Category Archives: Payroll News

Parliamentary Bill hopes to tackle so-called ‘bogus’ self-employment

A draft Bill put together by the Parliamentary Work and Pensions and Business Committees aims to tackle what MPs say are loopholes in employment law that allow firms to use ‘bogus’ self-employment status to hire cheap labour and avoid granting basic rights, such as holiday pay and the minimum wage, to workers.

The Bill says that all personnel should be considered workers ‘by default’, with the onus on the firms using their services to prove otherwise. According to the chair of the Work and Pensions Committee, Frank Field, this “would end the mass exploitation of ordinary, hard-working people in the gig economy” and would “put good business on a level playing field, not being undercut by bad business”.

In recent months, several gig economy firms have been embroiled in a series of legal battles over how they treat those who work for them. Towards the end of 2017, Uber lost its bid to ‘leapfrog’ an appeal to the Supreme Court against a landmark ruling ordering it to treat its drivers as employees.

However, around the same time, Deliveroo won a case at the Central Arbitration Committee (CAC), which ruled that the food delivery app’s couriers are self-employed, rather than workers. The CAC said it made the decision because Deliveroo’s riders have the right to put forward a substitute to do their work for them.

Reaction to the Bill has been mixed so far, with one commentator saying that making individuals ‘workers’ by default would be a significant change to the current law.

The new rules would provide protection to individuals who work flexibly and make it more difficult for businesses to exploit the system by relying on self-employed people to carry out work.

However, she added that it will mean an additional financial burden for many businesses that operate flexible workforces. Such firms will also face additional administrative and financial costs if they are obliged to provide written statements of terms, obligations and rights to workers in the future.

At The Fish Partnership, we can provide ongoing support and payroll advice where necessary. If you would like more information about our payroll services, please contact us.

The Pensions Regulator cracking down on employers avoiding auto-enrolment responsibilities

In the first prosecution of its kind, The Pensions Regulator (TPR) has convicted a bus company and its boss for deliberately avoiding auto-enrolling their staff into a workplace pension scheme.

In December, Stotts Tours – and founder Alan Stott – pleaded guilty to a total of 16 offences of knowingly and wilfully failing to comply with the law on workplace pensions under section 3(2) of the Pensions Act 2008.

As a spokesman for TPR said, dozens of employees at the firm had been entitled to workplace pensions since June 2015 but were denied them because their employer deliberately failed to set them up.

He added that auto-enrolment is not an option but the law, stressing that employers should be in no doubt that if they wilfully refuse to become compliant, they could end up with a criminal record and will still have to give their staff the pensions they are due.

The Regulator has previously stressed that it is happy to raise prosecutions in any “appropriate cases”.

In recent months, there have been a number of fines for non-compliance with auto-enrolment legislation, mainly because of procedural errors and oversights, which have even included common excuses such as “running out of time”. However, the use of criminal prosecution powers is something new.

Automatic enrolment began for the largest employers in October 2012, and is expected to lead to around 10 million people starting to save or saving more towards their retirement by the end of this year.

The rules require employers to automatically enrol their workers into a defined contribution (DC) pension scheme which meets certain minimum requirements, and to make contributions towards the pensions of workers that do not opt out of the scheme once enrolled.

At The Fish Partnership, we offer advice on auto-enrolment at very competitive rates, and our payroll team can manage all of the necessary changes so that your employees’ pay is correctly adjusted. Many of our existing clients are already benefiting from our expertise to ensure that they meet their obligations. For more information about our payroll services, please contact us.

New thresholds announced in Autumn Budget to affect payroll from April 2018

There were a number of changes announced in the Autumn Budget on 22 November 2017 in relation to pay and tax, which will affect payroll from April 2018 onwards. These changes range from a rise in the basic rate of income tax to an increase in the National Living Wage (NLW).

Chancellor Philip Hammond announced a rise in the basic rate income tax threshold to £11,850 and an increase in the higher rate threshold to £46,350, while the National Living Wage will go up to £7.83 from £7.50.

In addition, Mr Hammond said he would delay implementing a series of National Insurance Contribution (NIC) policies by one year and confirmed that the Government will no longer proceed with an increase to the main rate of Class 4 NICs from nine per cent to 10 per cent.

