Ask Us About: Payroll

Employer payment to HMRC is due on Payrolls where the Pay Bill for the Tax Year is, or is expected to be, £3m +. This is after allowing for a £15,000 annual off-set per employer or connected group of companies. Click this link to view more information.

Where the Apprenticeship Levy is due to be paid, on a pro-rata basis each pay period, then 0.5% of the Pay Bill (i.e., earnings subject to employers National Insurance Contributions from the first £) will be calculated. This is reported to HMRC via the EPS and paid over monthly with other Tax & Nic's. Refunds may also be due if cumulative figures' YTD then start to drop.

Gender pay gap reporting is mandatory for all employers in England, Wales, and Scotland with 250 or more employees. The figures must be calculated using a reference effective date called the 'snapshot date'. This snapshot date each year is:

• 31st March for the public sector
• 5th April for the private sector

In order to publish the report, specific requirements will be needed for each separate legal entity. Reports are required to be published within twelve (12) months of the effective date and thereafter on the anniversary of the date when the first gender pay gap was reported. Mean, median, and quartile statistics are also required as a ratio of Male figures.

Click this link to view more information on gender pay gap reporting.

The principle applied in publishing the gender pay gap is applied to the gender bonus gap as well, but this time around, the figures are based on the year to date (YTD) value and then paid against those who actually received a bonus over the preceding 12 months (i.e. prior to the effective dates, so at TYE) and who were live employees on the 'snapshot' date.

Click this link to view more information on gender bonus gap reporting.

Certain Pay elements must be included in the calculation of gender pay and bonus gap whilst some others are not required (e.g. overtime). The link provided in this section serves as a guide on which Pay elements should be included. It also covers information on some generalisations such as allowances so that employers could decide which Pay elements should, by law, be included or excluded.

Note that the value of hours worked are also needed in calculating the divisor.

Moorepay will set each payroll up with a default set of Pay elements - it is for the employer, where mandated to report, to ensure that these are the correct elements of pay to be included.

Click this link for more information on the required reporting data.

Eligible employees can take up to 52 weeks' statutory Maternity leave, which includes 39 weeks of statutory Maternity pay.

How can an employee qualify for SMP?

A female employee must be employed by her current employer for 26 weeks at the qualifying week and she must have earnings in excess of the Lower Earnings Limit (LEL). In addition, an 8-week average earnings calculation has to take place 15 weeks prior to the expected week of confinement

The maternity leave will commence once the employee provides the correct proof of pregnancy (i.e. MATB1 certificate) and notice of when to commence this. The first 6 weeks are paid at 90% of the employee's Average Weekly Earnings and the remaining 33 weeks are paid at the Lower SMP rate as set by law. If the Average Earnings is lower than the Lower SMP rate, then the lower of the two amounts is paid.

The employee may return to work at any time after a minimum of 2 weeks' leave, or 4 weeks if the employee is a factory worker, have been taken. The employer can also reclaim 92% of the cost.

Click this link to view the Employer Guide on statutory Maternal pay and leave.

 

Is it possible to arrange for KIT days, ShPP, and/or SPLIT days when the employee is on Maternity leave?

Keep In Touch (KIT) days may be arranged by the employer with the employee but she is not obliged to accept. Refer to the KIT Days section below for more details.

Shared Parental Pay may also be requested by the employee to the employer. Refer to the ShPP section below for more details.

Furthermore, Shared Parental Leave In Touch (SPLIT) is available during a period of ShPP. Refer to the SPLIT Days section below for more details

 

Employers are required by law to provide SAP and SAL when an employee takes time off to adopt a child or have a child through a surrogacy arrangement.

How can an employee qualify for this entitlement?

In order to qualify for SAP, a male or female employee must be employed by his or her current employer for 26 weeks at the matching week and he or she must have earnings in excess of the Lower Earnings Limit (LEL). In addition, an 8-week average earnings calculation has to take place at 15 weeks prior to the matching week.

Once the employee provided the correct proof of Adoption (i.e. proof is not needed for the leave but it is needed for pay - proof includes the copy of a matching certificate) and the Adoption leave has commenced, the first 6 weeks are paid at 90% of the employee's Average Weekly Earnings and the remaining 33 weeks at the Lower rate as set by law. If the Average Earnings is lower than the Lower rate, then the lower of the two amounts is paid. The employer can also reclaim 92% of the cost.

 

Is it possible to arrange for KIT days, ShPP, and/or SPLIT days when the employee is on Adoption/Surrogacy leave?

Keep In Touch (KIT) days may be arranged by the employer with the employee but he or she is not obliged to accept. Refer to the KIT Days section above for more details.

Shared Parental Pay may also be requested by the employer to the employee. Refer to the ShPP section above for more details.

Shared Parental Leave In Touch (SPLIT) days are also available during a period of ShPP.

Click this link to view the Employer Guide on statutory Adoption pay and leave.

 

This is available to fathers or partner of a couple Adopting a child or through Surrogacy arrangements.

What are the qualifying criteria for SPP?

An employee may be eligible for statutory Paternity pay and leave if he and his partner fulfill the following criteria:

• Must have worked for the employer continuously for at least 26 weeks by the end of the 15th week before the expected week of childbirth (known as the ‘qualifying week’)
• Or must have a matching certificate
• Must be employed by the employer up to the date of birth / adoption
• Must earn at least the Lower Earnings Limit (LEL)

 

Once the employee qualifies for SPP, he will get the Pay for 1 or 2 weeks at either the statutory payment rate or at 90% of the Average Weekly Earnings, whichever amount is lower. The employee needs to decide if he will take the pay for 1 or 2 weeks; if he chooses the latter, it must be 2 weeks consecutive. The employer can reclaim 92% of the cost.

