It pays – A review of payroll and wages

As businesses grow, so does the complexity of their payroll processing.

It can seem like payroll guidelines are constantly changing, and this can leave many businesses feeling it is difficult to stay compliant.

Noncompliance risks incurring penalties from HM Revenue and Customs (HMRC) and could cause your business’s reputation to be damaged.

We are going to take a look at some of the challenges that face businesses with payroll compliance, including businesses that operate across the UK and employ seasonal workers.

What impact did the National Minimum Wage Increase have on payroll?

This year brought in an increase to both the National Minimum Wage and the National Living Wage.

For businesses employing younger workers, it will undoubtedly have had a great impact.

Payroll records need to be carefully monitored given that, as employers have birthdays, they may age into higher pay brackets.

When an employee turns 18 or 21, they should be moved to a higher wage.

This has to be done from their birthday, even if that is partway through a week or month.

Failure to keep employees on the correct rate of pay risks noncompliance and can result in severe penalties for businesses.

Knowing the ages of your workers can help you to plan for any future increases in wages.

As the rates tend to increase every year, it is particularly important to plan ahead for any worker who ages into a higher bracket towards the end of the tax year.

How do I payroll seasonal workers?

Many businesses see staff numbers fluctuate throughout the year.

Your payroll responsibilities remain the same for workers, whether they are long-term employees or short-term seasonal staff.

They will need to be paid at least the National Minimum Wage or the National Living Wage, depending on their age, and you will need to navigate your National Insurance Contributions (NICs) based on the amount they earn.

One of the main challenges of seasonal workers is monitoring the time they actually spend working.

As they are more likely to be operating under flexible hours, you need to set up a system where you track their presence in the workplace.

This avoids you underpaying them if they do additional work, but also prevents them from being overpaid if they turn out to be unreliable.

It is also worth keeping in mind that if a seasonal worker is aged 22–65 and earns over £123 a week, they must be automatically enrolled into the workplace pension within one month of starting work.

What are the main differences in payroll between the UK countries?

For many businesses looking to grow, the prospect of branching out into different countries is exciting.

Rather than rolling the dice in foreign markets, many businesses utilise the diversity of the British Isles and expand into the different countries of the UK.

Each of the devolved nations carries its own approach to payroll that can catch uncertain businesses off guard.

Scotland is keen to push boundaries when it comes to offering workers a fair pay.

While they technically adhere to the UK’s National Minimum Wage, it is becoming the norm in Scotland to follow the Real Living Wage campaign.

This sees a higher rate of pay for employees, with workers receiving £12.60 per hour rather than £12.21 from accredited Living Wage employers.

While there is no obligation to be part of this, it is important that businesses that are considering expanding into different territories are aware of cultural expectations.

Paying below this rate could result in a recruitment struggle as potential employees find their talents better rewarded elsewhere.

For businesses operating in Wales, it is vital to adhere to the guidelines imposed by the Welsh Language Measure 2011.

This regulation requires public bodies, and some private employers, to translate core employment documents when they are sent to multiple people or at the request of an individual.

Payslips are considered employment documents, and a Welsh Language translation can be requested by employees.

Rather than waiting for this to happen, savvy employers can implement a Welsh Language translation as standard on payslips so that employees feel that their culture is being valued.

This can also prevent risking noncompliance.

How do I keep up with payroll compliance?

This has been a review of some of the easily overlooked challenges to payroll compliance that face many businesses operating in the UK.

The best way to stay fully compliant is to seek professional support and guidance from trusted experts.

We are on hand to help you navigate any challenges that you could encounter when trying to accommodate the needs of your employees.

To stay payroll compliant whatever your business looks like, be sure to speak to our team today!

Neil Manuel