recognised institute installs confidence and pride in my abilities. How has your membership helped in your career? I’ve been able to gain a Level 4 Payroll Qualification and to keep my payroll knowledge current with various courses. It’s also shown my employer I’m getting the latest updates, as I need them to ensure the payroll is compliant. Which membership benefits have you used or enjoyed the most? Can you provide some relevant examples? Since joining the CIPP, I’ve ensured that I attend both the Payroll Update and the BeConnected: National Forums on an annual basis. I find them both very informative and would recommend that, if you do nothing else, you attend both of these. I‘ve also used the Advisory Service, and the team are quick and knowledgeable in their responses. Can you describe your payroll journey to us so far? I, like many others, ‘fell’ into payroll. This happened when my human resource (HR) apprenticeship was disrupted, as the HR department relocated to Hungary, and I had to find a department in which to finish my apprenticeship. That was in 2004, and I haven’t looked back since. I’ve processed large payrolls for the International Business Machines Corporation and the National Health Service, and smaller payrolls for Kraft. My current employer has the smallest payroll I’ve worked on. Each type of payroll has its merits – working in a team means you can bounce off one another and use each other’s knowledge to learn. With a larger payroll, however, the employees you pay can become just a number. With a smaller payroll, you could be working as a sole payroll professional, but you get to know the employees and build a better relationship with them. The part I enjoy most about payroll is checking that calculations generated by the system are correct. I really enjoy administering payrolls and have worn this hat in many guises, but have always kept to the core of payroll processing, rather than payroll
management. I really enjoy the fact that no payroll month is ever the same. I have processed payroll for pay as you earn and for contractors. I’ve also had experience of the Transfer of Undertakings (Protection of Employment) regulations and redundancies, which always makes for complicated payroll processing. What are your hopes for your future career? I’m hoping to gain a Level 5 Payroll Qualification via an apprenticeship programme. Due to a re-structure within my current organisation, I’m also going to be more involved in the benefits side of things. This will give me further understanding of the full process, rather than just the administration of benefits. I’ll be able to gauge which benefits employees want and hopefully get them implemented. Do you have plans to study any CIPP qualifications or training courses? I attend the Payroll Update course and a payroll forum every year. The Payroll Update course gives a high-level overview of upcoming legislative changes and highlights everything you need to know for the current and upcoming tax year, and also things to look out for which could happen in the future. The BeConnected: National Forums provide a great service update and, like the Payroll Update course, offer an insight into upcoming changes that will affect payroll. I keep an eye on courses as they’re announced and look into any which will enhance my skills, and would be beneficial to me and my employer. What advice would you give to anyone new to the payroll profession, just starting out in their career? Never forget how important you are to your organisation. More often than not, payroll is the forgotten element of an organisation, which is only considered when someone’s pay is wrong. Many people think we just press a button (I’m yet to find this elusive button!), but we are much more than that. It’s important to remind yourself that you’re enabling the employees on your payroll to live every day. You are the most important member of your organisation that you pay. n
If you are interested in being featured in the BePayroll series, please email marketing@cipp.org.uk .
| Professional in Payroll, Pensions and Reward | April 2022 | Issue 79 10
Compliance
Are you payrolling your benefits offering?
Lora Murphy ACIPP, editor at the CIPP , provides payroll teams with a checklist of things to remember once they’ve registered to payroll benefits for employees
H er Majesty’s Revenue and Customs (HMRC) has been ramping up its communications to encourage organisations to begin processing the benefits they offer to employees through pay as you earn (PAYE), in real time. This is the alternative to submitting the information via form P11D following the end of the tax year the benefits were provided in. The February issue of the Employer Bulletin highlights HMRC’s support for payrolling benefits: “You can payroll most benefits. It’s quick and easy to register online, but you must do so before the start of the 2022 to 2023 tax year. We recommend payrolling of benefits in kind. It’s designed to be less complicated and time consuming”. Read the February Bulletin in full here: http://ow.ly/iwiS30scE6h. This message builds on ideas included in previous issues of the Bulletin. The deadline for registering to payroll benefits for tax year 2022/23 is 5 April 2022, so if you’re intending to use this process, you’ll have already registered or you’ll need to do so before the deadline. Registration can be completed online here: http://ow.ly/lWPi30scE6s. The positives of payrolling benefits won’t be explored in full in this article, as the focus is firmly on the steps organisations need to take once they’ve taken the plunge and registered to payroll benefits. We’ve provided a handy checklist : 1. Remember which benefits you can process through payroll All benefits can be payrolled, except for: ● employer provided living accommodation ● interest free and low interest (beneficial) loans. These benefits must still be included on a P11D, even if other benefits are being payrolled for the same employee. 2. Communicate with employees Employees must be provided with written notification about payrolling benefits, and
4. Class 1 A National Insurance contributions (NICs) Organisations that payroll benefits will still need to calculate and pay any class 1A NICs. They will be required to complete form P11D(b) and this must be done by 6 July following the end of the tax year. This is because the class 1A NICs liability arises regardless of the method used to process benefits. There’s currently no facility for paying the NICs in real time, and only the tax on the benefits can be collected via real time information at the present time. The amount must be paid across to HMRC by: ● 19 July if paying by post ● 22 July if payment is made by an approved electronic method. The payroll team will be required to calculate the ‘cash equivalent’ of the benefit, which should be split equally across the year A note on the health and social care levy Class 1A NICs will be increasing by 1.25 percentage points in tax year 2022/23. There are no considerations for 2021/22, but when calculating the P11D(b) amount following 2022/23, the increase will need to be considered. Stakeholders have approached HMRC to ask what will happen in 2023/24, when the levy is separated out in terms of class 1A NICs, and the response was that guidance will be published in due course. n
how it impacts them. This can be done in a variety of ways: ● by payslip ● by email ● by letter. This must be provided by 1 June following the end of the tax year and must explain that employees will not be taxed twice due to the switch to payrolling benefits. The following information should be included: ● which benefits are being payrolled (the value, cash equivalent and which benefits have been subject to PAYE) ● the amount payrolled for optional remuneration ● details of any benefits that haven’t been payrolled. Employees should also be informed that, in the first year of payolling, their tax code will be amended to remove the adjustment for their benefits in kind. They should also be told an adjusted amount will be processed through payroll each month, which they pay tax on, and that, at the end of the tax year, they’ll be notified how much taxable benefit they’ve had in the year, and what it was for. New employees must also be advised of how their benefits will be taxed. 3. Process the ‘cash equivalent’ through payroll The payroll team will be required to calculate the ‘cash equivalent’ of the benefit, which should be split equally across the year. They will then need to use a notional pay element to process the benefit through payroll. A simple example is included below: A car has a ‘cash equivalent’ of £1,000. The employee is paid monthly, so 12 times in a year. Therefore, £1,000 / 12 = £83.33 should be added to each payslip for tax purposes only, and tax will be calculated each pay period, with no requirement for an adjusted tax code the following tax year.
