Professional June 2018

Professional June 2018

Official publication of The Chartered Institute of Payroll Professionals

in Payroll, Pensions & Reward

Issue 41 June 2018

It all kicks off…

National Payroll Week Prepare to celebrate

Tapping into talent Goals and skills

CIPP’s Annual Excellence Awards Pitch perfect

CIPP update | Policy hub | Professional development

Our innovative cloud based payroll & HR solutions include software, consultancy, training and managed services which are quick to set up, with no need for installations, downloads or upgrades.

Women are the largest untapped reservoir of talent in the world. Hillary Clinton (1947–)

In this issue you’ll find several articles (pages 37–42) covering various aspects of the wide topic of talent management Editor’s comment

retention of talented professionals and the role technology plays. In ‘The philosophy of hiring talent’, Lisa Gillespie discusses motivational issues in the recruitment of talent, advising that “the starting point is to play to human nature”. (Though this might in part explain why some employers seek ‘jedi’ and ‘ninja’ in their job advertisements (page 22), I wonder who would apply.) And, finally, I imagine many if not everyone will relate to Penny’s predicament in the ‘Confessions’ article (page 48).

which I hope will resonate. Whatever your role and duties, I believe you’ll find something of worth and relevance in them.

In ‘A change of heart’, Jeremy Campbell argues that payroll and human resources departments must undergo a fundamental shift in the way they operate, from being a largely administrative function to a transformative one. In ‘HR agenda or wish list’, Sandra Walker urges use of software to create a better understanding of the strengths and weaknesses of your human resource and how these can be improved. In ‘Tapping into Talent’, Kavitha Sivasubramaniam discusses

Mike Nicholas MCIPP AMBCS Editor

I’m in the middle of a lovely break between contracts, but I’ve been busier than ever. I recently took over as chair of the Lincolnshire County Amateur Dramatic and Operatic Society, and we had Chair’s message

about what we are going to bring to the ‘show’; and we have to make sure we fully explain how we are going to make a difference and what key attributes we are going to bring to the role. Another way of showcasing our attributes, whether as an individual, as a team or company, is making a nomination for our Annual Excellence Awards. You’ll notice in this edition we’re focussing on talent management, and there are some great tips on writing a nomination. You’ve got until 10 August to get your nominations in, so look at what you’ve achieved, both personally and in your team, and tell us all about it. You never know, you might be standing on stage at our fabulous awards ceremony receiving an award from our after dinner speaker for the occasion, Alistair McGowan.

our first rehearsal this week for our production of the Rogers and Hammerstein classic, The King and I, which is on at the Lincoln New Theatre Royal in September. Things are looking great, the cast are settling into their roles nicely, and we look set to have a fabulous show – it’s all very exciting and gives me an opportunity to use my business skills for a fun cause. Being present throughout the auditions reminded me of the similar process we enter in our day-to-day business world, where we see potential candidates for job roles and go through the interview process (which I’ve done myself recently when applying for new contracts). As the interviewer we have to look beyond the obvious and see the potential in what the individual can bring to the ‘production’ or to the ‘role’. As the interviewee, we have to think

Eira Hammond ChFCIPPdip Chair, CIPP

CEO’s message

So, year-end nearly done and dusted? P60 certificates all done and issued? It’s that time of the year when the CIPP board have conducted a review of our strategy; looking at our lines of business, with a

We are pleased to say that all strategic objectives were achieved, and this has been reflected in the take up of all these offerings by our members. It’s also worth a reminder that as a not-for profit membership organisation, every penny (and pound) is reinvested in keeping our qualifications and training offerings in excellent shape and in ensuring our membership offering has benefits in enhancing your career. For example, we have introduced 50% off our payroll and HR legislation update course to all paid members and to those who take up membership. In next month’s editorial I’ll set out our planned strategy for this new financial year and there will be further enhancements to your membership package later this year. So watch this space!

focus on how we can continually improve our service offerings to the full membership base. This is something we carry out on an annual basis and with some detailed preparation and input from the CIPP management team. This time last year, we identified several key strategic areas. Firstly, to ensure a clear payroll, pensions and reward career path through our qualifications portfolio. We also identified the need to provide world class training provision. This includes a unique review process, where in terms of accurate content, our payroll and HR legislation update course is no older than seven days. Digital was also high on our agenda as we looked to provide more online content, in training and qualifications. And finally, a fresh-look prospectus was in planning.

