So much goes into getting payslip right

From pension requirements to holiday pay entitlements, employers need to keep on top

Our payslip is arguably the most important document we receive each month, yet few of us realise just how much work goes into it. Payroll is one of the most complex and highly regulated areas of business life and employers need to make sure they are up to speed. 

Julie Campbell, payroll manager at Cumbrian firm of Chartered Accountants and Business Advisers Dodd & Co, is an expert on the subject and has outlined some of the key things which organisations need to be aware of.

How vital do you think it is that employers have a good understanding of payroll?

“Payroll is really important and I think people just do not realise what they have got to do to make sure they understand their duties when they become an employer for the first time. Depending on the new employee’s circumstances, you have to register as an employer with HMRC before you pay them. Every time you pay an employee you have to report to HMRC, telling them what their gross pay is and how much tax and national insurance is to pay, plus any other mandatory deductions such as student loan payments. There are lots of rules and regulations that you must comply with.”

Would you say then that it is important to make sure you are doing things correctly?

“It is absolutely vital, you can get things quite wrong fairly quickly.  With employment law, if you have a small bit of knowledge you can think things are going right but then find out that some of your employees know more about certain rules and regulations than you do. Employers want to get things right but you have got so many other things to think about.”

Has Automatic Enrolment – which has given all employees the right to be part of a pension scheme – had an effect on how payroll works?

“Automatic Enrolment has been in for a significant amount of time now. The government set the rules back in 2012 but a lot of employers have only had to meet duties in the last couple of years and it has been a really, really busy time for us. I do not think they made it easy for employers to understand what they have got to do. Anyone in your business who earns more than £10,000 each year has got to be put into a pension scheme and you also have to write to all employees and tell them about your pension scheme. All employees have a right to join the pension scheme even if they do not meet that threshold. The Pension Regulator is imposing some serious fines for employers who do not comply.

Are there any other issues which you think employers may not be aware of?

“There has also been quite a lot of talk lately about holiday pay, mainly because there have been a few employment tribunals recently about how you calculate it. Employers have also got to make sure they are paying the right rate of pay. There has been a lot in the news about the National Minimum Wage and employers not complying with the regulations.   Those people working in the “gig” economy are also caught up in recent rulings regarding their rights to minimum wage, sick pay or holiday pay.

Do you think it is important to get professional advice on payroll?

“Yes. Setting up in business can be tough and it is important to get the right advice. If you get payroll wrong it can go very wrong and fixing that can take quite a lot of time.”

 

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