Take a look at common mistakes made with day to day payroll processing. Learn how to avoid these errors, which may prove costly to your business or result in non-compliance.

1. How to Avoid
the Top Payroll Errors
Peoplesoft User Group May 2018 1

2. Agenda
1. NMW/NLW
2. Statutory Payments
3. Student Loans
4. National Insurance
5. Employer Supported Childcare Schemes
6. Real Time Information
Peoplesoft User Group May 2018 2

3. How important is payroll accuracy?
SD Worx survey 4,000 employees
in companies with
between 10 – 10,000 staff across Europe,
found that 44% of respondents were paid late.
• 48% paid late, were also paid incorrectly
• 79% paid incorrectly, identified the issue
themselves
• 61% of UK respondents paid incorrectly,
attributed it to poor management
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4. National
Minimum
Wage
4

5. National Minimum Wage/National Living Wage
• BEIS are responsible for monitoring NMW/NLW
• But HMRC have been appointed to oversee enforcement
• Compliance budge tripled to £25 million in 2017/18
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6. Criminal Offence
Gov.uk
‘It’s a criminal offence
for employers to not pay
someone the National Minimum Wage
or National Living Wage,
or to fake payments records’
6

7. National Minimum Wage/ National Living Wage
• The Government now name and shame those who fail
to pay workers
• Latest figures show 260 employers named for failing to pay
16,000 workers NMW/NLW
1. Primark Stores Ltd underpaid £231,973 to 9,735 workers
2. Sports Direct underpaid £167,036.24 to 383 workers
3. Motherwell F.C. underpaid £2755.34 to 12 workers
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8. Peoplesoft User Group May 2018 8
NMW & NLW Rates
8
Age 1 April 2017 1 April 2018
Age 25 and over (NLW) £7.50 per hour £7.83 per hour
Age 21 to 24 years old £7.05 per hour £7.38 per hour
18 to 20 years old £5.60 per hour £5.90 per hour
16 to 17 years old £4.05 per hour £4.20 per hour
Apprentice rate for under 19
or over 19 in 1st year of apprenticeship £3.50 per hour £3.70 per hour
Accommodation offset rate
£6.40 per day £7 per day

9. Change of Rate
ACAS:
‘The new pay rate will only affect
someone's pay from the first full pay
reference period after that date’.
• The same rules apply an age
change
• ‘It’s not about when you work,
it’s about the start of the pay
reference period you pay’
9

10. Avoiding the Common Traps!
ACAS:
‘The new pay rate will only affect
someone's pay from the first full pay
reference period after that date’.
• The same rules apply an age change
• ‘It’s not about when you work, it’s about
the start of the pay reference period
you pay’
10

11. Avoiding the Common Traps!
• The Pay Reference Period (PRP)
is when the money is earned
• But the rate only increases from
the first FULL PRP
• Payments in arrears only count
if paid by the next PRP
11

12. Avoiding the Common Traps!
• Salary sacrifice
– pay post sacrifice counts
towards NMW/NLW
• You cannot reduce a worker’s pay
below NMW/NLW even if they agree!
• Court Order Admin fee can reduce pay
for NMW purposes
12

13. Every Minute Counts!
• You must include every minute worked
• For example the T&A system only pays
on the quarter hour if a worker is late
• Include time spent cashing up,
replenishing stock, staff meetings
• Include time spent searching staff
13

14. Underpayments
14
• If you discover
you have underpaid a worker
pay it as soon as you can
• Ideally by the next pay period

15. Penalties
15
The penalty for non-payment is:
• 200% of the amount owed unless
the arrears are paid within 14 days
• Maximum fine for non-payments
is £20,000 per worker
• Underpayments are calculated
at the current hourly rates

16. The Living Wage Foundation
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• Do not confuse “The Living Wage” with the National Living Wage
• The Living Wage is a voluntary arrangement that employers
may commit to
• The Living Wage Foundation sets out the rules of operation
and the conditions that must be met by the employer to claim
they pay the Living Wage
• There is a Living Wage and a London Living Wage rate
www.livingwage.org.uk/

17. The Living Wage
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Living wage increased from 1 Nov 2017 to:
• £8.75 per hour and
• £10.20 an hour in London
More than 3,600 employers employing 150,000 workers belong
to Living Wage Foundation
• Including:
• IKEA
• Aviva
• Nationwide

