For the majority of businesses in the UK, payroll makes up the largest part of expenditure so it’s vitally important to understand exactly what it consists of.
Payroll entails the management of BACS payments (automated direct debit or credit payments often used to pay employees) and includes calculating overtime which often changes month to month. Pay as you earn (PAYE) and National Insurance contributions (NIC) are also included, where relevant, totalling £250bn in the 2017/18 tax year according to HMRC.
Keeping employees happy and motivated at work is one of the most important factors to creating a successful business, and effective payroll management can help to achieve this. An efficient payroll system reflects a commitment to employees and recognises them as a valued part of the business. If there are problems with payroll leaving employees underpaid for example, this will leave them disheartened and annoyed, causing damage to morale and overall productivity.
In more severe cases, employees may even file an Employment Tribunal claim, something that has become much easier for employees to do since Employment Tribunal fees were abolished in 2017 and carries extensive financial costs to the business.
Clearly it is vital for businesses to stay up to date with updates to the National Minimum Wage and National Living Wage in order to ensure all employees are paid what they are owed, such as the recent increase to the National Minimum Wage on 1st April.
Ineffective payroll management can have further non-financial effects as well. Underpaid employees are likely to speak out about their frustration leaving their business’ reputation severely tarnished. Although this may not carry direct financial costs, it affects the ability to attract the most skilled workers which can impact on recruitment costs and productivity in the long term.
Payroll giving is a scheme frequently used by UK businesses whereby employees who receive their salaries through payroll are able to give an agreed tax free sum to a charity of their choice. According to the Charities Aid Foundation, only around 0.2% of employers in the UK offer payroll giving schemes to their staff, meaning that it is a great way to gain an edge over competitors. In competitive sectors the image of a business may be what holds it in higher stead than its rivals in the minds of consumers and potential employees alike; associating with charitable organisations can enhance your business’ reputation, allowing you to get ahead of your rivals.
In recent years the payroll industry has become much more automated, largely due to its cost effectiveness and efficiency. However since the General Data Protection Act (GDPR) came into effect on 25th May 2018, replacing the Data Protection Act, firms using automated systems have had to become increasingly aware of legislation regarding data protection in their payrolls.
Part of the introduction of the GDPR is the removal of the administrative fees of submitting a Subject Access Request (SAR). SARs involve employees requesting their personal data, including;
Payroll automation is founded on employee data being consistently available across interfaces, causing a grey area and potential conflict with SARs.
Since the introduction of the GDPR, there have been nearly 35,000 complaints submitted to Data Protection Authorities (DPAs) at a rate of 51 per 100,00 people. Although this may not seem like many, it more than doubles that of the next highest of European countries (Germany at around 15,000). This is of huge importance to UK businesses as a breach of GDPR laws can subject them to fines of 4% of annual global turnover, or up to £16.5million. Considering that there were around 12,000 breach notifications submitted to DPAs within the first year of its introduction, business need to ensure they are aware of their responsibilities on data protection in their payrolls.
If you require any further advice regarding Payroll, Subject Access Requests or other HR & Employment Law issues, contact one of our Employment Law Consultants on 0161 603 2156.
With new laws in place regarding pensions, businesses need to be more aware than ever over their obligations regarding the retirement savings of their employees and the consequences of non-compliance with pension legislation. According to FT Adviser, 8,875 penalties were issued against UK employers in a three month period for failures to comply with regulations around pensions, a figure that the Pension Awareness Campaign aims to reduce through educating the public and businesses about pensions.
The Pensions Act 2008 legally obliges every UK employer to put certain employees on a workplace pension scheme and alongside employees, make contributions towards it, otherwise known as automatic enrolment. Different duties apply to the employer based on whether their employee is starting automatic enrolment or coming back for re-enrolment after 3 years. The legal duties of the employer begin on the day the employee begins working for the business and run continuously throughout the term of employment. So what are the individual duties for employers on a day-to-day basis?
Employers are obliged to continuously monitor the ages and earnings of their employees for any critical changes. Any employee between the ages of 22 and the state pension age (which changes from person to person) or that earns over £10,000 per annum must be put into a pension scheme. Both the employer and employee are obliged to pay into the scheme throughout the employee’s term of employment. Employee wages may change, for example due to promotion which may put them over the £10,000. Therefore employers need to regularly monitor changes to ensure compliance with pension scheme regulations.
