Category Archives: Payroll News

TPR launches historic prosecution against firm which ‘meddled’ with workplace pensions

In the first known prosecution of its kind, a national recruitment company accused of illegally ‘meddling’ with its workplace pensions scheme is facing legal action at the hands of The Pensions Regulator (TPR).

According to reports, Derbyshire-based Workchain and a number of its Directors are facing prosecution after having opted employees out of the company’s auto-enrolment pension scheme illegally by using personal data to access individual online pension accounts.

Directors Phil Tong and Adam Hinkley, along with a further five senior members of staff, allegedly terminated employees’ pension scheme memberships in this way.

As a result of their actions, they have been charged with unauthorised access to a computer programme, contrary to section 1(1) of the Computer Misuse Act 1990, and are due to appear at Derby Magistrates’ Court on 7 June 2018.

TPR has said that the Directors’ actions were in direct violation of auto-enrolment regulations – which stipulate that employees who wish to opt out of a workplace pension scheme must do so themselves.

To date, the regulator has served some 79,879 compliance notices to employers who have failed in their auto-enrolment duties – on top of more than 32,000 fixed penalty notices (FPNs).

Many businesses have also been taken to Court over auto-enrolment failings, but this case marks the first time TPR has launched prosecutions for this particular offence.

In a warning to other businesses, the media has been keen to point out that Workchain’s Directors could potentially face a maximum sentence of six months’ imprisonment as a result of their actions.

At The Fish Partnership, we can offer support and advice on all of your payroll obligations, including administering auto-enrolment pensions. For more information about our services, please contact us.

Employers could see further PAYE RTI ‘tweak’

Employers could soon see a further ‘tweak’ to the operation of Pay As You Earn (PAYE) codes through the Real Time Information (RTI) system via dynamic coding.

As part of the new system of ‘dynamic coding’, since May 2017, the Government has been increasing the number of PAYE codes sent to employers.

The system aims to use the information that HM Revenue & Customs (HMRC) is gathering from various sources to estimate an individual’s total annual income and, from that, work out what their final tax bill will be.

Under dynamic coding, potential underpayments are replaced with in-year adjustments (IYAs), which reflect changes in an employee’s circumstances as soon as HMRC becomes aware of the change. This is called the ‘trigger point’.

However, it would appear that this system is struggling with irregular amounts, such as bonuses, commission, variable pay, dividends or income from overseas.

As far as bonuses are concerned, particularly if they are paid early in the year, estimated pay may be considerably higher than actual pay.

The estimated pay calculation assumes that pay accrues evenly throughout the year and, where a bonus has been paid, average weekly or monthly pay will be higher than normal. This calculation is only performed when there is a trigger event and is not revised each month following submission of the final payment submission (FPS).

Interestingly, however, the solution to many of the problems associated with dynamic coding lies with the employee. Workers need to ensure they have activated their Personal Tax Account (PTA) so they can check the amounts they have been charged and inform their employers accordingly.

For more information about The Fish Partnership’s payroll services and how we might be able to help, please contact us.

Companies ‘named and shamed’ over NMW failings

In March, the Government published a list of 149 employers who failed to pay the basic rate of the National Minimum Wage (NMW).

Those accused included restaurant chains such as Wagamama and TGI Friday’s, as well hotel giant Marriott, Premier League football club Stoke City and rugby club St Helens.

According to the Business Department, the failure to pay meant that a total of £1.1 million was due in back pay to some 9,200 workers, particularly among the retail, hairdressing and hospitality sectors.

According to the report, failing to pay workers for travelling between jobs, not paying overtime, and deducting money for uniforms were some of the reasons for the underpayments.

However, as Business Minister Andrew Griffiths commented when the list was published, “there are no excuses for short-changing workers” and “this is an absolute red line for the Government”.

He added that employers who cross this red line will get caught and will be forced to pay back every penny, in addition to fines of up to 200 per cent of the wages owed.

On 1 April, the NMW rose from £7.50 to £7.83 – and employers need to make sure they have accounted for this in their payroll.

