Latest Changes HR Managers Need To Know About Employee Remuneration
29th July 2019
Numerous new changes have recently come into effect in UK Employment Law which will affect your business. It is important that you are enacting these changes and informing your staff. You should also be aware of the financial and procedural impact on your organisation to minimise disruption and ensure compliance. Here are the main changes that you need to know about…
It is now obligatory for all employers to provide payslips to all their workers. Previously, it was only necessary to issue payslips to employees specifically, rather than workers as a whole.
A person is generally classed as a ‘worker’ if:
- they have a contract or other arrangement to do work or services personally for a reward (contract doesn’t have to be written)
- their reward is for money or a benefit in kind, for example, the promise of a contract or future work
- they only have a limited right to send someone else to do the work (subcontract)
- they have to turn up for work even if they don’t want to
- their employer has to have work for them to do as long as the contract or arrangement lasts
- they aren’t doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client
Payslips should also show hours where pay varies by the amount of time worked. For example, for a worker who has a fixed salary each month and works overtime with additional pay at an hourly rate, only the overtime hours will need to be shown.
These hours can be shown as a single total of all such hours in the pay period or broken down into separate figures for different types of work or different pay rates. It should be clear on the payslip which pay period these hours were worked in. Bear in mind that this only applies for pay periods that began on or after 6 April 2019.
You can find out more about the new Payslips legislation on the gov.uk website here.
The national minimum wage is updated every year, so it is important to keep an eye on these changes on an annual basis. For the 2019-20 tax year, the National Living Wage and National Minimum Wage are as follows:
Those aged 25 and over – £8.21 per hour
21-24-year-olds – £7.70 per hour
18-20-year-olds – £6.15 per hour
Under 18s – £4.35 per hour
Apprentices – £3.90 per hour
Apprentices are entitled to the apprentice rate if they’re either:
- aged under 19
- aged 19 or over and in the first year of their apprenticeship
Workers are required to be at least school leaving age (last Friday in June of the school year they turn 16) to be entitled to the National Minimum Wage. In order to be entitled to the National Living Wage, they must be 25 or over.
There is full information on who is and is not entitled to National Minimum Wage and National Living Wage on the gov.uk website here.
Since April 2018, employers have been required to increase the minimum amount that they and their staff must pay into their automatic pension enrolment scheme. An additional planned increase came into effect on 6 April 2019. From this date, the minimum contribution that an employer must make towards their employees’ pensions is 3%, while the staff member must contribute 5%, taking the total minimum contribution up to 8% (previously 5%).
Both you as the employer and the staff member themselves are each entitled to pay in more than this minimum percentage amount. Note that if your payments are greater than this increased minimum rate, you will not need to pay any more.
Rather than a one-off adjustment, you will need to stay on top of your responsibility towards your employees’ pensions. Each time you pay your employees, for example (including new staff members), you must assess their age and earnings to check whether they need to be put into a pension scheme and how much you need to pay in. You are also required to keep records on your pension scheme and manage any employee requests to join or leave it.
The Pensions Regulator monitors the contributions that are paid into workplace pensions. It is important to note that they can tell if payments are not being made into the staff’s automatic enrolment scheme, and will take action against you if you are failing to comply. Your responsibility for employee pensions is a legal duty, and if you are not meeting these duties you will be required to backdate any missed payments.
As part of your role as HR Manager, it is your responsibility to ensure that staff on maternity, paternity, adoption, shared parental leave, and those on sick leave, are paid at least the statutory minimum rates.
As of April 2019, the weekly rates increase as follows:
Statutory maternity, paternity, adoption and shared parental pay: £148.68
Statutory sick pay: £94.25
You will also be required to review and update your company’s policies and documents that mention these rates.
Employers are required to pay those with two years’ service a redundancy amount based on the employee’s weekly pay, their length of service, and their age. The maximum weekly pay amount (from 6 April 2019) is £525.
Note that only employees with a minimum of two years’ service are entitled to statutory redundancy pay.
You can calculate statutory redundancy pay using the gov.uk website’s Redundancy Calculator.
These figures are correct for the 2019/2020 financial year, but rates are subject to change on an annual basis. That’s why it’s important to stay up-to-date with the latest figures as they are announced. Using a professional accountant to handle all these aspects of your business is the best strategy for ensuring full ongoing compliance with the latest legislation and rates across these and other financial matters.
Guest post contributed by Perrys Accountants, a London-based accountancy practice, which handles accounts for a wide range of businesses and industries.