Employers must also manage requests from employees to join or leave the pension scheme which can be done at any time during their employment. Requests must be acted upon within one month from the date of the request. Employees that request to leave the scheme are said to be opting out and as such the business is obliged to cease taking money out of their pay to put into their pension scheme, as well as arranging a full refund of what has been paid to date.
Records must be kept of how the business has met, and is continuing to meet, its legal duties regarding pensions. The information that must be kept includes;
These records must be kept for at least 6 years except for those requesting to leave the scheme, which must be kept for 4 years.
Of course, maintaining contributions is a legal obligation of the employer as well. Payments must continuously be made to the scheme every time the business runs its payroll. This is monitored by the government and any failures to comply with the legal duty can result in further action.
Employers should also be aware of any updates to the laws around pension schemes. On 6th April 2019, the minimum pension contribution amount rose. Businesses must now pay a minimum of 3% of an employee’s wages into their pension scheme and the total combined payments of the business and its employees must be no less than 8%. Failure to comply with the new regulations can lead to fines and even court action.
The final consideration of employers regards re-enrolment. Every three years employees must be put back into a pension scheme if they have previously left it. Failure to re-enrol employees and declare re-enrolment is met with fines. The declaration of re-enrolment must explain how the business has met its legal enrolment duties.
Escalating Penalty Notices (EPNs) are one of the most common penalties issued for non-compliance, issued for a failure to comply with statutory notices, which direct employers to comply with their duties and pay any late or outstanding contributions. The penalty is prescribed at anywhere between £50 and £10,000 per day, depending on the size of the business. Daily fines carry huge financial implications for businesses, especially those that may only be making slight profits or even newer businesses targeting to break even.
Employers may also be penalised with a civil penalty for failure to pay due contributions. These penalties are much larger and can be any value up to £50,000. Again the financial burden this places on businesses can be catastrophic and may force them into bankruptcy and administration. In more severe cases the employer may even face court action, which doesn’t just carry financial implications but damage to the business’ reputation also which may tarnish the ability to attract the top talent from the labour force.
Our team can help you with implementing pension schemes, engaging your teams and provide further advice on other HR strategies. Just book a free consultation or contact one of our Employment Law Advisors on 0161 603 2156.
It’s time to switch off to switch on with National Simplicity Day.
This day honours the life of the naturalist and philosopher Henry David Thoreau, who advocated simple living and in today’s fast-paced society it’s important to stop and take a break from the hustle and bustle of life.
The dictionary definition states “The quality or condition of being plain or uncomplicated in form or design”; simplicity can be applied to all parts of our lives, from creating small manageable tasks out of a much larger one, ensuring a clean clear space to work in, turning off your phone or setting time restrictions for tasks.
In many ways technology has made life simpler by enabling us to communicate and innovate more easily, however a recent survey by Ofcom found that we spend 8 hours and 41 minutes averagely spent staring at a computer/ phone screen.
Constantly staring at screens can lead to increased health problems and long term issues. These include eye strain, neck & back pain, headaches and blurred vision. Your company should take into account these considerations and the legal implications, providing support such as eye tests, health insurance and other policies that safeguard employees.
For example, allowing employees to take mindfulness breaks will help revitalise minds and bodies; taking time away from the screens to talk face to face with colleagues not only allows a reset, but helps to nurture workplace relationships, improving teamwork and creating a nicer environment.
ACAS proposes that it may be helpful to set guidelines around device usage; for example, personal use of phones could be permitted during breaks which could help to increase productivity and retain concentration on work related tasks during the working day as well as reducing screen time.
A focus on simplicity can benefit a company in many ways, including
A Siegel + Gale survey found that clear communication drives simplicity with organisations that communicate clearly from the top about their corporate values and goals led to 54% of employees finding it easier to innovate.
The survey also found that simpler workplaces aided recruitment as 65% of employees said that they were more likely to recommend somebody to apply for a job at their company because of the simple organisational structure.
