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CEO Pay Reporting

j0marshall@yahoo.co.uk (Jo Marshall) — Fri, 02 Mar 2018 09:37:18 GMT

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

j0marshall@yahoo.co.uk (Jo Marshall) — Fri, 16 Feb 2018 12:17:01 GMT

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

Payment In Lieu Of Notice

j0marshall@yahoo.co.uk (Jo Marshall) — Wed, 31 Jan 2018 10:52:20 GMT

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

How do I calculate my pay?

j0marshall@yahoo.co.uk (Jo Marshall) — Fri, 26 Jan 2018 14:36:13 GMT

Ok, so to start the ball rolling…

First question, how is my pay calculated?

For those of us receiving a payslip from our employer, we are paying two types of taxes. Income Tax 20% and National Insurance 12%. In reality, we are paying a whopping 32% tax!

On top of this, our employer also pays 13.8%, if you work for a large company, the chances are your employer is also paying an additional 0.5% under the new apprenticeship levy too.

So, how do we calculate our pay, lets start with National Insurance, we’ll use a monthly salary of £2000. National Insurance calculation has thresholds that represent different percentages.

↑ 2%

Upper Earnings Limit

If we earn above £3750 per month, the national insurance contribution reduces to 2%

↑

12%

↓

Primary Threshold

Anything we earn between £680 per month and £3750 per month, the national insurance contribution is 12%

↓ 0%

Anything under the Primary Threshold £680, the percentage is 0%, or nil if below £490.

Our salary of £2000, this amount is less than £3750, so we don’t have to worry about the 2% calculation, all we need to do is take our salary £2000 minus the £680 Primary Threshold, which leaves £1320. We then times this by 12% £158.40 employee national insurance contribution.

Try it with your payslip, do you get the same answer?

If so, we’ll move onto tax.

Thanks for reading!

Jo Marshall

Yorkshire Payroll Services Ltd

26th January 2018

Two Years Later...

j0marshall@yahoo.co.uk (Jo Marshall) — Fri, 26 Jan 2018 14:27:18 GMT

Intoduction

In April 2018, Yorkshire Payroll Services Ltd will celebrate it’s second anniversary!

Its been a busy two years, delivering payroll training including expenses and benefits, pensions, gender pay gap reporting to name but a few, to delegates up and down the UK. The difficulties have been keeping up with the changes in legislation, in the last two years alone, we’ve had; statutory exemptions, trivial benefits, apprenticeship levy, gender pay gap reporting, re-enrolment, national minimum wage, holiday pay calculations, the list goes on…

Following the third Finance Act 2017-19, last year, we hopefully have a chance to catch our breath and digest what we need to do moving forward (well, only until Brexit has finished!).

What I have learnt over the last two years, is the average person isn’t aware of how their pay is calculated, what the purpose of their tax code is, what their statutory rights are, what tax relief they are entitled to. Most haven’t opened their Personal Tax Account yet, even though HMRC have created an app that you can download onto your phone.

Based on this, I’d like to start sharing some of the knowledge I have gained over the years to help everyone to start to understand all this payroll jargon. If there is anything in particular you would like me to explain, please message me and I’ll create a post with the explanation.

Thanks for reading!

Jo Marshall

Yorkshire Payroll Services Ltd

26th January 2018