There were a number of changes around vehicles too, although fuel duty was frozen again for the eighth year running.

The existing benefit-in-kind (BiK) tax supplement of three per cent will rise to four per cent from April 2018.

Mr Hammond also confirmed that HM Revenue & Customs (HMRC) will clarify the law so that employers who charge their electric vehicles at work will not face a BiK charge once the changes have taken effect.

In addition, the first-year vehicle excise duty (VED) rate for diesel cars that do not meet the latest emission standards, will go up by one band. However, the Chancellor was clear that the VED measure will only apply to cars.

As he announced the measure, he promised that “no white van man or woman will be hit” by the move, which will fund a new £220 million Clean Air Fund to provide support to the implementation of local air quality plans.

At The Fish Partnership, our payroll team can manage all of the necessary changes to your payroll so that your employees’ pay is accurately adjusted in line with any changes. For more information about our payroll services, please contact us.

Employers ‘named and shamed’ for minimum wage law breaches

The Government has published a list of 260 employers that have failed to pay 16,000 workers a combined total of £1.7 million in back pay over the last seven years.

According to the Department of Business, Energy and Industrial Strategy (BEIS), Sports Direct and Primark were two of the worst offenders – having failed to pay employees a combined total of nearly £1 million.

However, as far as sectors are concerned, firms in the hospitality, hairdressing and retail industries all ranked poorly in terms of underpaying their workers, mainly because they did not pay employees for travelling between jobs, and deducted money for uniforms. Some were also not paying for overtime.

As Business Minister Margot James pointed out, there is “no excuse” for not paying staff the minimum wage, adding that the Government will come down hard on businesses that break the rules.

A spokesman for the Low Pay Commission added that it is good to see HM Revenue & Customs (HMRC) continuing to target large employers, as well as those with only a few employees.

The National Minimum Wage (NMW) is the minimum pay all workers are entitled to by law and the hourly rate depends on the worker’s age. All working people aged 25 or over currently receive the National Living Wage (NLW) which is set at £7.50 per hour. Those under 25 will receive the NMW, which ranges from £3.50 for apprentices to £7.05 for those aged between 21 and 24.

Since 2013, the scheme has identified £8 million in back pay for 58,000 workers, with employers fined a total of £5 million. In 2018, the Government is expected to pump even more money into minimum wage enforcement.

At The Fish Partnership, we can offer support and advice on all of your payroll obligations. For more information about our services, please contact us.

Funding injection to help HMRC enforce minimum wage compliance

According to the Government’s latest Labour Market Enforcement Strategy report, HM Revenue & Customs (HMRC) is to receive an additional £5.3 million of funding in 2017/18 to ensure businesses are paying employees the national minimum wage (NMW) and national living wage (NLW).

This follows on from a previous increase of £20 million in 2016, which has allowed the team to expand to more than 360 members of staff.

According to the report, it is estimated that there were 362,000 jobs paying less than the NMW or NLW in April 2016, which equates to around 1.3 per cent of all UK employee jobs.

Within its findings, the Government flagged up accommodation and food services, the wholesale and retail trade and other services such as hairdressers and beauty as the worst offenders.

Shockingly, of those who were underpaid, more than 40 per cent received wages that were at least 50p an hour below the NLW.

It is thought that this high rate of underpayment was what led to the increase in penalties on arrears from 100 per cent to 200 per cent in April 2016.

Currently, HMRC enforces non-compliance with the statutory wage legislation in five ways:

  • Ensuring that the wage arrears are paid to the worker;
  • Civil penalties of up to 200 per cent of the arrears owed per worker up to £20,000;
  • A naming scheme under which the Department for Business, Energy and Industrial Strategy (BEIS)  will name all employers who owe their workers over £100;
  • The new regime of labour market enforcement undertakings and orders;
  • And criminal investigation possibly resulting in a prosecution by the Crown Prosecution Service (CPS).

Depending on the severity of the case employers can face one or all of the penalties listed above, so it pays to ensure that a business is compliant with the current NMW and NLW requirements.

