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Revenue and Customs (HMRC) but are then handed a P45 by the employee, do you use the previous pay details from them if you believe they were missing from the P6? A: No. Once HMRC has sent P6 details, you wouldn’t operate the P45. You should send it back to the employee, telling them you’re unable to operate it but prompt them to speak with HMRC to get it to send the previous pay details too if required. Q: Are there rules on how to calculate deductions for sickness days (as in, the rate to use)? We’re not sure if this should be based on the 260 rule or the hourly rate * hours in that day. A: The applicable rate or formula would entirely depend on what’s stated in the contact of employment or absence policies. Apportionment methods should also be documented in terms and conditions or handbooks for all employees to access. It can be based on calendar days, working days or it could be based on contractual hours. However it’s done, the same method must be applied to all employees so that it’s fair and consistent. Calculation methods for sickness days
to enquire if they have recently been in receipt of employment and support allowance (ESA) and possess a linking letter (ESA220). This would entitle them to be excluded from SSP for a fixed period in preference for continuing ESA payments, which can sometimes be higher. Where an employee claims ESA, they will be given a form at the end of the claim period known as a ‘linking letter’. The standard letter (form ESA220) contains a date falling 12 weeks and one day after the end of the period of claim to the relevant state benefit. If an employee falls ill before that date, no SSP is due and a form SSP1 must be issued to the employee. The above justifies asking certain questions from new employees. NI implications for company directors Q: With company directors, what are the risks of not ticking the director’s NI tick box on the payroll system? No additional payments are made during the tax year and salaries are quite low for director level. The salary received is also based on 12 equal instalments. Two of them complete their own self assessments, so I would assume if this was a problem, it would have been picked up then. I’ve inherited a payroll on which it hasn’t been ticked for several years. However, for peace of mind, I might tick the box for next tax year. A: The primary risk is that this can result in underpayments or overpayments of employee and employer National Insurance contributions (NICs). The likelihood of this occurring depends on the payment profile of the directors in question. Those who receive a regular salary and nothing more are unlikely to have their NIC liabilities notably impeded. But those who are paid irregularly and / or have large bonuses and other ad hoc payments could experience large discrepancies in their NIC calculations. To a lesser extent, this can also result in incorrect student loan deductions, as these also follow an annual learnings method for directors. An annual reconciliation should always be done in month 12. Please note that most systems will do this for you if the appropriate indicators are set. n
PAYROLL UPDATE
Duration Two consecutive half days for online option OR one full day for face-to-face option
This focused update course represents the single best opportunity to be briefed and updated on changes affecting payroll.
Book online at cipp.org.uk/training
How do you treat e-vouchers for tax and NI purposes?
Are you required to ask new employees if they have had any recent sickness absence with their previous employer?
Absences in previous employment
*Price correct at time of print and based on CIPP membership with eligible grade booking the online delivery of the course.
Q: Currently, in our starter paperwork we ask employees if they have been off sick during the final few weeks in their previous employment. Is there a rule that states we must record or consider sickness in a previous employment? A: There isn’t a requirement to enquire about absence prior to new employment, nor to record previous instances of sickness absence. However, in the interest of a new employee’s welfare, it’s best practice
Member price: £247.50 + VAT Non-member price: £495 + VAT
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| Professional in Payroll, Pensions and Reward |
Issue 95 | November 2023
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