Issue 81 June 2022 PROFESSI NAL in Payroll, Pensions & Reward Official publication of The Chartered Institute of Payroll Professionals
All systems go!
The rise of the payroll robots? How robotic process automation can enhance the payroll function
The hybrid working era
Payroll’s role in financial well-being As we face a cost-of-living crisis, how can payroll teams support staff?
How do hybrid and fully remote working practices impact expenses?
CIPP UPDATE POLICY HUB PERSONAL DEVELOPMENT
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Editor’s
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Welcome to another sparkling new issue of Professional . The theme of the June magazine centres on something the modern payroll professional arguably couldn’t perform their job without – software and systems. Technology can serve to enhance the role
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of the payroll department, by dealing with some of the more routine administrative and transactional tasks. As a result, payroll professionals have time to commit to the more intricate elements of payroll and can start to explore how they can add strategic value to an organisation. With the current cost-of-living crisis, this invaluable time could even be spent investigating how payroll teams could assist employees with financial well-being. Turn to page 20 to discover what a team of experts think about the evolving role of payroll systems. In the same vein, this issue also includes interesting articles covering robotic process automation (page 36) and how payroll teams within accountancy firms can use technology to boost their value (page 38). Our hot topic this month focuses on an area that’s recently seen a flurry of activity – pensions. Flick to page 50 to read about the issues posed by pensions data, and also find some helpful considerations for retirement planning on page 30.
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Lora Murphy ACIPP (editor@cipp.org.uk) Editor
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20 - Feature topic – all systems go! By Jerome Smail 30 - Retirement planning By Jeremy Montgomery 36 - Should a robot be your next hire ? By Andrew Guy 38 - Boosting the value of payroll bureau services within accountancy firms By Jeremy Hyman 50 - Hot topic – the pensions data
trust issue By Henry Tapper
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| Professional in Payroll, Pensions and Reward |
Issue 81 | June 2022
Chair’s
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
message
I’ve recently been involved in many communications involving trips down memory lane. This goes back to the time when at school, the desktop computer was the size of a large microwave oven and choosing computing as a subject meant learning how to write programmes. Processes were all manual with payroll using Kalamazoo sheets
and relying on the paper forms provided by Her Majesty’s Revenue and Customs (HMRC). Fast forward to the current day. Nowadays, people are brought up with technology as if it’s always been around, not knowing life without it. If you need to find out what to do, everything is on Google and YouTube. We don’t have to worry about storage limits, as all data is held on the cloud, although we are concerned about cyber-attacks, with data security of the utmost importance. Payroll systems are now so sophisticated that users are not limited to one provider. Employers investigate the best options for the type and size of business, with some using one type of software for all aspects, including payroll / human resource (HR) / time and attendance (T&A). Others use different providers for specific areas. Sourcing the best T&A, learning and development, recruitment, HR, payroll and finance systems that integrate is no easy task. However, with the rapid development of cloud-based technology and connectivity, it will be interesting to see the progress in this area over the next five years.
Chief executive officer Ken Pullar FCIPP CIPP board of directors 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 Justine Riccomini MSc FFTA AIPA Chartered MCIPD ChFCIPP Katie Sharpe MCIPPdip Cliff Vidgeon BA(Hons) CMA ACG ChFCIPP Clare Warrington MSc FCIPPdip AFHEA
Liz Lay MSc FCIPPdip FHEA ACIPD (liz.lay@cipp.org.uk) Chair, CIPP
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
CEO’s
message Every April, the CIPP board meet with the CIPP senior leadership to review and plan the strategic vision for the next five years. Additionally, they review progress from strategic meetings held in earlier years, where actions are identified as short,
medium and long term. This was the first time we had met face-to-face since 2019, and we had an excellent day as we set out the direction of travel for the CIPP, its members and students. Trying to predict the payroll and pensions landscape over the next few years isn’t always an easy task. However, regular input from all membership levels (including Chartered members), through the Market Insight Survey , the Future of Payroll Survey and special interest groups, as well as many other formal and informal routes, has all helped to mould the CIPP’s strategic vision. Key strategies set out in previous years, and reaffirmed at the recent review, continue to focus on these key objectives: ● growing membership and brand awareness (membership) ● leading innovation and engaging certified solutions (qualifications) ● providing knowledge and skills to practitioners (training) ● providing governance and advice to all payroll professionals (governance). The demand for training and qualifications, driven by both employees and employers, continues to be a key focus for the CIPP and its board of directors. This will ensure that all those working in these key worker positions are suitably skilled in continuing to keep the UK paid. The way we work post-pandemic will vary going forward, particularly with the increase in hybrid working. Although not every employer will go down this route, it’s a testament to payroll and pension professionals that hybrid working is even an option. Don’t forget we can, at last, celebrate our profession in person for the Annual Conference and Excellence Awards at Celtic Manor Resort, Wales on 5 and 6 October. We’re confident this will be a successful ‘in-person’ conference and look forward to seeing you there.