At The Fish Partnership, our payroll team can manage all of the necessary changes to your payroll so that your employees’ pay is accurately adjusted in line with any recent changes. We can also offer advice and support relating to all aspects of auto-enrolment. For more information about our payroll services, please contact us.

Chancellor urged not to extend new off-payroll rules to private sector

Chancellor Philip Hammond has been urged to ensure that new IR35 rules which were phased in for the public sector in April 2017 are not extended to the private sector in the upcoming autumn Budget.

The calls come from employment intermediary PRISM, which says that the Chancellor must “stop and analyse” all evidence for and against an extension of the new off-payroll rules before his much-anticipated statement on 22 November.

The new rules, which have been in force for the public sector since the beginning of April, now see that public sector end clients are responsible for determining the IR35 status of the contractors and freelancers they provide work to.

Previously, such public bodies and recruitment agencies were not liable for defining the IR35 status of contractors.

Earlier this year, a U-turn on initial proposals saw the new IR35 rules extended to those contracting for the NHS, despite strong opposition.

Fears now abound that the off-payroll rules will soon be extended to the private sector, perhaps as part of the upcoming Budget announcements in November.

But PRISM Chief Executive Crawford Temple has warned that ‘superimposing’ the same legislation on the private sector could duplicate instances of non-compliance – as has been seen in the public sector since the reforms were first phased in earlier this year.

Mr Temple said: “Extending these rules to the private sector will exacerbate the problem and will not deliver the expected HMRC returns.

“[It] is highly unlikely that HMRC will be able to collect any taxes due from the non-compliant providers and therefore the anticipated tax gains will be significantly reduced,” he said.

The Chancellor is now being urged to consider a “structural reform of the tax system” ahead of his upcoming Budget, in a bid to iron out any issues caused by the IR35 reforms.

At The Fish Partnership, we can offer support and advice on all of your payroll obligations. For more information about our services, please contact us.

Hundreds of thousands of SMEs could face fines for stalling auto-enrolment

Around 800,000 small businesses are yet to enrol into the Government’s flagship pension scheme – and could face fines as a result, it has been warned.

The Pensions Regulator, which published the report, said that more than eight million employees are now saving into a workplace pension, but thousands of employers remain non-compliant.

Launched in October 2012, “auto-enrolment” requires all employers – no matter if you have one employee or one thousand – to set up a workplace pension scheme. Depending on the size of the business, employers were given a staging date between 2012 and February 2018 to enrol their employees.

Businesses found to be non-compliant have either been issued with a Fixed Penalty Notice (FPN) or an Escalating Penalty Notice (EPN). Those receiving the latter have been publicly named and shamed on the Pensions Regulator website.

Fines for receiving an EPN range from £500 to £14,000 – depending on the size of the business.

However, businesses who fail to pay an EPN face huge penalties of up to £52,500.

The Pensions Regulator warned that new businesses which start trading from October 2017 will have instant pension responsibilities.

Charles Counsell, executive director of Automatic Enrolment, said: “Employers who wilfully refuse to become compliant should be in no doubt that we will take enforcement action against them.

“Automatic enrolment is not an option, it is the law. Allowing some employers to get away with non-compliance is not fair on the employees who are denied the workplace pensions they are entitled to and is not fair on the vast majority of businesses who have taken the time to meet their responsibilities.

“To date we have only had to bring court proceedings against a tiny proportion of employers, but every court case is one too many – and one that employers can easily avoid by becoming compliant.”

Around 598,126 employers have declared compliance up to the end of May 2017.

At The Fish Partnership, we offer advice on auto-enrolment at very competitive rates, and our payroll team can manage all of the necessary changes so that your employees’ pay is correctly adjusted. Many of our existing clients are already benefiting from our expertise to ensure that they meet their obligations. For more information about our payroll services, please contact us.

Home Office updates guidance on Right to Work checks

Towards the end of the summer, the Home Office published updated guidance on an employer’s guide to Right to Work checks in a bid to assist all employers to ensure that they comply with the legal requirements to prevent the employment of illegal workers.

A right to work check means that the employer verifies a document that is acceptable for showing permission to work before they employ a person to ensure that they are legally allowed to do the work in question.