18. The Right to Work in the UK
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19. Illegal Working Civil Penalties
This report shows the number of illegal workers found and
the value of the penalties issued between 1 July to 30 September 2017
PeoplesoftUserGroupMay2018
19
Regions
Number of
penalties
Number of
illegal
workers
found
Value of
penalties
issued (£)*
LSE ME NEYH NW SNI WSW
314
422
128
187
33
37
53
66
28
62
44
Key:
LSE - London &
South East
England
ME - Midlands &
Eastern England
NEYH - North
East England,
Yorkshire &
Humberside
NW - North West
England
SNI - Scotland &
Northern Ireland
WSW - Wales &
South West
England
* This figure is the gross value of penalties issued. The recoverable value will be reduced due
to adjustments made following objections and/or appeals.
52
£500,000£2,160,000£4,950,000 £770,000 £540,000 £758,125

20. Guidance for employers can be found at:
https://www.gov.uk/government/public
ations/right-to-work-checks-employers-
guide
There is a quick answer tool on Gov
to help employers check they have
the correct documentation:
https://www.gov.uk/legal-right-work-uk
The Right
to Work
in the UK
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21. Student Loans
Peoplesoft User Group May 2018 21

22. Peoplesoft User Group May 2018 22
Earnings
in month
£
Student
Loan
Deduction
£
Earnings
in month
£
Student
Loan
Deduction
£
Earnings
in month
£
Student
Loan
Deduction
£
Earnings
in month
£
Student
Loan
Deduction
£
1 - 2094 0 3039 -
3049
86 3995 -
4005
172 4950 -
4961
258
2095 -
2105
1 3050 -
3061
87 4006 -
4016
173 4962 -
4972
259
2106 -
2116
2 3062 -
3072
88 4017 -
4027
174 4973 -
4983
260
2117 -
2127
3 3073 -
3083
89 4028 -
4038
175 4984 -
4994
261
2128 -
2138
4 3084 -
3094
90 4039 -
4049
176 4995 -
5005
262
New Student Loan
Table format
on Gov
https://www.gov.
uk/government/
publications/sl3-
student-loan-
deduction-tables

23. Peoplesoft User Group May 2018 23
1. If the employee
ticks the
Student Loan
box in error
you cannot give
a refund unless
instructed by
HMRC
2. If they don’t
know which
Plan use Plan 1
3. From 6 April
2018 you must
state Plan type
on FPS

24. National Insurance
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25. NIC Thresholds 2018/19
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LEL PT ST UEL/UST/AUST
Weekly £116 £162 £162 £892
Monthly £503 £702 £702 £3,863
Annual £6,032 £8,424 £8,424 £46,350

26. National Insurance for under 21 years old
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• Employee aged from 16 to under 21
• 0% Employer Class 1 NICs up to
Upper Secondary Threshold (UST)
• UST same as UEL for 2018/19
• UST could change in future tax years

27. National Insurance for Apprentices under age 25
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• 0% Employer NICs up to
Apprentice Upper Secondary
Threshold (AUST)
• Applies to apprentices
under the age of 25
• Legislative power to alter age

28. Statutory Maternity Pay
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29. Peoplesoft User Group May 2018 29
SMP Tables
improved format
for 2017/18
& all statutory
payment tables
for 2018/19

30. SMP Calculator on Gov
• A recent calculation of SMP
using the calculator on Gov.UK
was found to be incorrect
by nearly £250!
• HMRC are aware and agree
with the findings
• Gov have been notified
• Employers should exercise caution
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31. A Change to the SMP Rules
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32. EMPLOYER 1 EMPLOYER 2
Employee working for
Employer 1 and
Employer 2 before the
end of qualifying week
I have satisfied all the
relevant criteria and
I’m entitled to SMP
from this employer
I don’t satisfy all the
relevant criteria here
so I’m not entitled to
SMP from this
employer
BEFORE END OF QUALIFYING
WEEK
Employer 2 does not have to pay SMP
but I can continue to work for him
before and after confinement and
employer 1 will still have to pay me
SMP. This is because I was working for
employer 2 before the qualifying week
This employer must pay me
SMP once my MPP begins
and continue to pay me until
I return to work. The MPP
period will run in the
background .
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33. Employee works for another employer
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Employer 1
&
Employer 2
Joins
Employer 2
11th
week EWC
Qualifying
Week
Paid SMP by Employer 1
May also qualify for SMP from Employer 2

