Are you paying employees correctly, deducting tax and national insurance and reporting to HMRC in the correct way?
Changes such as Auto Enrolment and the National Living Wage (NLW) continue to impact employers and employees.
Not only is it a legal requirement for employers to manage their payroll accurately, but failing to do so can lead to disgruntled employees, missing resources and costly penalties for non-compliance .
In this post we go through recent changes that all employers need to know about and how to incorporate them into your payroll procedures as smoothly as possible.
Legal pay requirements
NLW rates until October 2016
It is now a legal requirement for employers to pay the NLW to employees aged 25 and over. The new rate of £7.20 an hour came into force from April 2016, replacing the previous the previous national minimum wage (NMW) rate of £6.70.
NMW rates from October 2016
Employers should check if their employees are eligible for the new NLW & NMW rates. Workers must be 16 years old to get the NMW, and 25 or over for the NLW.
Employees must do the following:
- prepare records and take suitable action
- inform staff about the new hourly rate
- if staff are under 25, check if they’re earning the right NMW rate.
The following hourly rates apply for both NLW and NMW:
| Age | Hourly rates until October 2016 | Hourly rates from October 2016 |
| 25 and over | £7.20 | £7.20 |
| 21-24 year old rate | £6.70 | £6.95 |
| 18-20 year old rate | £5.30 | £5.55 |
| 16-17 year old rate | £3.87 | £4.00 |
| Apprentice rate* | £3.30 | £3.40 |
*Apprentices aged 16-18 and those aged 19 or over who are in their first year.
The NMW rate will continue to apply for workers aged 21 to 24 until 2016.
Auto Enrolment
You may be aware that the Government has introduced legislation that requires all employers to set up a compliant pension scheme for their employees - referred to as Workplace Pensions or Auto Enrolment.
Employers will be required to assess their employees each time they are paid and enrol them into the pension scheme should they meet certain criteria. In addition, employers will be required to make pension contributions on their behalf and maintain certain records to remain compliant with the legislation.
Employers must make sure that their systems and processes are in place to assess and correspond with employees, calculate contributions and deal with pension companies and The Pensions Regulator, and as follows to perform the following tasks:
- assess staff and identify if they need to be automatically enrolled
- retain information on auto-enrolment (staff names, addresses etc) to pay the right amount of contributions for the right person
- calculate how much you need to pay
- generate and send data to your pension provider
- communicate the right information to your staff
- handle requests to opt into or join in the pension scheme
Contact us
dhPayroll is a specialist payroll bureau expert in Auto Enrolment solutions and would be pleased to assist is any payroll or Auto Enrolment matters.
If there is a specific area of payroll you would like us to help you with, contact us by completing the form on our website.
Alternatively you can call us on 020 8977 0905 (Hampton Wick Office) or 01932 855644 (Weybridge Office) to speak to an adviser.