As the guidance underlines, employers must undertake the check before the first day of employment. They are also required to conduct a follow-up check on people who have time-limited permission to work in the UK.

Employers must undertake a three step check to confirm that a potential employee is entitled to work in the UK. These steps are to:

  1. Obtain original versions of one or more acceptable documents.
  2. Check the document’s validity in the presence of the holder.
  3. Make and retain a clear copy, and record the date the check was made.

Employers who have carried out document checks, as set out above, have a ‘statutory excuse’ against a liability for a civil penalty. This means that if the Home Office subsequently find out that someone does not have the right to work in the UK but the checks have been carried out correctly, the employer will not receive a civil penalty for that worker.

However, the employer cannot rely on a third party, such as a recruitment agency or even a member of staff, to carry out the checks, as it is the employer who is liable for the civil penalty and action will be taken against them if they are found to have been negligent.

At The Fish Partnership we can provide ongoing support and payroll advice where necessary. If you would like more information about our payroll services, please contact us.

Business owners facing increasing scrutiny over NMW

Business owners who fail to pay their employees the National Minimum Wage (NMW) are coming under increased scrutiny from HM Revenue & Customs (HMRC), with a number of directors being struck off recently for not doing so.

Earlier this year, the Department for Business Energy and Industrial Strategy (BEIS) ‘named and shamed’ 361 businesses that had underpaid their employees a total of £995,683. Following the investigations, the employers were required to repay all the arrears and pay fines totalling around £800,000.

Workers of school leaving age must be paid the NMW, which is £4.05 for those under 18, £5.60 for those aged 18 to 20, £7.05 for those aged 21 to 24 and £7.50 for workers aged 25 or older – although this is known as the National Living Wage (NLW).

As HMRC points out on its website, it is a criminal offence for employers to not pay someone the NMW or NLW, or to fake payment records to make out that they have complied.

Employers who discover that they have paid a worker below the correct minimum wage must pay any arrears immediately. If they do not, HMRC officers have the right to check their payment records, which must be kept for three years, or investigate the employer if a worker complains to them.

If HMRC investigates and finds that an employer has not paid the correct rates, they must pay the arrears immediately. They will also be fined and might be named and shamed by the Government.

As HMRC states, it may also hold the individuals responsible for failing to pay the correct wage personally liable and, although unlikely, could prosecute them under criminal law. However, the more likely sanction is disqualification as a director for up to 15 years, which could have serious implications for the individual concerned.

At The Fish Partnership, our payroll team can manage all of the necessary changes to your payroll so that your employees’ pay is accurately adjusted in line with any recent changes. We can also offer advice and support relating to all aspects of auto-enrolment. For more information about our payroll services, please contact us.

Are you using the correct tax codes?

On 6 April 2017, the basic Personal Allowance changed to £11,500 and the basic rate limit changed to £33,500. This means that the new threshold, or starting point for Pay As You Earn (PAYE) is £221 per week or £958 per month.

Since the changes, any employer starting an employee from 6 April onwards should have prepared a payroll record, identified the correct tax code to use in the new tax year and entered the correct tax code on the employee’s payroll record.

For those in doubt, the new emergency code to use for all employees is now 1150L.

For any employee who needs a new tax code, HM Revenue & Customs (HMRC) will have sent either a paper form P9(T), called ‘Notice to employer of employee’s tax code’, or an Electronic Data Interchange notice of coding, or, for employers who are registered to use HMRC’s PAYE Online service, an internet notification of coding.

Employers should note that HMRC will not send a new tax code out to every single employee. However, for any employee who has been allocated a new tax code, the employer should keep and use the form P9(T) or other tax code notification with the most recent date on it.

They should then scrap any form P9(T) or other tax code notification for the same employee with an earlier date and copy the tax code from the relevant documentation onto their payroll record.

They should also update any tax codes where they have received form P9(T) or any other tax code notification after they have set up their payroll records.

Employers who use payroll software should ensure that their real time information (RTI) payroll software incorporates the income tax changes from 6 April and, if they are not sure it does, they should check with their software supplier.

At The Fish Partnership, we can offer support and advice on all of your payroll obligations, including tax codes and the National Living Wage. For more information about our services, please contact us.