Ten Questions All Employers Should Ask Themselves

Obviously we are not Solicitors and thus are not specialists in Employment Law and HR, however we are frequently asked questions while preparing payroll, so we thought it would be helpful to provide you with a ‘top ten’ things you should be doing as an Employer.

Have you:

  1. Given your employees a Contract of employment?

All employees have an employment contract with their employer and it doesn’t have to be written down. However an employer must give employees a ‘written statement of employment particulars’ within 2 months of the start of their employment if their employment contract lasts for at least a month. You can find out more about the detail this should include at: www.gov.uk/employment-contracts-and-conditions/written-statement-of-employment-particulars

Apprentices – If you employ apprentices, under the Apprenticeships (form of Apprenticeship Agreement) Regulations 2012 which came into effect on the 6th April 2012, you must have an Apprenticeship Agreement in place with the Apprentice for the duration of the Apprenticeship.

See point 8 below for more information.

  1. Checked that you are paying your employees at the National Living Wage, the National Minimum Wage or above?

From 1st April 2016 the National Living Wage applies to all employees over 25.  The current rate is £7.20 an hour.

From 1st October 2015 the National Minimum rates apply to all under 25 and are as follows:

  • Age 21 and over £6.70
  • Age 18-20 £5.30
  • Age 16-17 £3.87
  • Apprentices £3.30*

*This rate is for apprentices up to the age of 19 or in their first year. Once 19 or over and in their second year they are entitled to the age appropriate rate.

Failure to comply can be costly, HM Revenue and Customs can investigate and if you are found to be non-compliant may take you to court on behalf of any employees underpaid with associated costs and backdated payment at the current rate even if the failure applies to an earlier period.

If you discover you are not paying the appropriate rates, make backdated payments at the current rates now to correct the position, ensuring it is clearly shown what the payments relate to.

  1. Been processing your payroll under Real Time Information?

If we prepare your wages the answer to this question is yes.

If you are preparing your own wages, you should, since 6th April 2013, be reporting each pay period to H M Revenue and Customs. All payments made to staff should be reported on or before the payment is made.

Failure to report or reporting late could make your business liable to penalties, however H M Revenue and Customs are still taking a risk-based approach to this up until 5th April 2017.  This means that only employers who persistently file more than 3 days late will be issued with a penalty.

If you are a small employer and only have staff paid less than the lower earnings limit (LEL)(2016-17=£112 per week), and this is their first job, you are still exempt until you have one employee paid over the LEL.

  1. Checked that all your staff are entitled to work in the UK?

You must perform identity checks to ensure that all of your staff are entitled to work in the UK and you must not discriminate against anyone because of their nationality. You can be prosecuted and fined up to £20,000 for each illegal worker you employ. If you need further guidance on what documentation is acceptable the full guidelines on this are available at www.gov.uk/check-an-employees-right-to-work-documents.

  1. Explored what Auto Enrolment means for your business?

If you don’t already know it, check your staging date, you may need to assess employees up to a month before you stage.  Most employers will have staged by October 2017 and The Pension Regulator can issue instant penalties of £400 for non compliance.  If the employer continues to fail to comply there are penalties of £50 a day for employers with 1-4 employees, £500 a day for employers with 5-49 employees, rising up to £10,000 a day for larger employers.  By February 2018, all employers will have staged and at that point it will be compulsory for all from day one.  To find out when it applies to your business, telephone our offices today. If you don’t know what Auto Enrolment is, find out now so you can start planning. To find out more about Auto Enrolment and what it will mean for your business, have a look at www.thepensionsregulator.gov.uk/employers/beginners-guide-to-auto-enrolment.aspx.


Are you:

  1. Ensuring that you comply with the Working Time Regulations?

This is lengthy European legislation governing the hours employees can work, holiday entitlement and sick leave. This includes the requirement for almost every employee to receive at least 5.6 weeks paid holiday, that employees are not required to work an average of more than 48 hours a week unless they have specifically agreed to do so, and a worker’s entitlement to rest breaks of at least 20 minutes in every 6 hour period of work. Additional guidance on this can be found at http://www.acas.org.uk/index.aspx?articleid=1373.

The ruling in the case of Bear Scotland v Fulton on 4th November 2014 makes significant changes in the way that overtime and other additional pay entitlements are reflected in holiday calculations.  Please see our article for more details.  Please note that since this article was written there have been several further cases in relation to overtime, commissions etc, however as yet there is still no final clarification in law as to how the calculation should be made and what should be included.  We will update on this once a final ruling is made.

  1. Making statutory payments when appropriate?

If one of your employees is ill, becomes pregnant or has a partner who is pregnant and they earn more than the Lower Earnings Limit (2016-17 £112 per week) the chances are they will be entitled to one of the following statutory payments.