0121 712 1013 cipp.org.uk @CIPP_UK
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.
Ken Pullar FCIPP (ken.pullar@cipp.org.uk) Chief executive officer, CIPP
| Professional in Payroll, Pensions and Reward | June 2022 | Issue 81 2
in Payroll, Pensions & Reward PROFESSI NAL Contents June 2022
Also available online at cipp.org.uk
FEATURES
Policy factsheets
Federal income tax withholdings on supplemental wages By Sally Hilton
Did you know…? Statutory
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By the CIPP’s policy and research team
maternity pay By the CIPP’s policy and research team
‘Kunjuring’ up the right result? By Justine Riccomini
Working from home allowances By Mathew Akrigg
PSAs – ensure you don’t over declare By Angela Ferguson
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Detriments, dismissals and discrimination By Nicola Mullineux
New statutory code of practice on fire and rehire By Danny Done Exploring the world of payroll software and the role BASDA plays With Pauline Green
Payroll and employee financial well- being: how do we make it work? By Paul Gibbons Fintech’s entry into payroll By Jaspal Randhawa
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Global payroll transformation By Lara Smart
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REGULARS
01 Editor’s comment 02 Chair’s and CEO’s message 04 CIPP update Events, news and developments 05 My CIPP On your behalf, Advisory, Spotlight on..., The CIPP’s climate change update 10 Personal development BePayroll, Policy factsheets 12 Compliance From expenses to statutory maternity pay
20 Feature topic
42 Payroll news 43 Industry news 45 Wordsearch 50 Hot topic 52 Payroll pets
Read all about the theme of this month’s issue
Your monthly payroll news update
24 Reward
Update yourself on the latest industry news
Learn how payroll can help with financial well-being and read the latest employment law updates
Take a break with our monthly wordsearch offering
30 Pensions
Have you started preparing for your retirement?
What are the current issues facing pensions?
32 Technology
Learn all about robotic process automation and the work carried out by BASDA
We say hello to some of your animal friends
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| Professional in Payroll, Pensions and Reward |
Issue 81 | June 2022
CIPP update
CIPP supports the IAB and Finance Awards Wales WE’RE DELIGHTED to be supporting both the International Association of Bookkeepers (IAB) and Finance Awards Wales this month through sponsorship of their ‘payroll professional’ and ‘payroller of the year’ awards respectively. It’s great to see these organisations recognising payroll within their award ceremonies and we’re looking forward to congratulating the winners, who shall also receive 12 months’ affiliate membership of the CIPP in recognition of their amazing achievements. The IAB awards will take place at the House of Commons in London on 22 June 2022, and the Finance Awards Wales at City Hall, Cardiff on 24 June 2022. Details of the award winners will be announced shortly. BeKnowledageble: holiday pay ON 14 JUNE 2022, we’re hosting our next BeKnowledgeable webinar, free for members, on the topic of holiday pay. With complex legislation and an array of things to consider when calculating holiday pay payments, can you afford not to attend this essential update? Book online at: http://ow.ly/ uKYM30sjFHH.
New member benefit – employment law helpline FROM 1 JUNE 2022, CIPP members will have access to a new service, via our partnership with Moorepay. To complement our Advisory Service, which you tell us is highly valued, we’re launching support for all your employment law queries that we’re not always equipped to answer. Moorepay employ qualified employment law specialists who come from a range of backgrounds and have a wealth of professional experience in operational human resources (HR) and employment law, across a range of business sizes and sectors. They are members of, and qualified by, the most rigorous professional bodies of HR, employment law and health and safety in the country, and their continuous professional development ensures they give the best advice. This service is available round the clock to support you whenever you need it – 24 / 7 / 365. We’re really pleased to be able to add this as another invaluable membership benefit, to ensure you stay compliant with legislation and avoid business disruption. Visit http://ow.ly/KFm430sjFGX to find out more and to access the service.
Tutor training OUR ANNUAL tutor training day will be taking place on Saturday 2 July 2022. This face-to-face event sees all of our Payroll Technician Certificate, Certificate in Pensions Administration and Foundation Degree tutors come together to gain updates on the requirements within their roles as tutors, and support them in how to better serve our students on these programmes. We look forward to welcoming our tutors physically face-to- face for the first time in two years. To find out more about the CIPP’s qualification programmes, visit: http:// ow.ly/jlUA30sjFHz.