Click this link to view the Employer Guide on statutory Paternity pay and leave.

 

ShPP and ShPL refer to the untaken balance of leave and pay of the mother or the primary adopter which can be shared with their partner.

This is only available in England, Wales, and Scotland.

What are the qualifying criteria for Shared Parental Pay and Leave?

The employee may be eligible provided that he or she and his or her partner fulfill the following criteria:

• Must have worked for the employer continuously for at least 26 weeks by the end of the 15th week before the Due date (or date they are matched with their adopted child)
• Must still be employed by the employer while they take shared Parental leave/pay

 

This can be taken by either one or both parents or guardian, individually or together take leave and pay during the Maternity or Adoptive leave period.

Click this link to view the Employer Guide on shared Parental pay and leave.

 

What are the entitlements under ShPP and ShPL?

There is a maximum of 50 weeks' leave and a maximum of 37 weeks' pay. ShPP is paid at a statutory level each week of £140.98 (2017/18) or at 90% of an employee's Average Weekly Earnings, whichever amount is lower. An entitlement calculation needs to take place when the employer is for the Father/Secondary Adopter (i.e. Mother/Primary Adopter should have already taken place).

 

What should eligible employees do to commence ShPP and ShPL?

A curtailment notice must be given by the Mother/Primary Adopter to their employer in order to cease SMP or SAP payments.

Afterwards, both parents/guardians must inform their employer by giving notice and completing a Booking form for the leave they wish to book off work (i.e. maximum of 3 periods). The employer can refuse shorter periods such as one week on one week off. The employer can also reclaim 92% of the cost.

 

Is it possible to arrange for SPLIT days when the employee is on ShPL?

The employer/employee can agree on SPLIT days of up to 20 during this period. This is similar to and should be calculated on top of KIT days.

 

An employer can ask an employee to attend at work for up to 20 days during an ShPP period without it affecting entitlement to ShPP.

How are SPLIT days paid?

The employee can agree with his or her employer the additional payment that will be made for such days but the employee does not have to agree to attend these.

These days are in addition to the 10 Keep In Touch (KIT) days.

Click this link to view the Employer Guide on Shared Parental Leave In Touch days.

 

Certain deductions/reductions (such as Salary Sacrifice) that cannot be made if this then brings the minimum wage rate below the required minimum hourly rate according to age.

Other factors such as traveling time and sleeping whilst at work for certain types of workers are also considered when calculating this rate. Click this link for more information on Night Working Hours.

Employers who are found not paying the minimum rates are named and shamed by the Government, in addition to being fined for non-payment.

NB. The Living Wage is not mandatory and is governed by the Living Wage Foundation, and is not to be confused with the National Living Wage, which is mandatory.

Click this link to view the Advisory, Conciliation and Arbitration Service's (Acas) guidelines on NMW and NLW.

Minimum contributions for auto-enrolment of pensions are set at 2% (i.e. wherein 1% is paid by the employer and the remaining 1% by the employee), although the employer could decide to have made this a non-contributory scheme. This will increase on 6th April 2018 to 5% (i.e. wherein 3% is paid by the employee and 2% is paid by the employer).

In line with this, eligible job holders may Opt out (with the Opt out window) while non-eligible job holders may Opt in. New employees must be assessed for auto-enrolment.

The re-enrolment exercise occurs every 3 years for those individuals who Opted out or were previously out. Click this link for more information on the re-enrolment process.

From April 2018, the minimum contributions will increase to 5% (i.e. 2% is paid by the employer and 3% by the employee). Employers are encouraged to inform your employees about the new rates prior to April 2018.

From April 2019, the minimum contributions will increase once again to 8% (i.e. 3% is paid by the employer & 5% by the employee). Employers are encouraged to inform your employees about the new rates prior to April 2019.

Click this link for more details on the increase of auto-enrolment contributions.

From 1st October 2017, new employers who employ their first employee/s must fulfill auto-enrolment duties as soon as the employee/s start/s working. Click this link to learn more about the duties for new employers from 1st October 2017.

The Contribution table letter for employees under the age of 21 is typically ‘M’ (i.e. Not contracted-out standard rate contributions) unless he or she is an Apprentice. Refer to the Employing an Apprentice under the age of 25 section for more information.

Once the employee reached 21 years of age, the employer's regular National Insurance contributions would commence.

The Contribution table letter is ‘H’ for all Apprentices under the age of 25. 'H' overrides table letter ‘M’ (i.e. Not contracted-out standard rate contributionsas used for non-apprentices under the age of 21). Table letter 'G' should be used if the employee is a Mariner.

The employer should only commence Student Loan deductions where indicated:

• On a New Starter's P45
• Employee indicates on Starter checklist
• Received an SL1 Start Notice from HMRC

As the P45 will not show the Student Loan's Plan Type and if the employee does not know which type he or she has, then the employer must use Plan Type 1 until HMRC advises otherwise.

The employer can only STOP a Student Loan once he or she receives an SL2 STOP Notice. The employer must not make any refunds.

In the case when the employee leaves the company and he or she is still paying a Student Loan, the employer must indicate such on the P45.

The deduction of a Student Loan may be affected by a court order but this would depend on the Plan Type. Click this link to learn more about this circumstance.

Student Loans should not be operated for anyone on payroll who is considered an ‘Off Payroll’ type worker (i.e. known as 'IR35'). Click this link for more information on IR35.