Statutory Sick Pay (SSP) is not paid for the first 3 days an employee is off, unless the employee had previously claimed in the last 8 weeks. The 2016-2017 rate is £88.45 a week. Employees should provide a doctor’s ‘fit note’ if they are sick for more than 7 days.

Statutory Maternity Pay (SMP) If an employee becomes pregnant, they must have worked for you continuously for at least 26 weeks, up to and into the 15th week before the baby is due. They must provide you with a form MATB1 from their doctor or midwife as evidence of the date the baby is due. The employee is then entitled to 6 weeks at 90% of their average wage and 33 weeks at the SMP rate (2016-17 £139.58) or 90% of earnings, depending on which is lower. An employee can also take a further 13 weeks of unpaid Statutory Maternity leave. Employees are still entitled to pay rises and to accrue holiday while on leave. The law is quite complex in this area so it is a good idea to do your research. Further information can be found at www.gov.uk/maternity-pay-leave or of course please contact us for clarification.

Statutory Paternity Pay (SPP) If an employee’s partner is having a baby or they are adopting a child they may wish to take 1 or 2 weeks Ordinary Paternity Leave or up to 26 weeks’ paid Additional Paternity Leave but only if the partner returns to work. Further information can be found at www.gov.uk/paternity-pay-leave.

Shared Parental Leave: Since the 5th April 2015 if your employee or their partner is due to have a baby or adopt a child they may be entitled to, and choose to take, Shared Parental Leave and/or Shared Parental Pay.  In order for your employee to start Shared Parental Leave/Pay any Statutory Maternity Pay or Adoption Pay must end early.  Any remaining weeks of maternity leave can then be shared between the two parents.  Shared parental leave may be taken in blocks of one week or more providing that sufficient notice is provided to the employer.  It is up to the employee to establish and calculate any entitlement and provide evidence of this to the employer, they can do this at https://www.gov.uk/pay-leave-for-parents.

This legislation is far too complex to provide detailed guidance here, more information can be found at https://www.gov.uk/shared-parental-leave-and-pay/eligibility.  For advice specific to you and your employees please contact us on 01978 264846.

  1. Paying your apprentices correctly?

If you take on employee under the apprenticeship scheme make sure you are paying him/her correctly. Apprentices must be paid for their normal working hours, which should be a minimum of 30 hours a week, at the Apprenticeship rate (see point 2), and training that is part of the apprenticeship which is usually 1 day a week. Please note the rate of pay may differ for workers in the Agricultural Sector. Apprentices are also entitled to the same holiday as everyone else (see point 6).

You must ensure that all apprentices receive an Apprenticeship Agreement which reflects that the Apprenticeship is primarily a job rather than training and clarifies that apprentices do not have any additional rights over those of other employees.  A template Apprenticeship Agreement and further guidance on this can be found at http://www.apprenticeships.org.uk/partners/policy/apprenticeship%20agreement.aspx

If you are considering taking on an apprentice your business may be eligible for a grant, further information can be found at www.apprenticeships.org.uk/Employers/Steps-to-make-it-happen/incentive.aspx

  1. Offering flexible working?

Since 30th June 2014 every employee has a right to request flexible working after 26 weeks’ employment. They must make their request in writing; requests and appeals must be heard and decided upon within three months of the request.  If the employer rejects the application they should write to the employee stating the business reasons why, explaining how it would affect the business and how the employee can appeal. Employees are only entitled to request flexible working once in 12 months. Information on the acceptable reasons for denying a request for flexible working can be found at www.gov.uk/flexible-working/after-the-application

  1. A Contractor in the Construction industry? If so, are you verifying your sub-contractors and issuing Payment and Deduction statements to them?

If you pay subcontractors to work for you they should all have been verified with H M Revenue and Customs online or via the CIS helpline on 0300 200 3210. You will need to give them your details as a Contractor and details of the subcontractor who is to work for you. HMRC will then issue you with a verification number and advise you to pay them either Gross (ie no tax deducted) or Net with either 20% or 30% deducted. You should then issue a Statement to the subcontractor showing the gross invoice amount excluding VAT, and deduction made for materials and the CIS deduction made. At the 5th of each month all payments made should then be entered online onto the CIS monthly return and payment of any CIS due by the 19th of the same month. Also as an employer, be sure to include any PAYE liability with your CIS payment.

Limited Companies – Don’t forget if you are a Subcontractor too, you can deduct any CIS you have already paid (CIS suffered) via payroll.  Ask your payroll provider to submit an EPS report to do this.

If you are having difficulties with any of these issues please contact us for more specific advice to suit your business.

The above information is correct at the time of going to press but subject to frequent change.

E&OE.

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