34. Employee works for another employer
Peoplesoft User Group May 2018 34
11th
week
Employer
1
Joins
Employer 2
EWC
QW
Receiving SMP from Employer 1
8thweek Birth
Leaves
ER 2
SMP Employer 1
stops from birth
SMP ER 1
RESTARTS

35. Employee works for another employer
Peoplesoft User Group May 2018 35
11th
week
Employer
1
Joins
Employer
2
EWC
QW
Receiving SMP from Employer 1
Birth
Leaves
Employer 2
SMP
Employer 1
STOPS
SMP ER 1
DOES NOT
RESTART

36. Statutory Sick Pay
Peoplesoft User Group May 2018 36

37. SSP Linking Tables 2018 on Gov are wrong!
6 April
does
not link
to
9 February
it links to
8 February
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38. Employer Supported Childcare Changes
www.childcarechoices.gov.uk
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39. Employer Supported Childcare Changes
“On 13 March the Government announced that the employer supported
childcare schemes, namely childcare vouchers and directly contracted
childcare would remain open to new entrants for an additional 6 months,
until 4 October 2018.
We recognise that this decision may have created some practical difficulties
for some employers. As an employer, you can continue to allow your
employees to join your childcare voucher or directly contracted childcare
schemes up until 4 October 2018 (as long as they have joined a scheme and
received their first voucher by that date).
This means that you and your employees can keep taking advantage of
the income tax and National Insurance reliefs.”
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40. Employer Supported Childcare Changes
“However, we understand that some employers may have closed their
scheme to new entrants on 5 April 2018, (the date originally stated),
and it may be challenging to re-open it for the 6 month extension.
Any scheme which has tax and National Insurance contributions
advantages, must normally be open to all employees.
As a temporary measure, we will use our collection and management
powers to allow the tax and National Insurance contributions
advantages to continue for employees enrolled in a childcare voucher
- or directly contracted childcare scheme - on or before 5 April 2018;
even where employers choose not to re-open their schemes.”
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41. Peoplesoft User Group May 2018 41
Real Time
Information

42. Real Time Information
“The RTI payroll data you submit plays a critical role in keeping your employee’s
tax records up to date. Filing accurate information helps HMRC match your
payroll submissions to the correct record.
You can help by taking the following steps
• Submit your payroll on or before your employees’ payday- HMRC have found
some employers incorrectly use the date they process their payroll.
• Record all employees on your payroll submission, including those who earn less
than the lower earnings limit (LEL)
• Submit accurate and up to date employee information.
This includes full name, date of birth, National Insurance number and address.
Do not use any pseudo/default information.”
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43. Real Time Information Issues
Problem has come to light regarding leavers where Payroll
was notified after the payroll had been run
• The employer included the leaving date on the FPS
the following month
• No further pay was due and a P45 had not yet been issued
• Employer used late reporting reason H
• They were awarded a £400 penalty
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44. Reasons for late submission
A – Notional payment
B – Notional payment
C – Notional payment
D – Payment subject to Class 1 NI but P11D for tax
F – No requirement to maintain P11 for work
done on the day
G – Reasonable excuse
H – Correction to earlier submission
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45. Real Time Information Issues
Example
Payroll informed employee left at the end of January
FPS for January has already been submitted
Employer includes the leaving date on the February FPS
stating the last time the employee was paid was 31 January
No further payment is due to the employee
Employer uses the late payment code H
Peoplesoft User Group May 2018 45

46. Real Time Information Issues
Example
• Payment date 31/01/18 with leaving date 31/01/18
• FPS submitted 25/02/18 - so the submission is classed as ‘late’
even where there is no actual payment made.
Peoplesoft User Group May 2018 46

47. Real Time Information Issues
To prevent a potential penalty,
the FPS with the leaving date
must include a payment date that is
on or later than the submission date
(So in the example above the payment date
should have shown 25/02/18 or later)
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48. Peoplesoft User Group May 2018 48

49. Any Questions?
Peoplesoft User Group May 2018 49
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