Helping to create clear lines of communication allows employees to feel more engaged within the work place and enables change to take place more effectively, in turn helping to increase efficiency and profit.
In its recent annual Global Brand Simplicity index, Siegel + Gale surveyed 12,000 consumers interacting with 585 brands across 25 industries with the findings showing that 38% of consumers are willing to pay more for simpler experiences and that 70% of consumers are more likely to recommend a brand because it is simple.
Although on the face it of this may seem surprising, a clear, simple message in a cluttered world has an obvious appeal.
So if you’d like to find out more about how to implement strategies to create simplicity in your workplace and reap the potential benefits or for further advice on managing employee stress contact one of our Employment Law Advisers on 0161 603 2156 to arrange your free initial consultation.
The wellbeing of employees is a fundamental part of any business; employees who are both physically and emotionally healthy are key to thriving in today’s climate. As this is World Wellbeing Week we look a little closer into just what employee wellbeing is, how easy it is to integrate into business culture and why it is so vital to employers to improve the wellbeing of their employees.
An excessive workload can often be demotivating and affect employees’ work-life balance, increase stress and negatively impact their performance at work. Employees who feel supported by their employer both emotionally and physically find it easier to manage work-related stress and as a result are likely to be more productive, allowing the business achieve its goals.
Retaining these productive employees is crucial, reducing the need to constantly recruit and train new employees, as well as allowing teams to flourish, developing stronger bonds as they work on tasks together. Employees that feel valued by their employer and happy in their place of work are much less likely to jump ship as soon as another job opportunity becomes available.
But retention is only one side of the coin; a positive culture of wellbeing will help attract new recruits too. Although it’s easy to imagine that the highest wages attract the most talented workers, a recent study by Deloitte found that a good-work life balance was the number one factor considered by young adults looking for employment.
There are some huge health benefits to be gained that will ultimately benefit your business. Ensuring that employees aren’t tired or over-worked means that they can be physically active out of hours, aiding overall health and creativity.
A 2013 study by cognitive psychologist Lorenza Colzato found that workers who exercised four times per week were able to think more creatively than those that were sedentary. A more creative workforce can lead to improvements in both efficiency and productivity.
Recent research from Mind, a UK-based mental health charity found that of 2060 adults in England and Wales, 60% said they would not only feel more motivated at work but would recommend their organisation as a good place of work if their employer took action to support their mental wellbeing.
So far, so good but how can your business actually achieve greater employee wellbeing?
This World Wellbeing Week is a great opportunity to try out a few ideas and consider what your business could do to improve the wellbeing of its employees and its productivity.
Whilst having juxtaposing qualities in terms of good and bad attributes in a business/personal context, advantageously, social media has elevated companies into what they are today. The establishment of social media has created a whole new billion pound sector in the market creating a wealth of new opportunities. Nevertheless, with Social Media Day upon us (30th June), we have to remember to stay in compliance with the law to make sure to safeguard employees and our companies.
Social media has excelled businesses into the digital era and has provided cost effective marketing, sales and HR strategies. 73% of marketers believe social media marketing has been “somewhat effective” or “very effective” for their business, proving a triumph in employee minds. 71% of consumers who have had a positive experience with a brand on social media are likely to recommend the brand to their friends and family. Indicating that, not only is brand loyalty important for a consumer, but also a company’s digital presence.
Many businesses rely on their employees to use social channels as a positive function to spread the brands ethos, personality and message. An example of this includes Starbuck’s “Tweet a Coffee” campaign which was ultimately spread in-house by employees and managed to gain direct impact on sales with an $180,000 increase in the first month. A great way to reward employees on a HR stand point could be through social media, this can be seen through an initiative from Walt Disney Company on their careers Facebook page where they highlight the veterans that work for the company.
Most importantly social media is used to headhunt and find the perfect candidates with apps such as LinkedIn (the second largest professional app in the world). Further research found that Four-fifths of job seekers will research an employer online before applying and two-thirds (66%) of job changes are to organisations that candidates already know. Evidently, social media is used to build relationships and to acquire talent that will fit a company’s values.
However, ACA cautions that using information from a candidate’s social media profile without their permission in the recruitment process could breach GDPR rules. The GDPR principle is that an employer being able to see a candidate’s social media profile does not mean it has the candidate’s consent to take it into account.
