The next 12 months will see a number of new changes to payroll policy that could have an impact on a wide range of businesses.
To give an overview of how businesses could be affected by these changes, below are some of the highlights that employers will need to prepare for.
Private Sector IR35
From April 2020, where an individual is engaged by a medium or large-sized business in the private sector and works through a company, the employer will be responsible for assessing the individual’s employment status under the off-payroll working rules (IR35).
Where the rules apply, the business or agency will be responsible for deducting income tax and National Insurance contributions (NICs) via PAYE and will be required to pay employer NICs.
Businesses will be able to use the Check Employment Status for Tax (CEST) service, which is available to help businesses determine whether the off-payroll working rules apply. These new rules will not affect small businesses.
Postgraduate Loans (PGL)
From April 2019, taxpayers will be required to start repaying PGLs if they meet the threshold of £21,000 (England and Wales only). If they do meet the threshold, a deduction of six per cent will be taken from their wages.
The existing starter checklist provided by the Government will be updated to include a section for PGL. Employees’ P60 forms will also be changed to include a new box for PGL deductions, however, the existing P45 form will remain the same.
Parental Bereavement Leave and Pay
Employers will have to get to grips with a new workplace right to Parental Bereavement Leave and Pay for parents who lose a child under the age of 18.
This new right will include parents who have suffered a stillbirth after 24 weeks of pregnancy.
Those who qualify for the new right, which will commence from 6 April 2020, will be entitled to two weeks of paid Parental Bereavement Leave.
During this period, they will be paid at the statutory flat weekly rate of £145.18 or 90 per cent of average earnings (whichever is lower), if the person has at least 26 weeks continuous service at the date of their child’s death and earnings above the Lower Earnings Limit.
From April 2019 employers must provide payslips to all workers by law, and show hours on payslips where the pay varies by the amount of time worked.
Where this applies, the number of hours paid for on this basis must be shown, however, other hours worked, such as variable over time, does not need to be shown by law, although the Government has said that it may be useful to do so in some cases.
If a worker’s pay does not vary by time worked, such as where they receive a set salary each month, employers do not need to include an hourly figure to account for variations in pay caused by taking unpaid leave or being on statutory sick pay.
However, if a worker is paid according to the amount of time worked and takes unpaid leave or receives statutory sick pay any hours, they did work will still need to be included on their payslip.
Employers who do not follow the rules could have an action brought against them by an employee which could to them facing a claim before an Employment Tribunal.
This hearing could be made publicly available and could result in repayment of unnotified deductions made in the 13 weeks preceding the presentation of the claim, even where the employer was otherwise entitled to make the deductions.
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