Ken Pullar FCIPP Chief executive officer, CIPP

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| Professional in Payroll, Pensions and Reward |

Issue 41 | June 2018

in Payroll, Pensions & Reward PROFESSI NAL

Also available online at payrollpensionsandreward.org.uk

Contents

June 2018

43

The philosophy of hiring talent

Lisa Gillespie discusses our soul, nature, motivation

Features

18

20

15

Reporting expenses and benefits in kind Beverley Smith provides timely information and guidance

It’s an emergency Peter Minchinton reveals yet further changes to taxation rules

Starters and leavers Jill Smith covers the basic procedures

28

31

27

Performance management in the 21st century Michelle Shelton discusses the reality and need for change

Compare the pension.com Henry Tapper previews rise of online comparison sites

Going ape for pensions Johanna Nelson wonders about appealing to the inner chimp

| Professional in Payroll, Pensions and Reward | June 2018 | Issue 41 2

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Editor Mike Nicholas 01273 412 836 | [email protected] Advertising Jill Bonehill 0121 712 1033 | [email protected] Design James Bartlett and Nicole Gumery [email protected] Printing Warwick Printing Company Ltd

Pregnancy, discrimination, disability Nicola Mullineux reviews decisions in three cases

It all kicks off… Danny Done discusses workplace tactics and key players

41

42

Chief executive officer Ken Pullar FCIPP CIPP board of directors

Jason Davenport ACIPP Suzanne Gallagher MCIPP Stuart Hall MCIPPdip Eira Hammond ChFCIPPdip Ros Hendren MSc FCIPP, Mgr, FCMIdip, FHEA Lizabeth Lay MSc FCIPPdip Karen Thomson MSc ChFCIPP, FHEA Cliff Vidgeon FCIPP Ian Whyteside MCIPP, FMAAT, ATT

HR agenda or wish list? Sandra Walker argues for talent management to receive attention

A change of heart Jeremy Campbell sets out why payroll and HR must adapt

44

Useful contacts Membership [email protected] 0121 712 1073 Education [email protected] 0121 712 1023 Training [email protected] 0121 712 1063 Events [email protected] 0121 712 1013 Marketing and sales [email protected] 0121 712 1033 General enquiries

Tapping into talent Kavitha Sivasubramaniam looks at the role of employers

Regulars

01 Editor’s comment, and Chair’s and CEO’s message 04 Membership insight On your behalf, Advisory, Five minutes with, National Payroll Week 10 Professional development Diary of a student 11 CIPP update CIPP receives award, New course, New Chartered members, CIPP Awards host Events, news and developments

23 Events Horizon 26 Pensions news 27 Pensions insight 31 Reward insight 41 Feature articles Talent management 52 Confessions of a payroll manager

[email protected] 0121 712 1000

cipp.org.uk @cipp_uk

Articles Please support this magazine so that it can continue to be a part of your membership package. Trademarks The CIPP logo, the initials ‘CIPP’ and the words ‘Professional in Payroll, Pensions and Reward’ and ‘CIPP Consult’ are trademarks of the Chartered Institute of Payroll Professionals. Copyright: The Chartered Institute of Payroll Professionals 2018. The Chartered Institute of Payroll Professionals, CIPP, Goldfinger House, 245 Cranmore Boulevard, Shirley, Solihull, West Midlands, B90 4ZL. Switchboard 0121 712 1000 Fax 0121 712 1001 Copyright This magazine is published by The Chartered Institute of Payroll Professionals in whom the copyright is vested. All rights reserved. No part of this publication may be reproduced, stored in a retreival system, or transmitted in any form or any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. The views expressed in this publication are not necessarily those of the CIPP or the editor. The information and comment contained in this publication are given in good faith, their accuracy or completeness cannot be guaranteed.

14 Payroll news 15 Payroll insight 22 Industry news

Additional online content 19 Company car diesel supplement 36 Tips to overcome stress 37 Stress bust your workplace culture 38 Diabetes week 39 The death of team building

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| Professional in Payroll, Pensions and Reward |

Issue 41 | June 2018

MEMBERSHIP INSIGHT

On your behalf

Policy team update

Diana Bruce MCIPPdip, CIPP senior policy liaison officer, provides an update on three key issues

...if the debtor requests details in writing the employer must provide details within 28 days