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:
● CGI IT UK Limited ● Direct Line Group ● Payroll As You Go Limited
● John Lewis Partnership ● Natwest Group ● Oliver James Associates Group 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 | 4 June 2022 | Issue 81
POLICY HUB
On your behalf
Policy team update
Read about the range of activities the CIPP's policy and research team has recently been involved in
Payroll events Policy lead, Samantha O’Sullivan, was delighted to speak at the Global Payroll Association (GPA) Payroll Summit 2022, with a session entitled ‘Back to the future – salary sacrifice’. Topics included: ● national minimum wage (NMW) ● electric cars ● optional renumeration arrangements. Policy and research officer, Mathew Akrigg, spoke at Accountex 2022, held at ExCel London, to deliver a payroll legislative update. He also presented on a webinar for The Association of International Accountants, talking through the health and social care levy and the recently announced mid-year changes to National Insurance. The events the team got involved in this month were an enormous success and provided the opportunity to contribute to the wider payroll community and to continue to guide the profession. Critical meetings Mathew led a roundtable event in relation to the Low Pay Commission’s (LPC’s) consultation on NMW. Commissioners from the LPC joined the discussion, and there was also a presentation highlighting the work the LPC carries out, along with the associated timeframes. Members were invited to attend to share their views on the proposals included in the consultation. Spaces filled up so quickly that a second event was organised to accommodate everybody. The policy team’s consultation response will include
for payroll professionals was reference to a Data Reform Bill to revamp general data protection regulations and rules. It was also confirmed that minimum wage will be introduced for tens of thousands of seafarers. This follows the action taken by P&O Ferries, of dismissing hundreds of its employees to replace them with cheaper agency workers, paid below minimum wage. There was, however, no mention of the much-anticipated Employment Bill.
the invaluable comments shared at both meetings, along with information drawn from the NMW survey that recently closed. Maaz Naeem, policy and research officer, had the opportunity to get involved with some concept testing for a new Department of Work and Pensions (DWP) initiative, which involves supporting and educating small businesses on matters relating to occupational health. He also joined a meeting hosted by Her Majesty’s Revenue and Customs (HMRC), to provide feedback on scripts for YouTube videos designed to explain the HMRC statutory review process. The videos will advise businesses of the next steps they should take if they disagree with a HMRC decision or when they’re unhappy with the outcome of an appeal. BeKnowledgeable: holiday pay Mathew will be delivering the next instalment of the BeKnowledgeable series. He’ll cover one of the topics payroll professionals admit to finding increasingly complex – holiday pay. The session will take place on 14 June 2022, and anyone who grapples with holiday pay calculations should join to ensure they’re compliant with the associated legislation and rules. Sign up here: http://ow.ly/jJjj30sjPhu. The Queen’s speech On 11 May 2022, Prince Charles delivered the Queen’s speech in the House of Lords. He highlighted the government’s agenda for the coming Parliamentary year, outlining proposed policies and legislation. Of note
Do you want to feature in Professional magazine?
Have you ever thought you’d like to appear in the pages of a magazine, but never been quite sure what to write about? Well, the CIPP is offering a unique opportunity to members in the December / January issue of Professional . The topic of this issue will be ‘ the member takeover ’, and this is your chance to write about anything payroll- related. The payroll world is your oyster… If you’re interested in providing an article for the magazine, or have any ideas about what you’d like to see in the member takeover issue more generally, then please contact the editor, Lora Murphy, at Editor@ cipp.org.uk . n
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| Professional in Payroll, Pensions and Reward |
Issue 81 | June 2022
MY CIPP
The CIPP's Advisory Service team provides answers to popular questions
Company cars and salary sacrifice Q: A client processes a scheme which allows employees to choose either a company car or a cash allowance. They were advised that several employees have taken up a company car above their entitlement and the excess value will be processed under a salary sacrifice arrangement. My client will process a salary sacrifice pay element for the amount, which will be evenly apportioned over the months in the tax year. How does this arrangement affect P11D reporting? A: Your client is operating a type B arrangement under the optional remuneration arrangements (OpRA) rules, alongside a traditional salary sacrifice. Type B arrangements are arrangements in which the employee is given the option of being provided with a benefit in kind (BIK) or a cash allowance. However, with type A arrangements (salary sacrifice), an employee agrees to be provided with a benefit rather than an amount of contractual pay. A good example of where a choice has been given under a Type B arrangement would be the provision of a company car or a cash allowance. Where a benefit is chosen, for example, a company car instead of the cash pay, the taxable value of the reportable benefit is the higher of the amount of cash given up under the OpRA or the taxable value of the company car, calculated under the normal BIK rules. Where the two are the same, the normal benefit valuation rules are applied. This requirement doesn’t change whether the arrangement is type A or type B.
In this example, guidance available on GOV.UK is helpful, as the employees in this scenario have both type A and type B arrangements: “Some employees have both type A and type B arrangements under which a benefit is provided partly in exchange for the employee giving up an amount of salary and partly in exchange for giving up the option of a cash allowance. Where this is the case, the amount foregone is the total value of the type A and type B arrangements. Example 2 An employee has the option of a cash allowance of £5,000 (type B) which he decides to give up for a car. However, the employee wants a higher specified model costing a further £1,000. So, he also gives up £1,000 of salary (type A). The amount foregone is £5,000 plus £1,000.” See http://ow.ly/BKFo30snxAM for reference. Ultra-low emission vehicles (ULEVs), with a CO2 emissions figure of less than 75g/km are exempt from OpRA rules – in this case, you would report the cash equivalent of the benefit on the P11D, without needing to refer to the car allowance or salary sacrifice. For reference, see: https://bit.ly/3pZjesl. Death during service payments Q: An employee sadly passed away, and we’re considering making a payment to the family outside of the normal final payments and death benefits already made. Are we able to treat this payment as a tax-free termination payment?
