Payment In Lieu Of Notice

Jo Marshall • January 31, 2018

We’ve had our first payroll query via a Facebook follower.

The question, or statement, was “my employer has just informed me that any lump sum payments we receive will now be taxable and NIable, is this correct?”

Digging into this a little bit more, the lump sum payment is paid to employees who are leaving the company, in effect, the lump sum is a PILON payment, a Payment In Lieu Of Notice. In this case, the employee receives 3 month’s salary tax and NIC free, upon them leaving the company.

The employer is basically paying the employee 3 month’s salary, as a lump sum payment, because the employee will not be working their notice period. This is termed as a non-contractual PILON. Which means the payment can fall within the “redundancy” tax free limit of £30,000.

This is the last tax year an employer will be able to pay a PILON tax free. From April 2018, all PILON payments will now be taxed and NI’ed. However! The redundancy threshold of £30,000 which is tax and NIC free, is still valid. So, if you are being made redundant, i.e. your role is no longer required within the business, you can still receive up to £30,000 tax and NIC free.

So to summarise, from April 2018, employers must tax and NIC on all PILON payments, but redundancy payments up to £30,000 are still tax and NIC free.

Hope this helps

Thanks for reading!

Jo Marshall

Yorkshire Payroll Services Ltd

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CEO Pay Reporting

By Jo Marshall • March 2, 2018

I was scrolling through Twitter this morning when I spotted the front page of the Financial Times. The headline reads “Sorrell feels the strain as WPP is ‘walloped’ by ad spending cuts”. The reason this caught my attention, was I’d recently presented the CIPP Payroll and HR Legislation Update course in Leeds and a section of the presentation relates to “CEO pay ratios reporting”. Apparently, according to the House of Commons Library, Martin Sorrell, the CEO of WPP, was the best paid CEO in the UK. In 2016 he was paid £48,000,000!! Yes, 48 million pounds in one year, that’s 826 times more than the average pay of an employee. Believe it or not, his average is down when compared to the year before, in 2015 he was paid 1,336 times more than the average pay of an average employee. The article can be found in the House of Commons Library. https://commonslibrary.parliament.uk/economy-business/work-incomes/pay-it-forward-the-meaning-of-company-pay-ratios/ The high levels of executive payments have been subject to general debates for many years, but the government has now expressed concerns as the rate of the increases, certainly over the last two decades, in executive payments when compared to pay generally. So, the government is now starting to act. In August 2017, the government announced new reforms which include: Financial Reporting Council (FRC) to revise UK Corporate Governance Code Require *quoted companies to explain executive remuneration in context of wider pay New legislation to require annual reporting of ratio of CEO pay to average UK employee, with narrative *Quoted companies are those listed on the Main Market of the London Stock Exchange. In December 2017 FRC released its consultation document on reforms. http://frc.org.uk/getattachment/31897789-cef6-48bb-aea9-f46b8cf80d02/Proposed-Revisions-to-the-UK-Corporate-Governance-Code-Dec-2017-1.pdf Interestingly, Richard Howson, CEO of Carillion, was paid £1.5 million pounds in 2016, he’s a local lad too, lives in Skipton according to The Construction Index website. Thanks for reading! Jo Marshall Yorkshire Payroll Services Ltd

Holiday Pay

By Jo Marshall • February 16, 2018

I’ve seen a few entries on Facebook where people have stated they are working 13 hour shifts, or are missing the football match again because they were working overtime on a Saturday. Did you know, the national minimum wage for people over 25 is £7.50 per hour, it increases to £7.83 in April 2018. If your pay falls below this amount, your employer must top up your pay. For example, if you work over and don’t get paid for that time, or you are asked to come into work before your shift officially starts, or to stay behind to go through security checks, these hours are all included in national minimum wage calculation. It is these areas that Argos neglected to include in their employees pay, Ryan Air are the next to face investigation. Holiday pay. If you do work overtime on a regular basis and you are paid for the extra hours you work, your employer should be including the average overtime you have been paid into your holiday pay. For example, your normal salary is for working Monday to Friday, but you regularly work on a Saturday and are paid for those extra hours. When you go on holiday, if you are only paid for the normal Monday to Friday hours, you are receiving less pay than you normally would. From a legal point of view, you are therefore being deterred from taking your holiday leave entitlement. Because of this, recent legal cases have highlighted this fact and in general, workers should receive the same pay while they are on annual leave as they normally receive while they are at work. They should not be deterred from taking leave because they are paid less while they are on leave. For those people who receive Commission payments, recent cases have confirmed that Commission payments should also be included in the holiday pay calculation. We are now waiting for the calculation method to be confirmed; e.g. average over the last 12 weeks, last 52 weeks etc. Watch this space, if Commission payments are to be included in the holiday pay calculation, what could be next?? Thanks for reading! Jo Marshall Yorkshire Payroll Services Ltd

How do I calculate my pay?

By Jo Marshall • January 26, 2018

Starting with NIC

Two Years Later...