Payroll Update

Employers struggling to effectively manage an ageing workforce

older-peopleAccording to the Office for National Statistics (ONS), employment has never been greater, and 50-64 year-olds now make up 27% of the total workforce.  This is to be celebrated with people living and working longer but an ageing workforce can bring its own challenges.  Along with the removal of the default retirement age, employers have had to consider how best to look after their workforce as a whole and for longer, and the research indicates that some are struggling with accommodating the different needs they may have.

Some employers are embracing the needs of their older workforce and a popular plan is to introduce flexible working initiatives.  Others have introduced job sharing or have modified roles and procedures to accommodate older workers’ needs.  But while some employers have been proactive at looking at areas related to the actual job, they have been slower to focus on the health & wellbeing of employees.

National Minimum Wage – naming and shaming

If HM Revenue & Customs (HMRC) investigates an employer that is breaking the minimum wage law they will be issued with a Notice of Underpayment.  This is a formal notice that sets out the arrears of minimum wage to be paid by the employer together with the penalty for non-compliance with the requirement to pay workers the minimum wage.   The Government has increased the penalties imposed on employers that underpay their workers in breach of the minimum wage legislation from 100% to 200% of arrears owed to workers. 15431411_l

An information sheet is given to the employer at the start of the investigation which sets out details about The Department for Business, Innovation and Skills (BIS) naming scheme.  The employer will have 28 days to appeal against the Notice of Underpayment issued by HMRC.  If the employer does not appeal or an appeal has been unsuccessful HMRC will refer the employer to BIS for automatic naming under the scheme.  HMRC have produced a range of educational material to help employers comply with employment regulations and they are making it clear that non compliance with minimum wage regulations will not be accepted.

Meanwhile….Sports Direct workers to receive £1m in back pay

Workers at Sports Direct’s Derbyshire distribution centre will receive back pay of around £1m for non-payment of the minimum wage.  Sports Direct founder Mike Ashley admitted workers were paid below the minimum wage when he faced MPs on the business select committee.  The billionaire businessman acknowledged that search procedures carried out on staff after they had finished their shifts meant pay had not always met the statutory minimum.

Ashley also faced questioning over his company’s “Victorian” working practices and admitted that the company’s policy of docking workers 15 minutes’ pay for arriving on shift as little as one minute late was “unfair”.  The payments, which Unite union says could be worth up to £1,000 for some workers, will be backdated as far as May 2012 and delivered in full to staff directly and indirectly employed by Sports Direct.

Apprenticeship Levy

apprenticesIn April 2017, the way the government funds apprenticeships is changing, through the introduction of the Apprenticeship Levy.  UK employers whose annual pay bill is greater than £3 million will be required to contribute to a new Apprenticeship Levy.  The payment of the levy will be collected from these larger employers and paid to HM Revenue & Customs via the PAYE return each month.  The levy amount is 0.5% of a company’s payroll and the employer gets an allowance of £15,000 to offset against the amount they owe.  All businesses that pay the levy will be able to access their contribution in their online digital apprenticeship service account.  This account can be used to pay for apprenticeships training and assessment in England.

The overall purpose of the levy is to encourage employers to invest in apprenticeship programmes and to raise additional funds to improve the quality and quantity of apprenticeships so as part of this review there will be changes to the funding for apprenticeship training for all employers.

HM Revenue and Customs has published the first set of draft regulations for a period of technical consultation, which will close on 14 November 2016.

The levy is set to raise £3 billion a year to help fund the government’s target of 3 million apprenticeships but has received mixed reviews with some business organisations voicing concerns that larger business will also have to find additional funds to pay for the ‘on costs’ of recruiting more apprentices.  One thing that all seemed agreed on is that the arrival of the levy will raise the profile of apprenticeships amongst all businesses and this is likely to have an impact on small businesses that are considering apprenticeship programmes.

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