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A: If the pension is a salary sacrifice arrangement then this cannot take the employee below the NMW rate for their age. An employer still has auto-enrolment obligations even if the employee is not eligible to join a salary sacrifice pension scheme due to provisions of the National Minimum Wage Regulations. An employer would need to have an alternative pension scheme available for employees in this position, where the deduction can be taken from net pay rather than as a salary sacrifice arrangement. Q: An employee has been on sick leave for six months. Our occupational sick pay (OSP) scheme is six months’ full pay. If an employee exceeds statutory sick pay (SSP) entitlement, do we have to send a SSP1 form whilst they are still in their full pay period? A: An OSP scheme is a contractual arrangement and totally separate from SSP. Form SSP1 should be sent once the employee has exceeded SSP entitlement of 28 weeks. The employee would then need to contact the Department for Work and Pensions to establish entitlement to employment related benefits. Q: We have an employee who is asking to be moved to National Insurance (NI) letter C as she has paid contributions for over thirty years. We have calculated that she does not reach state pension age until November 2026. Are we allowed to move her to NI letter C prior to this if she has made the maximum contributions? A: Under the employee group for NI category letter C, it specifies that this is to be used for employees over the state pension age. There is no maximum limit to the amount of NICs an employee can pay, but liability to pay primary (employee) NICs ceases on reaching state pension age. Guidance can be found at https://bit. ly/3eFfMyj. Q: Could you advise if a handwritten amendment can be made on a P45 form before it is issued to the employee? A: You should not manually amend a P45, and you cannot issue a replacement P45. The only option available would be to issue the employee with a statement of earnings on company letter-headed paper. n
2017 (https://bit.ly/3rRYoKr) identifies the services that are subject to the Financial Conduct Authority as the transferring of moneys under financial agreements is regarded as a regulated activity. However, payroll is not a regulated service where a bureau is not part of an accountancy practice as payroll does not provide finance or financial advice to parties. If the payroll bureau is part of an accountancy practice, they would need to be registered with a money laundering supervisor. Q: If a contractor is caught by the IR35 off-payroll working rules, would we need to offer the contractors a workplace pension scheme? A: The IR35 legislation is introduced to establish if an individual is employed for PAYE tax and NICs purposes only. Contractors are employed not under a contract of employment but a contract for services, which are two separate and distinguishable agreements. If caught by IR35, a contractor is not regarded as employed or indeed a worker; therefore, employee rights such as pension, holiday pay, and national minimum wage are not due. Q: Should employees who work a month in arrears and are paid March’s hours in April, be paid the new minimum wage (NMW) rates for these hours as they are being paid in the April payroll? A: Regulation 4(2) of the National Minimum Wage Regulations 2015 (https:// bit.ly/30Mu7Rr) states: “The single hourly rate of the national minimum wage at which a worker is entitled to be remunerated as respects work, in a pay reference period, is the rate which applies to the worker on the first day of that period”. In this case, as the rate of pay at 1 March related to the minimum wage rates in force at that time, an employer would not increase the NMW rate in the April payroll for hours worked in March. Q: An employee has joined the pension scheme which is operated via a salary sacrifice arrangement. They earn the NMW, and a reduction takes them below this rate. Should the employee be disallowed from joining the pension scheme?
Our brand new P11Ds, expenses and benefits course collection contains everything you need to know about this annual process. If you’re new to payroll and need to know how to report your employee expenses and benefits, or just need a refresher and want to ensure what you are providing is effective and compliant, then this course collection is for you.
Find out more and choose the P11D courses that are right for you at cipp.org.uk/training
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| Professional in Payroll, Pensions and Reward |
Issue 70 | May 2021
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