Payroll – Staying Compliant

In Advice and tips by Caroline

Meeting employment rights should be a priority for every business, especially when we know from Chancellor Sajid Javid’s that the National Living Wage (NLW) will likely rise over the next few years. Following the end of the government’s ‘Good Work Plan’ consultation we that there may also be changes to the enforcement of employment laws. Therefore staying on top of all compliance issues associated with payroll such as holiday entitlement, pensions to payslips is increasingly important for employers.

The National Minimum Wage and the National Living Wage

Since it’s late 90s introduction, the National Minimum Wage (NMW) both rates and regulations have changed regularly. The largest of which was the introduction of the National Living Wage (NLW) in 2016.

Below is a summary of the minimum wage. The NLW is the minimum wage for those aged 25 and over, whilst the NMW applies to those above school leaving age and individuals aged under 25. There are also special provisions for apprentices.

Current minimum wage rates

Minimum wage rate       Hourly rate from 1 April 2019

NLW      £8.21

21-24 year-old rate         £7.70

18-20 year-old rate         £6.15

16-17 year-old rate         £4.35

Apprentice rate £3.90

The NLW will rise over the next five years according to Chancellor Javid, who pledged to see it increase to £10.50. The penalties for not paying the correct minimum wage can be high. The underpayment is calculated with the penalty set at 100% of the underpayment. This can be doubled to 200% if not paid within 14 days.  The maximum fine is £20,000 per worker, and can lead to bans from being a company director for up to 15 years.

Payslips and holidays

According to research by think tank, the Resolution Foundation, one in ten workers don’t receive a payslip. In addition, one in twenty don’t receive any paid holiday.

Employees are legally entitled to receive a payslip showing their earnings before and after deductions. Having a payslip is vital for employees to calculate whether their pay, pension and holiday entitlement are correct, along with any deductions.

Legally, employees are entitled to at least 28 days paid holiday per year.

It’s important for all businesses to ensure they are complying with the legal entitlements of their employees in relation to payslips, holidays and auto-enrolment for pensions. Failure to do so could lead to penalties and even prosecution.

How to get it right

The introduction of RTI, cloud based accounting and payroll systems and of course the support of your accountant, can take the burden of payroll compliance away for many businesses. The correct systems and support can make the administration of customised payslips, PAYE, national insurance, Statutory Sick Pay and Statutory Maternity Pay much less time consuming.

Get in touch today with our payroll experts in Birmingham to discuss how we can help you to streamline your processes and remain compliant.