DEA guidance updated Thanks to the resolve of one of our members, an area of the direct earnings attachment (DEA) guidance on GOV.UK has been revised to make the information about telling an employee about the amount of deduction clear. Member Paul Hughes questioned the guidance around notifying employees of the amount of deduction under a DEA. We turned to the DEA Debt Management team at the Department for Work and Pensions (DWP), who are responsible for this area of guidance. The DWP team answered Paul’s questions specifically and assured us that they would update guidance which, true to their word, they have done. Q. Looking at the new DEA guidance, how do they want us to show ‘how a deduction amount was calculated’ and how would they like us to advise our employee ‘well in advance of payday when the first deduction will be made’? A. Since the change to Regulation 21 (which was actually amended in 2015) there is no requirement on the employer to automatically notify the debtor of the recovery. However, if the debtor requests details in writing the employer must provide details within 28 days. See the Social Security (Overpayments and Recovery) Amendment Regulations 2015 [https://bit.ly/2rcKZPb]. Q. Is this requirement to notify employees in advance a ‘must do’ or recommendation? If so, is it policed and what level of non-compliance do you find? I have to admit to assuming that most employers believe that they have

fulfilled this requirement when they issue the payslip that details the deduction. A. See previous answer, and yes if they notify them via the payslip employers have fulfilled their requirements in law. [The original and amended texts from

the two guides for employers are shown in the tables below, slightly edited.] Flexible SSP We know from the government’s response to the Green Paper consultation Improving

Original text Amended text DEA Guide for employers (https://bit.ly/2vYD3GU)

You have a duty to your employee to notify your employee in writing of: l the amount of the deduction taken, including any amount taken for administrative costs … l how the deduction amount was calculated. The above information may be provided on the payslip for the pay period to which the deduction relates. Ensure you advise your employee that deductions will be made from their wages/salary and made over to DWP Debt Management, well in advance of the payday when the first deduction will be made. The regulations state that the employer must inform the employee of the amount of the deduction, including any administration costs, and how that amount is calculated. This information can be included on the payslip, by showing the amount with the explanation ‘DEA table’ or ‘DEA fixed’.

You have a duty to your employee to notify them in writing of the amount of the deduction taken, including any amount taken for administrative costs… The above information may be provided on the payslip and must be sent or given to the employee not later than the pay day for the pay period to which the deduction relates or, where this is not possible, not later than the following pay day. If your employee requests an explanation in writing of how the deduction was calculated, you must provide a written response within 28 days of receiving their request. The regulations state that the employer must inform the employee of the amount of the deduction, including any administration costs. This information can be included on the payslip, by showing the amount with the explanation ‘DEA table’ or ‘DEA fixed’. The regulations also state that the employer must provide a written response within 28 days of a request of how the deduction was calculated from their employee.

DEA More detailed guide (https://bit.ly/2HK4Agw)

| Professional in Payroll, Pensions and Reward | June 2018 | Issue 41 4

Policy hub

Lives – The Future of Work, Health and Disability (https://bit.ly/2Kug3CO) that government wants to see a reformed statutory sick pay (SSP) system “which supports more flexible working…to help support phased returns to work including spacing out working days during a return to work, managing a long-term health condition, or recovering from illness”. In advance of a consultation to be launched later in the year, we published a survey to gather early thoughts and opinion around the cost, the impact of change and the support that would be needed to implement change. Of those who responded, 89% offer both SSP and occupational sick pay (OSP); and as part of SSP or OSP, after sick leave, 86% offer employees an initial return to work on altered hours. There are several barriers identified that would need to be overcome in order to implement flexibility into sickness absence schemes. These include current SSP legislation, software adaptation, process change, cost and educating all relevant parties about a change – payroll, human resources, managers, employees. Comments from respondents included: ● “The amount of education around any change in returning from or alteration to SSP/sick leave would be huge!” ● “We would need some considerable lead time if legislation was to change (as would software providers) – this could not be a last-minute change.” ● “Reinstate some form of employer recovery.” ● “The three waiting days should be abolished, it makes calculating SSP, linked sickness etc much more complicated to calculate than it needs to be.” ● “Change SSP legislation to incorporate payment for phased returns.” The responses to cost for system changes ranged from zero to £100,000. Modern working practices In July 2017, the Good work: the Taylor review of modern working practices (https://bit.ly/2udwhLx) was published, which included 53 recommendations. It considered a range of issues, including the implications of new forms of work, the rise of digital platforms and the impact of new working methods on employee rights, responsibilities, freedoms and obligations. In February 2018, the government published its response (https://bit.

ly/2Ebc528) to the recommendations, which was accompanied by the launch of four consultations. The policy team has been gathering opinions and evidence from the payroll profession and other stakeholders through a series of surveys and roundtable discussions to inform our responses to these consultations, summarised as follows.