How do company cars and salary sacrifice arrangements interact?
A: When a payment is made for death in whether the payment is chargeable under Section 394 of ITEPA 2003 as a relevant retirement benefits scheme (EFRBS). By deciding to make a payment directly to the family after all final payments due to the employee under their contract of employment (or in relation to any terms under any pension arrangements, for example), the employer has created an EFRBS. Therefore, the payment becomes a relevant benefit and is taxable on the recipient as employment income. For reference, see: https://bit.ly/34yKtCC. In rare circumstances, a termination payment may be an excluded benefit. You would need to determine if the payment is exempt from tax under Section 406 of ITEPA 2003.
| Professional in Payroll, Pensions and Reward | June 2022 | Issue 81 6
POLICY HUB
Gain a detailed overview of National Minimum Wage (NMW) & National Living Wage (NLW) including the current rates payable. Learn to identify who is eligible, the calculation steps needed, record-keeping and compliance activities required. National Minimum Wage and other worker entitlements
How to approach the overpayment of salaries Q: How should an overpayment of salary be dealt with? A: In 2009, the CIPP sought clarification of the guidance contained in Her Majesty's Revenue and Customs’ (HMRC’s) booklet: CWG2 Employer’s Further Guide to Pay As You Earn (PAYE) and National Insurance Contributions (NICs), in respect of this subject. A senior HMRC representative confirmed to the CIPP that an unintentional overpayment of wages was not deemed as earnings and therefore not subject to PAYE nor NICs. However, HMRC also confirmed that, for a correcting entry to be made to the payroll, an active recovery process must be in place, for example, letters requesting repayment. For reference, see paragraph 1.19 of: http://ow.ly/9q9j30sjOSZ. Employee contributions to an income protection plan Q: A client is considering amending their income protection policy. The change will mean an employee’s contribution is made to the policy, to increase the percentage of salary to be paid if the employee becomes too ill to work. Can an employee’s contribution to the policy be made via a salary sacrifice arrangement? A: If an employee contributes towards an income protection plan, the portion the employee has funded will not be subject to taxes when the policy pays out, as expressed in Section 221 of the ITEPA 2003. However, the employer-funded part of the policy will be regarded as earnings under Section 62 of the ITEPA 2003 and will be subject to tax and class 1 NICs through the payroll. This would mean that the payment of any sick pay under the policy could make it more challenging to administer. If an employee was required to contribute to such a policy, any contributions must come from net pay, as per HMRC Employment Income Manual 06420, and therefore cannot be made under a salary sacrifice arrangement. For reference, see https://bit.ly/3tNSRqn and https://bit.ly/3pXwkq7. Deducting overpayments from statutory sick pay (SSP) Q: An employee has been absent due to ill health for several months. Due to a payroll administrative error, they
received full pay in December 2021, instead of SSP alone. As the individual is now due SSP only, can the overpayment of salary be recovered from his wages? A: HMRC guidance states that SSP is a replacement of earnings, therefore a lawful deduction can be taken from it. However, consideration should be made for the employee during their time of ill health, as a recovery of overpayment from SSP could create financial issues for the individual concerned. It’s advisable to arrange a discussion with regards to the net overpayment when the employee returns to work. For reference, see: https://bit.ly/365s4Od. The health and social care levy for employees over state pension age Q: Will the forthcoming health and social care levy apply to employees who are on NI table letter C from April 2022? A: Employees who are over state pension age, and still in employment won’t be required to contribute to the levy until tax year 2023/24. From April 2023, the 1.25% levy will be formally separated out and NICs rates will also return to their 2021/22 levels. Graduated return to work and sick pay Q: An employee has started a graduated return to work programme following a prolonged period of illness. They were previously working full-time but will only work in the mornings for the next few weeks. Will they be entitled to SSP for the afternoons they're off? A: An employee isn’t entitled to any SSP on any day they perform their duties of employment. The employee should be paid occupational sick pay if they’re entitled to it. Once an employee has returned to work, normal SSP rules must be followed. To receive SSP for any day they don’t work, the employee must form a period of incapacity for work (a PIW). This is a period of sickness lasting four consecutive days or more, including weekends, bank holidays and non-working days. If a PIW isn’t created, there’s nothing preventing the employer from paying the equivalent amount of SSP as company sick pay, but they’re not obliged to. For reference, see: http://ow.ly/QIsM30sjEJT. n
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CPD 7 points
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| Professional in Payroll, Pensions and Reward |
Issue 81 | June 2022
MY CIPP
Spotlight on... Materials team
