Nvq3_Business_&_Admin

UNIT 306 MANAGING THE PAYROLL FUNCTION Knowledge 1. The Employment Rights Act Legislation in respect of redundancy rights An employee’s rights under legislation within the Employment Rights Act are:  To be given written reasons for the redundancies  To be given written information regarding the numbers of employees affected  The proposed method for selection of employees to be made redundant  To receive a “redundancy payment” if employed for over 2 years  To receive a written statement regarding the breakdown of the payment  Be allowed reasonable time-off to seek alternative employment (or re-training) 2. Industrial tribunals legislation in respect of redundancy rights The main legislation regarding industrial tribunals in respect of redundancy rights are set by: • The Trade Union and Labour Relations (Consolidation) Act 1992 • The Collective Redundancies and Transfer of Undertakings (Protection of Employment) Regulations 1995 (SI 1995/2587) • The Employment Rights Act 1996 • The Collective Redundancies and the Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1999 (SI 1999/1925) • The Collective Redundancies (Amendment) Regulations 2006. The legislation briefly states that if an employee disagrees with the employer about their entitlement to redundancy payment they are entitled to take the matter to a tribunal. This can be done at any time, but if the claim is not brought within six months of the date employment ends, the employee may lose the right to payment. Although if a written claim is made to the employer during the six month period the employee will not lose their right to payment because of any other delays. 3. Data Protection Legislation The current Data Protection Legislation lays down several main points regarding the storage and retention of personal information. These are that all information: • Be obtained fairly and lawfully • Be held for specified and lawful purposes • Be processed in accordance with the person’s rights under the DPA • Be adequate, relevant and not excessive in relation to that purpose • Be kept accurate and up to date • Not kept for longer than is necessary for its given purpose • Be subject to appropriate safeguards against unauthorised use, loss or damage • Be transferred outside the European Economic Area only if the recipient country has adequate data protection 4. The PAYE regulations in respect of:  Tax and NI liability on pay, expenses and benefits o The regulations regarding tax and National Insurance liability on pay, expenses and benefits are set by HM Revenue & Customs. All staff are liable for tax and National Insurance on all pay, expenses and benefits. The amount to be deducted is laid out in “tables” issued by the HMRC, and individuals are given tax codes which identify a person’s “tax free” amount they can earn per annum. National Insurance contributions are also set out in “tables”, which clearly state the amount to be deducted from an individual’s wage. Expenses and benefits are also liable for deductions, for example if an employee has a company car this would be classed as a benefit, therefore deductions would be made.  National Insurance regulations concerning directors o The regulations regarding National Insurance contributions for Directors, differs from that of other employees as it states that a Company Director is classified as an “office holder”. Under Section 2(1) of the Social Security Contributions and Benefits Act 1992 they are liable for Class 1 NIC’s. This means that a Director must have their contributions calculated on an annual cumulative basis, therefore I would need to make a new calculation each time (e.g. four weekly) a director is paid, calculating their NIC’s on the total earnings paid to date in the tax year, or pro-rata period, including any bonuses or fees.  Tax and National Insurance regulations relating to “out of synch” payments o Where “out of synch” payments are made to an employee, the payment is subject to normal national insurance contributions, i.e. the payment is treated as part of the total pay at the time they are paid, irrelevant to when it was earned. For example an employee is normally paid on Friday 23rd March, but receives an “out of synch” payment of £120 on Sunday 18th March; NIC’s are calculated on that amount. When payroll is done on the 23rd March their normal weekly wage is £265, giving a total of £385 for that week, therefore NIC’s are calculated on £385. For tax purposes, the tax must be calculated in the normal way, however if it works out that there is tax to be “repaid”, then this must not be given to the employee. This amount must be added to the total due when the employee is next paid.  Tax and National Insurance regulations concerning termination and lump sum payments o Tax and NIC’s relating to termination and lump sum payments vary, in that some payments are taxable and others are not. If an employee’s employment is terminated either by them or the Company in accordance with their contract of employment (including Garden Leave and Payment in lieu of notice). If an employee is made redundant, and qualifies for statutory redundancy pay, the payment is tax and NI free, although if a “compensation payment is made, this amount is subject to both tax and NIC’s. However this rule only applies if the total amount of both compensation payment and the redundancy payment do not exceed the £30,000 tax free limit. Other payments made for normal salary and/or holiday pay is subject to tax and NIC’s as normal.  Legislation controlling attachments of earnings and their interaction with each other o If an AOE has been issued, the legislation covering the order and its interaction with other AOE’s clearly outlines that as the employer, we must:  set aside the employee’s protected earnings (a figure that will have been set by the court)  calculate the employee’s attachable earnings  deduct the amount specified in the order  pay the remainder to the employee  forward the money deducted to the court o If more than one AOE exists, we must first deal with any priority orders (in date order) then non-priority orders (again in date order). The first deduction must be made as detailed above, with any subsequent orders having the attachable earnings threshold reduced by the amount deducted under each previous order. 5. The information flows within the organisation I have to ensure the information flow within the organisation is accurate. To do this I ensure the Proprietor, Home Manager and Accountant are all provided with the correct information required. For example I collate all employee timesheets within the Home, collate number of hours worked, hourly rate, overtime, increased payments etc. Once this information is stored, I then forward it to the Accountant, along with details of any AOE’s, sickness details and annual leave breakdown for the final processing including transfer to individual accounts via BACS. The information, payment breakdowns, wage slips, etc are then returned to myself for final checking and distribution. I then provide an individual employee breakdown analysis to the Proprietor and Home Manager with regards to hours worked, pay, national insurance and tax. They also receive information regarding the employer contributions which are payable for National Insurance etc, along with a copy of the Wages Posting Schedule. The Accountant receives a copy of the Wages Posting Schedule, and details of any attachment to earnings cheques that may be required. 6. The organisational, external agency and employee requirements for information The organisational, external agency and employee requirements for information must comply with the DPA. Personal information relating to an individual must never be disclosed over the phone, any requests must be received in writing, and must only be given if there is a statutory requirement, contractual right or the individual has given their written approval. 7. The procedures for the security and confidentiality of information The Home has specific procedures on the security and confidentiality it holds. This incorporates the legislation set out in the Data Protection Act and also guidelines set by CSCI and the Criminal Records Bureau. These include: • Information be obtained fairly and lawfully • Information be held for specified and lawful purposes • Information be processed in accordance with the person’s rights under the DPA • Information be adequate, relevant and not excessive in relation to that purpose • Information be kept accurate and up to date • Information is not kept for longer than is necessary for its given purpose • Information is subject to appropriate safeguards against unauthorised use, loss or damage • Information is transferred outside the European Economic Area only if the recipient country has adequate data protection The Home’s confidentiality policy clearly states all the above points and that it is a breach of terms and conditions of employment if the policy is not adhered to. 8. The sources of information for the resolution of discrepancies The main source of information regarding the resolution of discrepancies regarding payroll, is myself. Should a staff member present with an issue regarding their wage, I would be their first point of contact. I would then either resolve the discrepancy, or if I am unable to do so, I would advise the member of staff of the course of action they should then take, for example, should they have a query regarding tax, I would provide them with the PAYE reference and contact details of our local HMRC office.