A spokeswoman for the TUC said it was “shocking” to see so many household names publicly shamed over NMW failings. She said that there was no excuse for not paying workers the NMW, as it has been in use for almost 20 years.

At The Fish Partnership, we can help businesses to implement any changes to the NMW into their payroll. For more information about our payroll services, please contact us.

‘Improved regulatory grip’ for TPR

The Department for Work & Pensions (DWP) has said it will improve the regulatory grip of The Pensions Regulator (TPR) so that the body can better deal with the rogue handling of defined benefit (DB) schemes used by a select few employers.

As stated in a White Paper entitled Protecting Defined Benefit Pension Schemes, DWP recognises that most employers want to “do the right thing” by their staff regarding pension schemes, but states that it is necessary to guard against the “small minority” who may be putting workers at risk.

In recent months, a discussion has emerged providing greater clarity around the existing funding standards. TPR has since said that it will now enter into talks with stakeholders about how this might work, including how to revise its DB Funding Code of Practice to set out its expectations of trustees and employers.

The regulator will be able to punish those employers who deliberately put their pension schemes at risk by introducing punitive fines. It will also be able to provide guidance or support to trustees and employers when dealing with events that may impact on their pension scheme.

In addition, the Government said it would ensure that TPR receives the information it needs to be able to conduct investigations effectively and efficiently and will give the body the ability to respond more quickly and decisively where it is believed that wrongdoing has taken place.

TPR had previously called on the Government for more effective powers, so the organisation is delighted with the proposals.

As a spokeswoman for the regulator said, the body will gain the ability to be clearer about what it expects from employers in relation to scheme funding and tougher where a scheme is not getting the funding it needs.

At The Fish Partnership, we can provide ongoing support and payroll advice where necessary. If you would like more information about our payroll services, please contact us.

Parliamentary Bill hopes to tackle so-called ‘bogus’ self-employment

A draft Bill put together by the Parliamentary Work and Pensions and Business Committees aims to tackle what MPs say are loopholes in employment law that allow firms to use ‘bogus’ self-employment status to hire cheap labour and avoid granting basic rights, such as holiday pay and the minimum wage, to workers.

The Bill says that all personnel should be considered workers ‘by default’, with the onus on the firms using their services to prove otherwise. According to the chair of the Work and Pensions Committee, Frank Field, this “would end the mass exploitation of ordinary, hard-working people in the gig economy” and would “put good business on a level playing field, not being undercut by bad business”.

In recent months, several gig economy firms have been embroiled in a series of legal battles over how they treat those who work for them. Towards the end of 2017, Uber lost its bid to ‘leapfrog’ an appeal to the Supreme Court against a landmark ruling ordering it to treat its drivers as employees.

However, around the same time, Deliveroo won a case at the Central Arbitration Committee (CAC), which ruled that the food delivery app’s couriers are self-employed, rather than workers. The CAC said it made the decision because Deliveroo’s riders have the right to put forward a substitute to do their work for them.

Reaction to the Bill has been mixed so far, with one commentator saying that making individuals ‘workers’ by default would be a significant change to the current law.

The new rules would provide protection to individuals who work flexibly and make it more difficult for businesses to exploit the system by relying on self-employed people to carry out work.

However, she added that it will mean an additional financial burden for many businesses that operate flexible workforces. Such firms will also face additional administrative and financial costs if they are obliged to provide written statements of terms, obligations and rights to workers in the future.

At The Fish Partnership, we can provide ongoing support and payroll advice where necessary. If you would like more information about our payroll services, please contact us.

The Pensions Regulator cracking down on employers avoiding auto-enrolment responsibilities

In the first prosecution of its kind, The Pensions Regulator (TPR) has convicted a bus company and its boss for deliberately avoiding auto-enrolling their staff into a workplace pension scheme.

In December, Stotts Tours – and founder Alan Stott – pleaded guilty to a total of 16 offences of knowingly and wilfully failing to comply with the law on workplace pensions under section 3(2) of the Pensions Act 2008.