Can you describe the materials team – who are they, what do they do and what are their various backgrounds? There are currently seven of us in the materials team and we form two streams: the writing team and the digital team. Terri Bethel, Diana Bruce and Lauren Handley are the subject matter experts (SMEs or ‘writers’) and are responsible for creating and maintaining the CIPP’s expansive catalogue of education and training material. Our SMEs come from various payroll backgrounds, and between them have 46 years’ experience spanning the broad spectrum of knowledge required to administer and manage the payroll function successfully. On the digital side is Ricardo Costa, who is our technical author. He’s responsible for developing and implementing the software tools the team uses [to create and manage the materials], as well as delivering content to trainers / tutors and attendees. Emily Malin and Ibukun Sobola are our learning technologists (LTs) and are responsible for developing and maintaining digital content for our products. Caroline Henderson is the technical project specialist (TPS) for the whole team. She’s responsible for liaising with internal and external ‘customers’, scheduling our workload, and monitoring projects to ensure publication deadlines are met. What are the priorities of your roles and how do they fit together? The SMEs must ensure all materials are accurate and appropriately tailored to the needs of the audience, whether it be developing a qualification for someone new to payroll or creating a training course for an experienced payroll manager. Several months of the year are allocated to the important task of ‘tax year updating’. This is
to ensure all our materials are in line with the routine legislative changes that take place each April. Governments also like to throw in a few surprises to keep us on our toes, a recent example being the mid-year change to the National Insurance contribution (NIC) primary threshold, from 6 July. Our materials are updated and reviewed by the SME team and then moved across to the LTs, who are responsible for creating and maintaining the visual elements and any interactive content. As so many of our products have online components, it’s important the materials created are translated into a digital environment in an effective way, so the digital team liaise closely with the SMEs. The digital team also track the latest technologies that may be useful for our products, while striving to ensure the highest quality and excellent delivery of all our digital services. Caroline monitors all our projects and tasks to ensure progress is where it should be to meet publication deadlines. Basically, she’s the glue that holds absolutely everything together, and always ensures a cohesive and successful outcome. What skills does a materials team member need? A core skill that’s fundamental to us all is the ability to create informative material in an understandable and engaging way. The SMEs must research and digest legislative information and turn this into relevant payroll and pension content, with often complex examples and calculations. Other SME skills include writing, proofreading, editing and learning design. They must also have comprehensive technical knowledge of, not only payroll, but also pensions, reward and employment law. Where the material is interactive, the digital team need to ensure the information
is transferred in an understandable and engaging format for end users. They need to have visual flair, a comprehensive knowledge of digital tools and learning design, and awareness of new technologies. These skills enable them to continually evaluate our products to make sure we’re using the most suitable and innovative solutions, all with the aim of continually improving the learning experience for our students and delegates. Our TPS has a unique role within the team and is affectionately referred to as ‘the juggler’. The skills required include time management, project management, planning, liaising and negotiating. As with the mid-year NICs change, unexpected announcements can happen any time and derail the perfectly planned schedule. Caroline must recast priorities to accommodate new tasks while keeping current projects on track. How do you keep all training and qualification materials up to date, to provide students with the best possible user experience? The SMEs regularly monitor legislation and guidance for changes in the industry that affect the administration of payroll and payroll-related pensions. This is critical to ensure students and delegates are taking the most up-to-date information back into the workplace. While the SMEs thoroughly review the traditional course materials, the digital team rigorously test all digital content before it’s released. This includes completing all graphic work, adding narration where required, user-experience testing, user- interface testing and other necessary checks. Our trainers and tutors provide us with useful feedback ‘from the front line’, which we use to continuously improve our materials and their delivery, keeping them relevant and engaging. n
| Professional in Payroll, Pensions and Reward | June 2022 | Issue 81 8
MY CIPP
2 0 3 5 CIPP COMMITMENT TO CLIMATE CHANGE
CIPP’s climate change update: The sustainability roadmap
The CIPP’s business support coordinator, Amir Aziz ACIPP, introduces the CIPP’s sustainability roadmap, and provides an update on how we’re fighting climate change
W e know the planet is
and that’s where our climate champions come into place. Dubbed the Avengers of the sustainability world, the climate champions are the CIPP’s designated volunteer group committed to keeping the company in line with the actions outlined in the roadmap. Through regular monthly catchups, our champions will be sharing their ideas, thoughts, and feelings on how we’re faring, and the actions we hope to complete in the month ahead. This holds the CIPP accountable to everything it has promised to, not only its members, but also to planet earth. I’ll leave you with a quote from the nation’s treasure, otherwise known as Sir David Attenborough. A man whose voice alone could turn a nation of disbelievers into achievers: “The truth is: the natural world is changing. And we are totally dependent on that world. It provides our food, water and air. It is the most precious thing we have and we need to defend it”. n It doesn’t stop there. We would like you to join in the debate. Got any thoughts on what the CIPP has done so far, how you think it can do any better or even some tips and tricks of your own? Why not email into Admin@cipp.org.uk and be in with a chance of being featured in our next article?
