Change comes regularly to the way in which we handle our payroll. From April 2019, new changes to payslips and payroll legislation takes effect. This should have a significant impact on the way in which you organise your payroll as a business. Let’s take a look at some of the new changes below.
WHAT ARE THE LATEST PAYSLIP CHANGES FROM APRIL 2019?
From 6 April 2019, two main changes to the rules on payslips come into effect. The changes cover payslips for pay periods that begin on or after this date.
Firstly, employers will need to provide all workers with an electronic or printed, fully itemised payslip to account for all hours worked. If a worker works more than their contracted hours, those additional hours need to reflected and reported for on the payslip. For example, where a worker has a fixed salary each month, but works overtime with additional pay at an hourly rate, the extra hours of overtime should be shown on the payslip. The hours can be shown for their total hours or for each variable pay element.
Secondly, the right to a payslip is extended to all workers – not just employees. It also applies to contractors, freelancers and other types of ‘non-employee’ workers, for pay periods that begin on or after 6 April 2019. A contractor, for example, must now not only have their day rate shown on their payslip but also the total number of hours worked.
The rule change aims to give greater clarity and transparency between employers and workers for the number of hours worked. This will assist with both reconciling working hours, and accuracy in payment in accordance to the National Minimum Wage. This useful HMRC guide for businesses should help you to fully understand what all payslips must now include.
It’s one of the most significant changes to payroll since auto-enrolment pensions, albeit, in practice, it’s only a relatively small change that needs to be made to payroll management processes to ensure compliance.
From April 2019, minimum pension contributions increased to 3% employer contribution and 5% employee contribution (8% total) – up 3% in total prior to April 2019.
You may need to review your pension processes within payroll to ensure it’s running smoothly and that it’s up-to-date. This ruling is now in force, so payslips will need to be adjusted to reflect the new rates accordingly. While there is no legal requirement to communicate these new changes to workers, it’s good practice to keep people informed. Workers should have been notified about contribution level increase changes over time when they first enrolled in your pension scheme.
NATIONAL MINIMUM WAGE CHANGES
One other interesting adjustment stated for acceptance, too, is the change in the National Minimum Wage and National Living Wage. From April 2019, these increased by a small but significant margin. For workers over the age of 25, the National Living Wage increased from £7.83 per hour to £8.21 per hour. The National Minimum Wage for those below the age of 25 include:
- Apprentices will now receive £3.90 per hour (previously £3.70 per hour).
- Those aged 16-17 will receive £4.35 per hour (previously £4.20 per hour).
- Those aged 18-20 will receive £6.15 per hour (previously £5.90 per hour).
- Those aged 21-24 will receive £7.70 per hour (previously £7.38 per hour).
As an employer, it’s essential you modernise and update your payslips and payments to ensure you are paying these rates. You should check that all your employees are being paid at least the minimum wage rate that now applies for compliance. Be sure to verify all your payslips and payroll systems to reduce the chance of anyone slipping through the net.
STATUTORY FAMILY-RELATED PAY AND STATUTORY SICK PAY CHANGES
Another adjustment comes in the rate that you must pay for statutory maternity, paternity, adoption, and shared parental pay. This increased to £148.68 for pay weeks commencing on or after 7 April 2019. Also, the rate for statutory sick pay increased to £94.25 from 6 April 2019.
You will need to make sure that any and all staff on maternity, paternity, adoption, shared parental and/or sick leave are given the correct payments. Payroll should be updated as soon as possible to account for this.
While not yet part of law from April 2019 onward, there is a coming change to look out for. In 2018, The Parental Bereavement (Leave and Pay) Bill was given Royal Assent. Though it will not likely become active until April 2020, it will provide employed parents with the right for a minimum of two weeks leave following the death of a child under the age of 18. This would also include suffering a stillbirth from 24-weeks of pregnancy. If you are eligible, you could also claim pay for this period of absence.
REDUNDANCY PAYMENT CALCULATION ADJUSTMENTS
One other small change that came into play on 6 April 2019 was new limits on employment statutory redundancy pay. Employees with two years’ service must be provided with an amount which is based on their age, length of service within the company and their weekly pay. Weekly pay is subject to a maximum amount of £525 per week, as of 6 April 2019. You should look to update and amend all redundancy related payments to ensure they reflect the new amount.
POSTGRADUATE LOAN REPAYMENTS
Lastly, taxpayers will now be expected to start repaying any postgraduate loans. This comes into play if you are over the £21,000 annual income threshold in England or in Wales. If you do meet this threshold, a 6% deduction will be added to payslips. Make sure any staff who are paying postgraduate loans are made aware of this change.
FINDING HELP WITH PAYSLIP AND PAYROLL CHANGES
Should you be unsure of how or why these changes may impact upon you, reach out for assistance. At Devonshire Green, we can help you to see the personal and professional impact of these payroll and payslip changes. Staying on top of payroll adjustments can be tough, as can managing payslips properly.
For more personal assistance related to your business, do not hesitate to reach out for assistance today.