As a spokesman for TPR said, dozens of employees at the firm had been entitled to workplace pensions since June 2015 but were denied them because their employer deliberately failed to set them up.

He added that auto-enrolment is not an option but the law, stressing that employers should be in no doubt that if they wilfully refuse to become compliant, they could end up with a criminal record and will still have to give their staff the pensions they are due.

The Regulator has previously stressed that it is happy to raise prosecutions in any “appropriate cases”.

In recent months, there have been a number of fines for non-compliance with auto-enrolment legislation, mainly because of procedural errors and oversights, which have even included common excuses such as “running out of time”. However, the use of criminal prosecution powers is something new.

Automatic enrolment began for the largest employers in October 2012, and is expected to lead to around 10 million people starting to save or saving more towards their retirement by the end of this year.

The rules require employers to automatically enrol their workers into a defined contribution (DC) pension scheme which meets certain minimum requirements, and to make contributions towards the pensions of workers that do not opt out of the scheme once enrolled.

At The Fish Partnership, we offer advice on auto-enrolment at very competitive rates, and our payroll team can manage all of the necessary changes so that your employees’ pay is correctly adjusted. Many of our existing clients are already benefiting from our expertise to ensure that they meet their obligations. For more information about our payroll services, please contact us.

New thresholds announced in Autumn Budget to affect payroll from April 2018

There were a number of changes announced in the Autumn Budget on 22 November 2017 in relation to pay and tax, which will affect payroll from April 2018 onwards. These changes range from a rise in the basic rate of income tax to an increase in the National Living Wage (NLW).

Chancellor Philip Hammond announced a rise in the basic rate income tax threshold to £11,850 and an increase in the higher rate threshold to £46,350, while the National Living Wage will go up to £7.83 from £7.50.

In addition, Mr Hammond said he would delay implementing a series of National Insurance Contribution (NIC) policies by one year and confirmed that the Government will no longer proceed with an increase to the main rate of Class 4 NICs from nine per cent to 10 per cent.

There were a number of changes around vehicles too, although fuel duty was frozen again for the eighth year running.

The existing benefit-in-kind (BiK) tax supplement of three per cent will rise to four per cent from April 2018.

Mr Hammond also confirmed that HM Revenue & Customs (HMRC) will clarify the law so that employers who charge their electric vehicles at work will not face a BiK charge once the changes have taken effect.

In addition, the first-year vehicle excise duty (VED) rate for diesel cars that do not meet the latest emission standards, will go up by one band. However, the Chancellor was clear that the VED measure will only apply to cars.

As he announced the measure, he promised that “no white van man or woman will be hit” by the move, which will fund a new £220 million Clean Air Fund to provide support to the implementation of local air quality plans.

At The Fish Partnership, our payroll team can manage all of the necessary changes to your payroll so that your employees’ pay is accurately adjusted in line with any changes. For more information about our payroll services, please contact us.

Employers ‘named and shamed’ for minimum wage law breaches

The Government has published a list of 260 employers that have failed to pay 16,000 workers a combined total of £1.7 million in back pay over the last seven years.

According to the Department of Business, Energy and Industrial Strategy (BEIS), Sports Direct and Primark were two of the worst offenders – having failed to pay employees a combined total of nearly £1 million.

However, as far as sectors are concerned, firms in the hospitality, hairdressing and retail industries all ranked poorly in terms of underpaying their workers, mainly because they did not pay employees for travelling between jobs, and deducted money for uniforms. Some were also not paying for overtime.

As Business Minister Margot James pointed out, there is “no excuse” for not paying staff the minimum wage, adding that the Government will come down hard on businesses that break the rules.

A spokesman for the Low Pay Commission added that it is good to see HM Revenue & Customs (HMRC) continuing to target large employers, as well as those with only a few employees.

The National Minimum Wage (NMW) is the minimum pay all workers are entitled to by law and the hourly rate depends on the worker’s age. All working people aged 25 or over currently receive the National Living Wage (NLW) which is set at £7.50 per hour. Those under 25 will receive the NMW, which ranges from £3.50 for apprentices to £7.05 for those aged between 21 and 24.

Since 2013, the scheme has identified £8 million in back pay for 58,000 workers, with employers fined a total of £5 million. In 2018, the Government is expected to pump even more money into minimum wage enforcement.

At The Fish Partnership, we can offer support and advice on all of your payroll obligations. For more information about our services, please contact us.

Funding injection to help HMRC enforce minimum wage compliance

According to the Government’s latest Labour Market Enforcement Strategy report, HM Revenue & Customs (HMRC) is to receive an additional £5.3 million of funding in 2017/18 to ensure businesses are paying employees the national minimum wage (NMW) and national living wage (NLW).

This follows on from a previous increase of £20 million in 2016, which has allowed the team to expand to more than 360 members of staff.

According to the report, it is estimated that there were 362,000 jobs paying less than the NMW or NLW in April 2016, which equates to around 1.3 per cent of all UK employee jobs.

Within its findings, the Government flagged up accommodation and food services, the wholesale and retail trade and other services such as hairdressers and beauty as the worst offenders.

Shockingly, of those who were underpaid, more than 40 per cent received wages that were at least 50p an hour below the NLW.

It is thought that this high rate of underpayment was what led to the increase in penalties on arrears from 100 per cent to 200 per cent in April 2016.

Currently, HMRC enforces non-compliance with the statutory wage legislation in five ways:

  • Ensuring that the wage arrears are paid to the worker;
  • Civil penalties of up to 200 per cent of the arrears owed per worker up to £20,000;
  • A naming scheme under which the Department for Business, Energy and Industrial Strategy (BEIS)  will name all employers who owe their workers over £100;
  • The new regime of labour market enforcement undertakings and orders;
  • And criminal investigation possibly resulting in a prosecution by the Crown Prosecution Service (CPS).

Depending on the severity of the case employers can face one or all of the penalties listed above, so it pays to ensure that a business is compliant with the current NMW and NLW requirements.

At The Fish Partnership, our payroll team can manage all of the necessary changes to your payroll so that your employees’ pay is accurately adjusted in line with any recent changes. We can also offer advice and support relating to all aspects of auto-enrolment. For more information about our payroll services, please contact us.

Chancellor urged not to extend new off-payroll rules to private sector

Chancellor Philip Hammond has been urged to ensure that new IR35 rules which were phased in for the public sector in April 2017 are not extended to the private sector in the upcoming autumn Budget.

The calls come from employment intermediary PRISM, which says that the Chancellor must “stop and analyse” all evidence for and against an extension of the new off-payroll rules before his much-anticipated statement on 22 November.

The new rules, which have been in force for the public sector since the beginning of April, now see that public sector end clients are responsible for determining the IR35 status of the contractors and freelancers they provide work to.

Previously, such public bodies and recruitment agencies were not liable for defining the IR35 status of contractors.

Earlier this year, a U-turn on initial proposals saw the new IR35 rules extended to those contracting for the NHS, despite strong opposition.

Fears now abound that the off-payroll rules will soon be extended to the private sector, perhaps as part of the upcoming Budget announcements in November.

But PRISM Chief Executive Crawford Temple has warned that ‘superimposing’ the same legislation on the private sector could duplicate instances of non-compliance – as has been seen in the public sector since the reforms were first phased in earlier this year.

Mr Temple said: “Extending these rules to the private sector will exacerbate the problem and will not deliver the expected HMRC returns.

“[It] is highly unlikely that HMRC will be able to collect any taxes due from the non-compliant providers and therefore the anticipated tax gains will be significantly reduced,” he said.

The Chancellor is now being urged to consider a “structural reform of the tax system” ahead of his upcoming Budget, in a bid to iron out any issues caused by the IR35 reforms.

At The Fish Partnership, we can offer support and advice on all of your payroll obligations. For more information about our services, please contact us.