change, while also adhering to the standards outlined within the United Nations’ sustainable development goals. The roadmap covers several areas, which include: ● estate and operations ● travel ● biodiversity ● waste ● food ● procurement or engagement ● feedback. It focuses on all areas of the business and how we can act in a more sustainable manner going forward. Whether it’s making practical changes or even encouraging conversation within the industry, we aim for the CIPP to lead by example – setting the benchmark for what other organisations should be doing as a minimum. I know what you’re thinking – how are you ever going to achieve all this? Well, Rome wasn’t built in a day, and the CIPP is committed to working towards a better, more sustainable future for all. With backing from senior management, staff and members alike, we’ve developed the roadmap with realistic and achievable goals we can meet with the right commitment of time and resources. But how will we govern everything we said we want to do? Good question,
facing huge environmental challenges. Increased wildfires,
soaring temperatures and rising sea levels are just a few. Some say the challenges are too large to overcome, but many argue this is still achievable if we act now. The CIPP believes in the cause and is determined to do its part in the fight against climate change. So, you may wonder exactly what we’ve been up to recently. Well... I want you to cast your minds back to December 2021. Memorable to say the least – the world was basking in the glory of the masterpiece just released in cinemas – arguably one of the greatest Spiderman movies of all time. Well, move over Marvel, the CIPP had been cooking up a masterpiece all of its own. *Drum roll* . Proudly introducing the CIPP’s sustainability roadmap. *Insert applause here* . I thought it would be important to explain a bit about what the roadmap is, and what it means for the CIPP. Officially launched in April 2022, the sustainability roadmap is our comprehensive strategy of actions we aim to complete in the leadup to our net zero target of 2035. Developed in partnership with all relevant stakeholders, the roadmap outlines the CIPP’s commitments to tackling climate
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| Professional in Payroll, Pensions and Reward |
Issue 81 | June 2022
PERSONAL DEVELOPMENT
# Be Payroll Laura Wood BA(Hons) FCIPPdip MIAB, payroll director at LaSu Payroll Consultancy and Services explains the benefits of membership with the CIPP
Why did you become a member of the CIPP? I became a member of the CIPP because I wanted to take qualifications to help me progress in my payroll career. The CIPP seemed the obvious place to go for training and qualifications as it’s the only Chartered Institute for payroll and pension professionals in the UK. How has membership helped you in your career? My membership has helped me in different ways, depending on where I’ve been in my career. The initial three years of my membership were spent studying, so I used the email updates and magazines for reliable referencing. More recently, I’ve used the Advisory Service, BeKnowledgeable webinars and National Forums. I still use the emails and magazine articles, but nowadays I use these to apply changes to my own organisation. What membership benefits have you used or enjoyed the most and can you provide some examples? I’ve taken advantage of many membership benefits. Most recently, I used a member rate for the Payroll Update training. The most enjoyable benefit has got to be the National Payroll Week events, as it’s great to take some downtime and meet up with like-minded payroll professionals and share experiences with each other. All these benefits help build confidence that I’m doing the right things in my everyday payroll tasks. Can you describe your payroll journey to us so far? My payroll career started accidentally, when I was referred to a job to fit in around my childcare needs. That was just over 19 years ago, and I’m still in payroll today. I’ve gone from payroll administrator to company director. I was a payroll administrator for 12 years and, during that time, completed the CIPP Foundation Degree in Payroll Management. After completing the degree, I moved to another company as payroll manager and stayed with them for just over three years, while also completing the BA Hons Degree in Business Management. The Business Degree gave me the confidence to finally take the plunge and set up my own payroll business. The business has been running for almost four years, and although challenging, I wouldn’t change it for anything! Alongside the business, I’m also a Payroll Assurance Scheme (PAS) assessor for the CIPP. I love the assessments as it’s great to see the enthusiasm, dedication and commitment that other payroll departments need to have to gain the accreditation. It’s nice to see those companies listed in the magazine and to feel part of their journey.
What are your hopes for your future career? My hopes for the future are to build on my existing payroll and business knowledge, and further my business plans. My hopes for the payroll industry are to see recognition of the challenging work that goes into processing accurate payments every payday, and for the profession to be recognised as a career of choice.
Do you have any plans to study any CIPP qualifications or training course?
