If you’re in charge of your company’s payroll, 1st April 2018 was a very important diary date. Not for playing April Fools’ pranks, but for ensuring you are properly on track to implement the scheduled rise in the National Minimum Wage, together with a planned increase in Pensions Auto Enrolment contributions.
Unfortunately, many major businesses have hit the headlines in recent months for failing to make the appropriate employee payments. Cases have been numerous and substantial, and even include companies renowned for their employee care, such as John Lewis, whose recent minimum wage error led to annual partner underpayment over six years.
Meanwhile, Primark failed to pay over £230,000 to 9735 workers, Sports Direct underpaid 383 workers by over £167,000, and Debenhams recently had to repay £134,000 to more than half its shop workers.
As you may have noticed, the worst offending industries are retail, closely followed by hairdressing and hospitality.
Small mistakes add up
It’s perhaps worth noting that in Debenhams’ case, an accounting error had left each of the affected shop staff around £11 short in wages, which is a figure that could possibly go unnoticed without thorough checks and monitoring in place. In February, Argos also admitted that they had failed to pay 37,000 of their staff an average of £64 each.
These cases surely highlight the need for intuitive payroll systems and staff that are able to keep up with wage changes, as well as capturing and rectifying mistakes before their effects are widely felt. Not to mention preventing any issues from escalating and making the national headlines.
Pensions auto-enrolment: non-compliance can be costly
From April 2012, employers large and small have been enrolling their staff in mandatory company pension schemes. Contributions are made via payroll, with strict qualifications that relate to the National Minimum Wage – meaning it is even more vital to ensure your employees are paid the correct salary.
Again, it is very important to keep on top of your pension auto enrolment obligations before they escalate into uncontrollable issues, and possibly even a criminal conviction.
In February, The Pensions Regulator ordered a UK bus company, Oldham-based Stotts Tours, to pay over £60,000 for failing to comply with their auto enrolment obligations, plus £10,000 in backdated pension contributions and over £14,000 in civil fines.
As the table below indicates, both employer and employee contributions increase from 6th April, and will rise further from April 2019.
|Date effective||Employer minimum contribution||Employee contribution||Total minimum contribution|
|Current until 5 April 2018||1%||1%||2%|
|6 April 2018 until 5 April 2019||2%||3%||5%|
|From 6 April 2019||3%||5%||8%|
What you can do to ensure compliance
There is a clear need for businesses to ensure pinpoint accuracy when it comes to payroll arrangements, with strict and regular monitoring in place. Whether you employ just a few or thousands of staff, failure to comply with payment obligations could lead to heavy fines, criminal convictions and national media coverage – in addition to a seriously disgruntled workforce.
If your resources are limited, outsourcing your payroll obligations could be an ideal solution. Rickard Luckin offer a dedicated payroll service that takes account of all employer obligations, automatically ensuring legal compliance and protecting your company from regulatory breach.
If you have any questions about your company’s payment obligations, or would like to discuss the payroll services we offer in more detail, please contact our friendly team on 01268 548127.