Payroll Guidance

Our payroll team round up the latest payroll guidance, including Employment Allowance, the King’s Coronation, Holiday Pay, National Minimum Wage and statutory rate changes. If you need our help with any aspect of payroll, please do get in touch.

Employment Allowance

The Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to £5,000.

If your payroll is eligible for the allowance in 2023/24, and we run your payroll, our payroll team will automatically claim this for you and reduce your PAYE liability accordingly.

Pensions: Automatic Enrolment/Re-enrolment

All eligible employees must be enrolled into a qualifying pension scheme before they can opt out. As soon as you have eligible employees on your payroll, a pension scheme must be set up, even if you believe your employees wish to opt out.

Employers must not actively encourage their staff to opt out of their workplace pension. Any decision to opt out must be taken freely by the staff member without influence from the employer.

Employees Working Variable Hours

If an employees’ hours are different from one pay period to the next, these are called ‘variable hours’, and might be if:

• they worked overtime
• the number of hours they work changes in each pay period
• the rate they get for working certain hours is different

In these cases, the total number of variable hours must be set out on the payslip.

Electronic Payslips (SSL)

Electronic payslips are a secure, hassle-free way of ensuring your employees receive their payslips on time. It also gives employees access to all historical payslips as well as other important documents like P60’s and Auto Enrolment letters. If your payroll provider does not provide this option and you would like to talk to us about electronic payslips, please do get in touch.

The King’s Coronation – the implications of an extra bank holiday

There will be an additional bank holiday this year, to mark the Coronation of King Charles III. This will be Monday 8th May. The wording of employee contracts needs to be carefully considered to avoid any breaches when it comes to allowing employees paid time off.

As an example, contracts which provide staff with 20 days annual leave plus eight bank holidays will not automatically entitle staff to the additional day.

Similarly, where a contract entitles staff to 28 days including bank holidays, there will no obligation to provide an extra day off.

However, contracts which state that employees receive 20 days annual leave plus bank holidays will be contractually entitled to the additional day off.

Starter Checklist

The HMRC Starter Checklist (Starter checklist (publishing.service.gov.uk)) was updated in September 2022.  It is important to ensure that any “new joiners ” complete the latest version as they must complete a Starter Checklist or provide a P45 from a previous employer before they can be added to your payroll.

Holiday Entitlement

Employees are entitled to holiday leave from their first day of employment. All workers are legally entitled to 5.6 weeks paid holiday a year which can include bank holidays. This includes workers with irregular hours and workers on zero-hour contracts.

Holiday entitlement and pay can no longer be calculated using the 12.07 % method.

Useful links for calculating holiday entitlement:
Holiday entitlement: Calculate leave entitlement – GOV.UK (www.gov.uk)
How much holiday you should get: Checking holiday entitlement – Acas

Holiday Pay

If a worker has no fixed or regular hours, their holiday pay will be based on the average pay they received over the previous 52 weeks worked. For any weeks where no pay was received, you must use an earlier week in its place.

When an employee takes holiday, they must get the same pay as they would if they were at work, regardless of their working pattern.

Any regular additional payments that are intrinsically linked to an employees work, must be included when calculating an employee’s holiday pay for at least 4 weeks of leave. This includes:

• Overtime
• Bonuses
• Commission

Holiday pay must be paid to an employee at the time that the holiday is taken. Holiday pay cannot be spread out over the year and added to the hourly rate as a ‘top up’.

Useful links for calculating holiday pay:
Calculating holiday pay: Checking holiday entitlement – Acas
Holiday entitlement: Holiday pay – GOV.UK (www.gov.uk)

National Minimum Wage 2023/24

The rates which will apply from 1 April 2023 are as follows:

Employers must start applying the new rates in the first pay reference period that starts on or after 1 April.

Statutory Rates 2023/24

The rates which will apply from April 2023 are as follows: