Redundancy is a huge topic and a situation that neither employers nor employees would like to find themselves facing. It can be an inevitable event that employers can predict, or it can be an overnight issue where employers suddenly find themselves with no option other [...]]]> Help with the issue of redundancy.

Redundancy is a huge topic and a situation that neither employers nor employees would like to find themselves facing. It can be an inevitable event that employers can predict, or it can be an overnight issue where employers suddenly find themselves with no option other than to make a position redundant.

It can affect every type of business, ranging from small employers right through to well established companies, as has happened very recently with the News of the World newspaper; a business originally started in the 1800s.

Although redundancy is a delicate subject for many people, it is an area than many people have questions about. If you are faced with making someone redundant, you may find the points below of use.

Statutory redundancy is payable to any member of staff who has been employed for two or more years of continuous service. It is usual for redundancy payment not to be taxable, up to the first £30,000, whereas a lieu of notice payment, a payment made to cover the notice period, is usually taxable. (Pay in lieu of notice is money paid to you by your employer as an alternative to being given your full notice.)

The amount payable depends on two things; the length of service and employee age. A member of staff who has worked for the same employer for 5 years and is age 30 would receive 5 weeks of statutory redundancy pay, whereas a 50 year old employee who has worked for the same duration would receive 7.5 weeks. There is a useful online tool for calculating redundancy amounts here – Direct.gov.uk/redundancy

Once an employer has notified an employee of redundancy, the employer can allow the employee a reasonable amount of time off work to seek new employment.

From February 1st 2011, the maximum weekly pay when calculating redundancy pay £400 per week. If an employee earns more than £400 per week then their redundancy calculation is limited to £400.

Employers should pay the employee’s redundancy amount at the time they are dismissed, or very shortly after. Any delay in providing the redundancy pay may give the employee the right to proceed with tribunal proceedings.

The employer must also provide you with a written statement showing how the payment has been calculated at or before the time it is paid.

Allan Pearson, director of bureau services and HR at PAYEpeople, says “Redundancy can be a complicated matter and as such needs to be correctly handled. Many employers tend to outsource their payroll to a payroll bureau, to ensure essential items like redundancy payments are calculated and paid correctly. The last thing an employer needs is an unhappy employee, especially at such a delicate time.”

For further information relating to redundancy, or for questions relating to employment in general, please visit our website.

PAYEpeople – ‘Helping employers reduce their PAYE tax obligations’

Take the headache out of all the complex payroll legislation by outsourcing your payroll to us.

April 5th 2011 marks the end of another tax year. As ever, with the change of tax year comes a wealth of changes to legislation. Please see below for some helpful facts and quick pointers to ensure your year end runs smoothly.

Under new proposals from the Government, the May Day Bank Holiday could be replaced by a new national holiday in October.

The idea is not to add another bank holiday, but scrap the current May Day Bank Holiday and to replace [...]]]> New proposals to move a UK Bank Holiday.

Under new proposals from the Government, the May Day Bank Holiday could be replaced by a new national holiday in October.

The idea is not to add another bank holiday, but scrap the current May Day Bank Holiday and to replace it with a new October Bank Holiday, provisionally named UK Day or Trafalgar Day.

The May Day holiday dates originally back to around the 4th Century, and is celebrated in many countries, not just those in the UK. The idea of scrapping it to replace it with a differently dated holiday is a controversial one and has caused much discussion.

As the May Bank Holiday is such an established holiday, many businesses currently arrange work to fit around this date. They argue that adjusting a recognised holiday may cause unnecessary problems. For example, scrapping it may affect employees, who often try to make use of the long weekend, and also affect employers who often schedule work around April. Businesses would then have to re-arrange their schedules to try to work around October.

Other people have questioned why it would be necessary to create a brand new Bank Holiday occasion when other well established occasions are often overlooked.

The Queen’s birthday is not an official UK Bank Holiday in the UK, but it is a recognised holiday in Australia. St. Georges day is also not a Bank Holiday in England, whereas St. Andrews Day and St. Patricks Day are official Bank Holidays in Scotland and Ireland respectively.

There are already two extra Bank Holidays scheduled over the next two years. 2011 sees an extra Bank Holiday for the Royal Wedding, and 2012 sees another extra Bank Holiday to mark the Royal Jubilee. The introduction of a new permanent Bank Holiday, to mark UK Day, could come into effect the year after the extra Bank Holidays, in 2013.

TUC General Secretary Brendan Barber said, “There is strong support for an extra public holiday as the UK has the stingiest allocation in Europe, but the last thing we need is for the government to mess around with established bank holidays that workers and businesses have built their schedules around.”

For more information on the extra Bank Holidays in 2011 and 2012, please see our related article.

PAYEpeople – ‘Helping you pay your people’

Currently Mothers are entitled to 39 weeks paid Maternity Leave and 13 weeks of additional, unpaid Maternity Leave, and partners are entitled to [...]]]> There has been a vast amount of discussion this week about the changes to paternity rules that are due to come into force in April of this year.

Currently Mothers are entitled to 39 weeks paid Maternity Leave and 13 weeks of additional, unpaid Maternity Leave, and partners are entitled to two weeks paternity leave at the statutory rate of pay (currently £124.88).

The new rules would mean that, if their baby is due on or after the 3rd April 2011, a partner may take up to an additional twenty-six weeks additional paternity leave, on top of their current two week entitlement, if the mother returns to work during her maternity leave entitlement. The current “take it or leave it” system for maternity leave will no longer be the case as any unused leave may be taken by the partner.

The additional paternity leave may start at any point after the baby is 20 weeks old and when the mother returns to work, but must be taken within the first year of birth. The purpose of the change is to allow parents to share the responsibility of raising the child.

The calculation for eligibility for Paternity leave remains the same as for Maternity pay, although the additional Paternity pay can only be paid once the mother has returned to work.

Throughout the Additional Paternity Leave, a parent will still accrue holiday entitlement. They can also add holiday to the beginning or end of your Additional Paternity Leave. They may not be able to carry over untaken holiday entitlement if your Additional Paternity Leave spans two different holiday years. If this is the case it should be discussed with the employer, as carrying holiday entitlement from one year to the next is more of a contractual matter.

You can work up to ten days during your Additional Paternity Leave without ending your entitlement to Additional Statutory Paternity Pay or Leave. These keeping in touch days (KIT days) may only be worked if both the partner and your employer agree. The employer does not have to allow you to work during your Additional Paternity Leave period and the employee does not have to accept any work offered. The employee will also need to agree with your employer what work is to be done on keeping in touch days and how much pay you will receive, as KIT days are not necessarily paid at the same rate as normal employment.

They must tell your employer in writing at least eight weeks before you want to start your Additional Paternity leave, using form SC7. They will need to know the actual date of the baby’s birth, along with when they want to start and finish Additional Paternity Leave and Pay (the leave and pay dates may be different if taking some unpaid leave).

The form must also include that they are either the father of the child, the spouse, civil partner or partner (including same-sex relationships) of the mother. They must also confirm your relationship with the child.

If you want to apply for extended paternity leave, please download the SC7 form from HMRC.

PAYEpeople - ‘Helping you pay your people’

Next year sees the Royal wedding between HRH Prince William and Kate Middleton, with the wedding date now confirmed as April 29th 2011.

With the release of this news, employers and employees are now faced with an [...]]]> How the additional Bank Holiday in 2011 may affect your business.

Next year sees the Royal wedding between HRH Prince William and Kate Middleton, with the wedding date now confirmed as April 29th 2011.

With the release of this news, employers and employees are now faced with an additional Bank Holiday at this time. This, coupled with Easter in late April, means that there will be two long weekends within three days of each other.

2011 Bank Holidays:

♦ Friday 22nd April – Good Friday
♦ Monday 25th April – Easter Monday
♦ Friday 29th April – Royal Wedding
♦ Monday 2nd May - Mayday
♦ Monday 30th May – Spring Bank Holiday

Employees and Employers are all understandably concerned about how this will affect them work-wise.

Employers do not necessarily have to give additional time off for extra public holidays. Employers whose businesses run 7 days a week, for example, will have no option other than to maintain their usual staffing levels for their business.

If the employee’s Contract of Employment names specific public holidays, then employees have the right to take these specific days off. Additional time off for extra public holidays, in this case, is entirely at the discretion of the company. If the Contract of Employment does not name specific public holidays, then the decision is based more on usual practice – are extra public holidays normally recognised?

Of course you have the option to voluntarily give an extra paid day of holiday to your staff, or even ask that those who wish to have the day off deduct it from their normal holiday allowance, but this may not be a viable option. Giving all your staff an additional paid day off may mean the difference, if you are a small business, between breaking even or making a loss. Plus, employers should still follow usual procedure of “first come, first served” when receiving holiday requests for this time, meaning that not all staff requests can be accepted.

If you feel you need to close your business on the additional public holiday, but will not be paying bank holiday pay to your staff, you should write to all employees at the earliest opportunity informing them that you will deduct one days holiday from their annual entitlement to cover for this time. This is ideally done as soon as possible, giving at least two clear days notice of your intention before the Bank Holiday.

Bear in mind that however you decide to treat the bank holiday for the Royal Wedding in 2011, (paid time off, use holiday allowance or require them to work,) you are setting the precedent for how your employees will expect you to treat the next Bank holiday in 2012 for the Royal Jubilee.

A final thing to remember is that if you are processing payroll for your staff, and send payment via BACS, their payments will have to be sent a few days early to allow for bank transfers.

PAYEpeople – ‘Helping you pay your people’

The annual Christmas Party is something that employers often avoid, mainly due to high costs. However, many employers are not aware of how to use the tax laws relating to annual events to their advantage.

Employers would [...]]]> How an annual event for employees can cost less than you imagine.

The annual Christmas Party is something that employers often avoid, mainly due to high costs. However, many employers are not aware of how to use the tax laws relating to annual events to their advantage.

Employers would not have to pay tax from costs relating to providing an annual event, such as a Christmas Party, as long as the event adheres to the following simple rules:

1. It has to be an “annual” event. (An “annual” event can happen at any time of year, but must happen every year at the same time. A Summer barbeque, or a Valentines Ball also qualifies as an “annual” event.)
2. It must be available to ALL employees.
3. It must cost less than £150 per head.

When calculating the overall cost per head, don’t forget to also take into account the cost of venue hire, entertainment, food and drinks, along with any transport or accommodation costs. Anything that you pay out for relating to the event must be included in your calculations.

To ensure the same limit of £150 applies to everyone, HMRC say you should divide the total cost by the number of people attending, rather than itemising the expenditure on each individual. This way you can see whether the average cost per employee falls under £150, and to ensure that those who incur extra expenses, like travel and accommodation, are not excluded.

The limit of £150 per head is a “per year” amount, meaning that you are able to hold as many “Annual Events” as you like as long as the total per year is less than £150. So if you haven’t had any annual events this year, why not use your full allowance in one go and make this Christmas party spectacular!

Gifts.

At this time of year, the HMRC rules applying to gifts from employers to employees are also worth making note of.

Gifts given to employees, providing it is a “trivial” gift, will also not be taxed. A “trivial” gift may be a Christmas turkey, a bottle of wine, or box of chocolates. As with the laws relating to Annual Events, the “Trivial” gift must be given to ALL employees, not just a select few. For a gift to qualify as “trivial”, it cannot have a cash value, like gift vouchers.

If a gift is deemed taxable by HMRC, the employer could agree a PAYE Settlement Agreement (PSA) whereby the employer agrees to pay grossed-up income tax on behalf of the employee.

PAYEpeople – ‘Helping employers reduce their PAYE tax obligations’

Greater Manchester based payroll bureau PAYEpeople has successfully forecast minimum wage rises for the last 10 years using specialist payroll software, providing results that many leading firms now use for their own forecasting.

They publish a report yearly, [...]]]> PAYEpeople, a national payroll bureau, has challenged the TUC on their suggested minimum wage rise to £6.14.

Greater Manchester based payroll bureau PAYEpeople has successfully forecast minimum wage rises for the last 10 years using specialist payroll software, providing results that many leading firms now use for their own forecasting.

They publish a report yearly, showing regional minimum wage trends and charting previous and current regional highs and lows rate-wise.

While the TUC are advising a national minimum wage figure of £6.14, PAYEpeople predict a figure of £6.04 is more likely.*

Allan Pearson, Director of Bureau Services and HR at PAYEpeople, says a higher rise would have significant implications on all businesses, particularly those in Eastern England.

“This year, the national average wage has risen by 2.4% since the same time last year. However businesses in the East of England only increased their wage rates by 0.3% on average. Last year the average hourly rate for the East of England was £5.92, and this year it has only risen to £5.94.

“If they can only accommodate a comparatively small increase of 0.3% in one year then increasing the national minimum wage to £6.14, an increase of 3.25%, may be to big a stretch for some smaller businesses.”

Current Minimum Wage:

21 and over: £5.93
18-20 year olds: £4.92
16-17 year olds: £3.64
From October 2010

(Please note that the age for the higher national minimum wage rate has been lowered from 22 to 21)

PAYEpeople is an outsourced payroll services provider with over 25 years experience in providing bespoke payroll solutions to SME’s throughout the UK. PAYEpeople has helped national companies save as much as 20% of their processing costs.

Contact PAYEpeople

tel: 01942 811767
email: info@payepeople.co.uk
web: http://www.payepeople.co.uk

*For full details of the TUC press release, please visit: http://www.tuc.org.uk/economy/tuc-18731-f0.cfm

On the 27th July, HM Revenue & Customs (HMRC) published a discussion document titled, ‘Improving the Operation of Pay As You Earn (PAYE)’. The document explores options to [...]]]> In June’s Budget, the Coalition Government expressed their desire to explore how the current Pay As You Earn (PAYE) system could be improved.

On the 27th July, HM Revenue & Customs (HMRC) published a discussion document titled, ‘Improving the Operation of Pay As You Earn (PAYE)’. The document explores options to improve the current PAYE system so that information on PAYE deductions is collected at the time an employee is paid, instead of at the tax year end. A processed referred to as ‘Real-time information’.

Problems with the current PAYE system…

Little has changed to the current PAYE system since its introduction in 1944. PAYE is seen to work well for employees with regular, stable earnings. However, employees with more than one job or with a pension and a job can experience overpayment or underpayment of tax.

Research suggests that around 5 million people calm tax repayment or receive a tax bill because PAYE has failed to collect the correct amount of tax. There are also issues with student loan deductions; repayments can continue well after the loan has been repaid.

Is Real-time information the answer?

Recent improvements in HMRC’s own systems and technology have made it possible to improve the PAYE process.

For employers paying electronically, the Real-time information concept would send details of an employee’s pay to HMRC; deductions of tax, NIC and student loan repayments. The information would be sent automatically via a computerised payroll system at the point of making a payment to the employee.

Benefits of the Real-time information:

· Simply the process for both employers and HMRC.
· Employees are more likely to pay the correct tax.
· Year-end reporting would be considerably reduced.
· Real-time income information would help HMRC pay tax credits.
· HMRC would know the correct amount of tax and NICs that is due to be paid by employers.

To find out more about this issue, visit www.hmrc.gov.uk.

To download HMRC’s ‘Improving the Operation of Pay As You Earn (PAYE)’ document, click here.

Other findings reveal that one in five employees discuss their salary with co-workers, while more than [...]]]> Research by the Institute of Payroll Professionals (IPP) found that one in six employees said they would read a colleague’s payslip if it was found on their desk and were confident of not being seen.

Other findings reveal that one in five employees discuss their salary with co-workers, while more than half talk to friends and family about how much they get paid outside of working hours. These statistics highlight how payslip confidentiality is still an issue that affects many organisations.

Elaine Gibson, Senior Policy and Research Officer for the IPP, was quoted at www.payroll-help.com saying, “Talking about how much money one makes is usually a social taboo in the workplace and most of the time there is an implicit understanding amongst colleagues not to their discuss salaries.

“Many organisations discourage workers from talking about their pay, some even going as far to implement clauses into employment contracts requiring confidentiality on pay.

“However, this will all change in October when the Equality Act 2010 will ban ‘gagging’ clauses which forbid staff members from comparing their pay levels with other employees.

“This will hopefully make organisations’ pay structures more transparent and will expose the pay gaps between employees who perform the same roles, especially in the cases of gender and disability-based inequality of pay.”

To find out more about the Equality Act 2010, visit www.equalities.gov.uk.