In payroll, you can never stop learning as there are constant changes to legislation and advances in systems. When the BeKnowledgeable webinars are held, I ensure I attend and make the most of them. What advice would you give to those new to the payroll profession, just starting out in their careers? I would say to explore what payroll has to offer. Payroll can lead you in many different directions, from general input and processing payrolls, to developing payroll systems, auditing, consulting, teaching, and even having your own business. How would you describe your experience of studying with the CIPP? I’ve had nothing but positive experiences while studying with the CIPP. I had some challenging personal experiences while studying the Foundation Degree. My tutor supported me tremendously after I lost the use of my hand for six months following an accident. I was determined not to miss any exams, and she supported me to stay on track and achieve my goals. I desperately wanted to stay in the year group with my fellow students and not to defer, and the CIPP supported me. I’ll always appreciate the confidence they had in me to succeed and finish the qualification. Why was gaining this qualification important to you? It was important to me to gain my first qualification to give me confidence in my abilities, to progress onto further things and not to stay stagnant in one job role. I then went on to study further, as my first experience was so positive. Both degrees have given me loads of confidence, not just with payroll, but with skills needed in other areas of a business and with management. n If you are interested in taking part, contact us at Marketing@ cipp.org.uk , and share your story with the payroll world. Together we can bring the payroll profession to the forefront of the business world.
| Professional in Payroll, Pensions and Reward | June 2022 | Issue 81 10
PERSONAL DEVELOPMENT
The CIPP’s policy and research team highlights the range of factsheets available to members, to assist with a variety of payroll-related topics, in an easily digestible format Policy factsheets
P ayroll is complicated. Things up. The policy team keeps you all updated with the latest changes through the News Online platform. There’s also content available through the policy hub, which you may not be aware of, such as: ● the devolution matrix ● webcasts ● policy articles ● consultation responses and surveys. An area that’s currently expanding is change, sometimes very quickly, and we must do our best to keep the factsheets page, which is a resource available for members to use whenever they need it. Covering a range of topics, of varying degrees of complexity, these factsheets and guides break topics down into easily digestible chunks for you to read. The factsheets page can be located here: http:// ow.ly/T5iT30siNJO. The factsheets present the basics of a topic in clear language, providing reminders of common pitfalls and errors, example calculations or scenarios and appropriate links to additional information. Not everything can be explained in simple terms (like I said, payroll is complicated), so if you have a specific query, our fantastic Advisory Service is also here to help. The factsheets can be a great resource to add to standard operating procedures, for building a library of guides for commonly used processes or as a reminder about those practices that aren’t carried out all that frequently. The stripped- down nature of the factsheets makes them perfect for introducing new team members
hopefully the factsheet can inform and educate on the basics. Data from the Advisory Service highlights the payroll areas members have most queries about. With so much to understand (did I mention that payroll is complicated?), there will be further factsheet offerings in the future, which will aim to cover all the
to unfamiliar concepts without going into too much detail. Current factsheets include: ● statutory sick pay ● statutory maternity pay ● redundancy ● optional remuneration arrangements ● off payroll working ● terminations ● payrolling of benefits ● pension deductions. The latest addition is a factsheet detailing the 2022/23 health and social care levy, which includes examples of how the levy and July changes to National Insurance (NI) will impact deductions. As these changes are very new and there are currently many questions floating around,
things members need to know. Future factsheets will include: ● holiday pay ● director NI ● the McCloud judgement. n
If there’s anything you would like to see in a factsheet, please let us know by contacting the policy team, at Policy@ cipp.org.uk.
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| Professional in Payroll, Pensions and Reward |
Issue 81 | June 2022
COMPLIANCE
Statutory maternity pay
First introduced in 1987, statutory maternity pay (SMP) is the payment made to eligible women, who take a period of maternity leave either prior to, or from, the date their baby is born. Here, the CIPP’s policy and research team provides an overview of how the payments work
Eligibility To qualify for payment of SMP, a woman needs to meet certain eligibility criteria. They are as follows: ● the woman must provide their employer with sufficient notice (a minimum of 28 days before they want to stop work) ● they must provide proof they are pregnant – this can be a letter from their doctor or midwife, or a form MATB1 ● they must earn at least the lower earnings limit ● they must have been working for their employer continuously for a minimum of 26 weeks continuing into the qualifying week *
Payment This article focuses on payment of SMP only, but employers can pay more than the rate of SMP if they wish. Details of any enhanced
maternity pay should be included in company documents provided to staff. ● payment for weeks 1-6 equates to 90% of the average weekly earnings (AWE)
● payment for weeks 7-39 equates to the current amount of SMP (£156.66 for 2022/23), or 90% of AWE, whichever is lower. The payment should be made to employees through payroll, and subject to standard deductions. It will also be included in the year-to-date figure reported on the full payment submission. Larger employers can reclaim 92% of SMP through the employer payment summary (EPS), while those that qualify for small employers’ relief ** can reclaim 103% through the same mechanism.
Record keeping Records relating to SMP must be kept for Her Majesty’s Revenue and Customs (HMRC), and they include: ● proof of the pregnancy – a form MatB1 or a doctor’s note ● the date SMP began ● details of SMP payments made, along with dates ● SMP amounts reclaimed ● any weeks SMP wasn’t paid and the reason why. Records must be retained for a minimum period of three years from the end of the tax year they relate to. An SMP2 form can be used for this, or employers may choose to keep their own records. The SMP2 form can be located here: http://ow.ly/3uuh30sjE4s. Jargon-buster * The ‘ qualifying week ’ is the 15th week prior to the expected week of childbirth. ** To qualify for small employers’ relief , employers must have only been liable to pay class 1 National Insurance contributions equating to £45,000 or less in the qualifying tax year. Use your voice… Which topic would you like to see covered in the next instalment of the ‘ Did you know ’ series? Please contact the team, at Policy@cipp.org.uk.
