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Payroll: Legal Obligations

Managing payroll isnt just about paying employees.

There are various legal obligations

The Payslip
Total gross earnings Minus Total deductions Gives Net pay

Employers Must:
Be Ready for Regular PAYE inspections

Calculate Tax, NIC & Employee NI Pay the Inland Revenue each month Maintain various records such as P11s & P11ds Issue various forms such as P45s Produce & submit annual returns such as P60s & P35s

The Payroll Process Can Be Quite Daunting

Calculating, deducting and detailing an employees tax and NICs is fairly straightforward.
Its simply a question of working through the relevant forms and consulting the appropriate tables

The main problem is the amount of time this can take.

Employers and Employees

An employee is anyone who works for you.

Directors of limited companies are also employees. Pay usually comprises wages and overtime payments.
There may be other elements too, including expenses and benefits such as a car or private medical insurance

What We Do: PAYROLL

Prepare and maintain payroll records Supply pay slips Prepare P45s when employees leave
Calculate the PAYE to be paid at the end of each month

Prepare forms P60s etc at the end of each Tax Year

Remember the Law

It is a criminal offence to employ anyone who is not entitled to work in the UK. Contracts of employment should be in place from day one even if they are on trial. Terms and Conditions of Employment An employee is entitled to receive a written statement of terms and conditions
Equal Pay: Men and women are entitled to the same pay for the same or like work and for work of equal value.

Part-Time Workers Have the right to be treated the same as a full time worker
Equal Opportunities& Sex Discrimination Discrimination against a person because of colour, race, nationality or ethnic origins is prohibited. Disability Employers with more than 15 staff are prohibited from discriminating against disabled people

Pay and Benefits

Employers Need to be registered with the revenue in order to operate payroll. National Minimum Wage Employees are entitled to minimum hourly wages. Stakeholder Pensions Employers with more than five employees need to operate a stake holder pension scheme

National Insurance
Employers pay National Insurance contributions for
employees aged over 16 who earn more than the Employers Earning Threshold. Insurance contributions when their earnings exceed the Employee Earnings Threshold.

Employees pay their National

There are special rules regarding National Insurance

contributions for directors.

Maternity and Parental Leave

Employees are entitled to 18 weeks maternity leave.

Employees with one years service or more are entitled to additional maternity leave.

Employees with one years service or more are entitled to 13 weeks parental leave for each child born/adopted on or after December 15 1999 up until the childs fifth birthday. Special rules apply for parents of disabled children.
Employees are entitled to a reasonable amount of time off to deal with an emergency involving a dependant.

Statutory Sick Pay (SSP)

All employers have to pay sick pay.
SSP is payable to employees who are absent due to sickness for 4 or more days in a row. should be paid in the normal way and is subject to tax and National Insurance.

SSP

Employees will be entitled to SSP if they satisfy the following conditions: *They are aged 16 or over and under 65 *They have started work *In the 8 weeks prior to their absence they
have average weekly earnings of not less than the Lower Earnings Limit.

Working Time Regulations

The key points of the Working Time Regulations are:
Maximum working week The working week should not exceed 48 hours. Rest periods Every worker should have a minimum daily rest period

Annual Leave Every worker is entitled to four weeks' paid holidays

Night Workers Employees have the right to transfer to day work wherever possible in the event of night work affecting their health. Young Workers A young worker is an employee between the ages of 16-18 years old.

Insurance
Employers must: Take out Employers Liability Insurance and display the certificate. Contact the Health and Safety
Executive to check legal responsibility for the health & safety of employees and the public.

Some businesses may also require a Fire certificate.

Termination of Employment
Dismissal
Employees have the right to a written reason for dismissal and to complain of unfair dismissal.

Notice periods
Over one months continuous service, but less than 2 years: 1 week, Over 2 years, but less than 12 years: 1 extra weeks notice required for each complete year worked., Over 12 years ,a maximum of 12 weeks.
Employment contracts should state the period of notice that employers should give and receive.

Redundancy
Under 18 or over the retirement age employees are not entitled to any redundancy pay. In the last year of employment entitlement is reduced by 1/12th for each month as an employee's age approaches 65. (i.e. if they are made redundant very close to retirement age redundancy pay will be minimal). The maximum service is 20 years, and the greatest amount payable is 30 weeks.