Some estimates report that misuse of the internet and social media by workers costs Britain’s economy billions of pounds every year. ACA proposes that it may be helpful to set some guidelines – for example, personal use of social media is permitted during tea breaks and lunchtime this could help to increase productivity and retain concentration on work related tasks. An employer should consult their employees or trade union representatives when drawing up a policy.
A 470% increase in social media crime over the past decade has led employers grappling with issues like time theft, defamation, cyber bullying, freedom of speech and the invasion of privacy. Therefore, safeguarding employees and training them on the associated risks that social media can bring can help to reduce serious issues such as phishing scams and harassment.
ACA cautions that employees and employers should also be aware that their online behaviour could break defamation, data protection or privacy laws (which we shall discuss further below). For example, if an employee posted damaging comments about a company or its products or publishing sensitive commercial data could cause serious risks for both your company and employees. Another example of employee risks includes; divulging protected personal data giving details of salary, political or religious beliefs or disciplinary records.
Three considerations we would have to examine in regards to social media and alliance with the law include:
Article 8 within the Human Rights Act gives a ‘right to respect for private and family life, home and correspondence’. Case law suggests that employees have a reasonable expectation of privacy in the workplace.
The Data Protection Act 1988 covers how information about employees and job applicants can be collected, handled and used.
The Regulation of Investigatory Powers Act 2000 covers the extent to which organisations can use covert surveillance on its employees, and prevents breaching privacy of employees.
Whilst laws have been past to safeguard social media usage we could argue that, bilaterally, social media has impeached on law passing. An example of this is the Brueni Boycott, despite celebrities such as George Clooney campaigning on social media sites such as Instagram calling for personalities and members of the public to boycott Brunei-owned hotels; his new law “death by stoning for gay sex” in the Sultanate was rebuked but not eradicated. On the other hand, whilst this case was not successful it has allowed a conversation to be discussed within society.
It is important to remember that whilst social media presents a wealth of positive attributes, safeguarding and complying with regulations will ultimately benefit our businesses in the long run. Training and policy making is the easiest way to enable your employees to fully comply with company rules and to protect them from any mishaps. Therefore if you need any further advice on Social Media Legal Considerations, policy making or laws, or any other HR and Employment Law issues please call one of our Employment Law Consultants on 0161 603 2156 to see how we can assist.
Since fees were abolished in 2017, employees are now more likely to file Employment Tribunal claims. It is therefore even more important that employers act in accordance with employment legislation.
Typical disputes that arise in the workplace include:
Ideally any issues that could potentially lead to an Employment Tribunal should be addressed with the employee in the workplace and an informal discussion can often lead to a resolution. However, if this is not the outcome there are strict rules around what, where and when constitutes a claim.
An employee has 3 months minus 1 day from the date of the incident occurring, e.g. an employee is dismissed on 15th January 2019, they have until 14th April 2019 to file a claim.
Before filing a claim, the employee must contact ACAS and start a process called Early Conciliation (a form of mediation). This is free and impartial.
Early conciliation is up to 4 weeks and can be extended by a further 2 weeks if they are almost near settling the matter.
The process of Early Conciliation ‘stops the clock’ on the 3 months minus 1 day timeframe, e.g. an employee is dismissed on 15th January 2019, on 15th February 2019 the employee contacts ACAS to start Early Conciliation. This came to an end after 4 weeks on 15th March 2019. The employee now has until 14th May 2019 to file a claim at the Employment Tribunal.
An employee must complete an ET1 form in order to submit a claim. As stated earlier, since 26th July 2017 these claims have been free.
ACAS are still available even after filing the claim and cases can still be settled up until the Judge makes a final judgement.
Our HR experts can advise employers on all aspects of employment law ensuring that they are compliant and therefore minimise the risks of being taken to an Employment Tribunal.
Our legal team can assist throughout the ACAS Early Conciliation process.
If you are taken to an Employment Tribunal, our legal team will act on your behalf and conduct full litigation during the tribunal claim. Full advice and guidance are provided throughout the process to ensure we get the best possible outcome.
To find out more call 0161 603 2156 or click here to request a free consultation.