Alabaster A European Court of Justice case, which impacts how an employee’s AWE is calculated for the purposes of SMP when an employee is given a pay rise, is referred to as ‘alabaster’. If an employee receives a pay rise that takes effect from any time between the start of the eight-week set period for calculating SMP and the end of the woman’s statutory maternity leave, then a relevant pay adjustment must be made. Guidance on how to make an alabaster calculation is available within HMRC’s Statutory Payments Manual, which can be accessed here: http://ow.ly/EjGX30sjE66. Training course This article provides a very high overview of SMP and doesn’t cover all the intricacies of the different scenarios which can arise. Never fear, though, the CIPP does offer a comprehensive training course on statutory payments. Details can be found here: http://ow.ly/ItWO30sjE5S.
| Professional in Payroll, Pensions and Reward | June 2022 | Issue 81 12
COMPLIANCE
Federal income tax withholding on supplemental wages
Sally Hilton CPP, director of payroll training for the American Payroll Association explains how to proceed for tax purposes when processing supplemental wages
A lthough payroll software generally defaults to the optional flat rate of 22% federal income tax (FIT) withholding for supplemental wages, this option isn’t always the appropriate method to use. As per the United States’ IRS Publication 15 (2022), (Circular E), Employer’s Tax Guide, supplemental wages are payments that aren’t regular wages. The guide can be located here: http://ow.ly/jgfm30sjlMr. Supplemental wages should be coded as such. The system tracks year to date taxable supplemental wages for each employee. Special rules apply if supplemental taxable wages paid to an employee during a calendar year exceed $1 million. At that point, all supplemental wages must be taxed at 37%. There are no exceptions, even if the employee is claiming exemption on their form W-4. You must use the mandatory flat rate on supplemental wages for the remainder of the year. Correct methods of withholding For most employees, the mandatory flat rate won’t apply. Let’s clarify the acceptable methods of withholding for employers with employees with $1 million or less in supplemental wages in a year. You can always use the aggregate method. Here, you add the supplemental wages with the current, or most recently, paid regular wages. Then you tax the combined amount based on the employee’s form W-4. The following are some examples: ● Example 1: An employee was paid a $2,000 taxable salary and a $250 taxable bonus on the same date. The combined taxable wages of $2,250 are used for determining the amount to withhold for FIT based on the employee’s form W-4
● Example 2: An employee was paid a $2,000 taxable salary last week and will receive a $250 taxable bonus this week. FIT withholding was calculated on the $2,000 taxable wages last week. Calculate the total withholding on the If electing to use the optional flat rate method, there are conditions that must be met first combined amount of $2,250 based on the regular pay and the employee’s form W-4. Subtract the amount that had been withheld from last week’s regular wages. The difference is the amount to be withheld from the bonus. The optional flat rate method If electing to use the optional flat rate method, there are conditions that must be met first. Your payroll system may not determine if the conditions are met. That’s up to you. The current optional flat rate is 22%. While using this method is easy, it’s not appropriate for all employees. It may result in over-withholding for some and under-withholding for others. Conditions for using the optional flat rate are as follows: 1.) FIT has been withheld from the employee’s regular wages either in the current or previous year. If an employee claims allowances on the pre-2020 form W-4 or claims dependents or credits on the 2020 or later form W-4 that results in no withholding, you cannot use the optional flat rate 2.) the employee isn’t currently claiming
exemption from withholding on their form W-4, assuming the employee has $1 million or less of supplemental wages. If using the optional flat rate method in examples one and two above, $250 x 22% = $55 of FIT withholding. The regular wages of $2,000 would be taxed as per the employee’s form W-4. It’s the employer’s choice whether to use the optional flat rate. However, it’s important they remember there are conditions that must be met first. n The American Payroll Association (APA) is the nation’s leader in payroll education, publications, and training. This nonprofit association conducts more than 300 payroll training conferences and seminars across the country each year and publishes a complete library of resource texts and newsletters. Representing more than 19,000 members, the APA is the industry’s highly respected and collective voice in Washington, D.C. Get more information at: http://ow.ly/ TQf730sa1VR. The Global Payroll Management Institute (GPMI) spearheads the APA’s global initiatives to provide the world with a leading community of payroll leaders, managers, practitioners, researchers and technology experts. Subscribers connect with each other through networking discussions, collaborative opportunities and access to education and publications dedicated to global payroll strategies, knowledge, research, employment and training. GPMI also publishes several global payroll texts and white papers as a benefit to subscribers. Get more information at: http://ow.ly/ qERI30sa1Xh.
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| Professional in Payroll, Pensions and Reward |
Issue 81 | June 2022
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