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| Professional in Payroll, Pensions and Reward |
Issue 79 | April 2022
TECHNOLOGY
Court of Appeal overturns previous decisions on holiday pay
Justine Riccomini Sc FFTAAIPACharteredMCIPDChFCIPP, head of taxation at the Institute of Chartered Accountants of Scotland (ICAS) explains why the Court of Appeal’s decision in Smith v Pimlico Plumbers is so important for workers and their holiday pay
Main points: ● the Court of Appeal has handed down its decision in the holiday pay claim case of Smith v Pimlico Plumbers ● Mr. Smith was deemed to be a worker, engaged by Pimlico Plumbers, in the original 2018 employment status case ● this latest decision has far-reaching consequences for those employing workers and the gig economy in relation to holiday pay.
of wages arrears for up to four weeks of the leave he took each year but was not paid for. This is at the rate payable in respect of the work he was carrying out at the time. Isn’t there a limit on the amount of years worker can claim for unpaid leave for? There’s no restriction on the period of ‘Euro leave’ which can be accumulated, because the two-year limit set out at Section 23(4A) of the Employment Rights Act 1996 was set aside by the Court of Appeal. The employee isn’t time-restricted in the claim they make (unlike they are with other claims such as statutory sick pay), and the liability for that payment crystallises on termination of employment if they bring a claim within three months of termination. This will make things much easier for tribunals going forward. Nobody will need to establish what was taken/untaken/unpaid anymore – it’s simply four weeks per annum if they’re a classed as a ‘worker’. What about post-Brexit claims? In this case, Smith brought his case before the Brexit implementation period completion day (31/12/2020). This means the application of the King v Sash Window principles was unquestionable. But what about post-Brexit claims? Can ECJ case law still apply to them? Some European Union (EU) legal principles point to the Marleasing principle. This is a duty to preserve the interpretations placed by the EU directive in accordance with Section 5 of the European Union (Withdrawal) Act 2018 as far as possible. So, while legal eagles might be trying to find ways to interpret things differently post-Brexit, Marleasing seems likely to stand for the time being, which is important
for workers bringing cases like this to the tribunal following Brexit. Regulation 30 of the Working Time Regulations (WTR) provides for someone to claim unlawful deductions from wages within three months which are due under WTR. The case of HMRC v Stringer supports this. Although Pimlico Plumbers could seek to overturn this decision at the Supreme Court, it seems unlikely. The founder of the company, Charlie Mullins recently sold the business to another entity, and they may not be interested in engaging with the courts so early in their tenure. Currently, Mr. Smith is owed in the region of £74,000. What does thismean for employers, payroll professionals and agents? Workers who have historically been denied any kind of claim for unpaid leave now have a pathway to claim an unlawful deduction of wages if: ● they make the claim within three months of their leaving date, and ● the employer can’t prove they: ❍ gave the worker the opportunity to take paid annual leave ❍ encouraged the worker to take paid annual leave, and ❍ informed the worker the right would be lost at the end of the year. Conclusion If an individual is legally classified as a worker, whether the employer agrees or not, the cost could be heavy. Employers and their agents should start to review the employment status of anyone working as a self-employed contractor and seek the appropriate legal advice. n
Background After 11 years of being engaged in a
legal battle with his ex-employer, Pimlico Plumbers, Gary Smith has won the final claim he made against the company. This latest decision by the Court of Appeal, which was handed down on 1 February 2022 centres on holiday pay, and has reversed the decisions made in both the employment appeal tribunal (EAT) and the employment tribunal (ET). The result means Mr. Smith is now entitled to recover compensation for all the unpaid leave he took since his employment started. This happened because in 2018, the Supreme Court deemed Mr. Smith to be a ‘worker’. How the decision came about The judiciary was unanimous in its decision to uphold the principles laid down in the case of King v Sash Windows (a European Court of Justice [ECJ] case), which not only entitles workers to claim the indefinite carry-over and accumulation of the untaken part of their ‘Euro leave’ (i.e., four weeks per year), but also to any ‘Euro leave’ taken, but not paid. Essentially, this means Mr. Smith has been given the right to claim unlawful deduction
| Professional in Payroll, Pensions and Reward | December 2021 – January 2022 | Issue 76 12
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