right to request a more predictable and stable contract m strengthen the ‘worker voice’ – to examine the effectiveness of the Information and Consultation Regulations in improving employee engagement in the rights – This consultation (https://bit. ly/2nJWNXZ) sets out the government’s intention to enforce a wider range of basic employment rights on behalf of vulnerable workers, and: m seeks evidence on the extent of the problem faced by low-paid workers in accessing sick pay and holiday pay to help target enforcement efforts m sets out the plans to simplify the enforcement process for employment tribunal awards m outlines the intention to introduce a naming scheme for unpaid employment tribunal awards m takes forward the recommendations that employment tribunal judges should be obliged to consider stronger punishments for employers who ignore previous tribunal judgments m seeks views on how best to implement these measures. l Employment status – This significant consultation (https://bit.ly/2nTDhb5) paper examines an area that is complex in nature and application and looks to pick up on recommendations, including: m there should be a clearer outline of the tests for employment status, setting out the key principles in primary legislation, and using secondary legislation and guidance to provide more detail m the current three-tier approach to employment status should stay as it remains relevant in the modern labour market, but renaming as ‘dependent contractors’ the category of people who are eligible for worker rights but are not employees m in developing the test for the new dependent contractor status, ‘control’ should be of greater importance, with less emphasis placed on the requirement to perform work personally and a renewed effort should be made to align the employment status framework with the tax status. All CIPP current surveys and consultation responses are accessible workplace and more generally l Enforcement of employment

...should be a clearer outline of the tests for employment status...

● Agency workers – This consultation (https://bit.ly/2nOpdjy) looks at proposals to improve employment rights for agency workers, including to: m amend legislation to improve the transparency of information which must be provided to work seekers both in terms of rates of pay and those responsible for paying them m consider whether the remit of the Employment Agency Standards (EAS) ought to be extended to cover policing umbrella companies and other intermediaries in the supply chain m repeal the legislation that allows work seekers to opt out of equal pay entitlements (the Swedish Derogation) m consider extending the remit of EAS to include compliance with the Agency Worker Regulations 2010. l Increasing transparency in the labour market – This consultation (https://bit.ly/2E7tn0i) looks at five key recommendations: m a payslip for all workers – to extend the right to a written statement to ‘dependent contractors’ as well as employees m continuous service extension and clarity – the break in service period for continuous service should be extended beyond one week m holiday pay – increasing awareness of holiday pay entitlements, changing the reference period by extending from 12 to 52 weeks and ensuring atypical workers receive their holiday pay entitlement m right to request – all workers should have more choice, where possible, in how and when they work including having a

under My CIPP / Policy Hub / Consultations on cipp.org.uk . n

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| Professional in Payroll, Pensions and Reward |

Issue 41 | June 2018

MEMBERSHIP INSIGHT

Revenue & Customs’ (HMRC’s) National Insurance Manual https://goo.gl/NASCWk which explains the criteria that must be applied to use the table letter for an apprentice under 25. Q: It has come to light this month that an employee (who is aged 38) was placed on the wrong NI category four years ago by mistake. We have corrected the category going forward, but I would like advice on how we can correct the class 1 NICs for those four years? A: You will now have the correct category for this current year, so you can collect anything owed for this current year by collecting up to double their normal employee deductions, if you can show this is a good faith error. You will not be able to collect arrears for previous tax years in the current year. To correct the previous years’ NICs that have been incorrectly taken or not taken you would use an earlier year update (EYU) return via real time information and you should pay over all the unpaid NICs (both primary and secondary) to HMRC as soon as possible. See GOV.UK https://goo.gl/ tvNFV1. You would also have to re-issue the employee’s P60 certificate for these amended tax years to show the correct figures once you have reported the corrections to HMRC. Q: Please can you advise what the average weekly earnings value needs to be when calculating statutory maternity pay (SMP) for a baby born after April 2018? A: In order to qualify for SMP the employee needs to have average weekly earnings (AWE) of at least the class 1 NICs lower earnings limit (LEL) in force on the last day of the qualifying week (QW). The weekly LEL of £116 (being the LEL for 2018–19) applies for the purpose where the baby is due on or after 15 July 2018. The LEL figure of £113 (being the LEL for 2017–18) applies where the baby is due on or before 14 July 2018. Q: Under the transfer of undertaking protection of employment regulation (‘TUPE’) we have an arrangement in place for a few employees, one of whom is in receipt of SMP. Does the outgoing employer have to pay all the remaining SMP?

Advisory Service is available 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m.

to 4.30p.m. on Fridays. It is free to all CIPP members * , students and attendees of approved CIPP courses and conferences in the last six months. Call 0121 712 1099 , email [email protected] or visit cipp.org.uk for frequently asked questions.

Advisory

*please see summary at cippmembership.org.uk for details.

Q: I must make a payment regarding shares to a former employee, in respect of whom a student loan deduction operated. Would the student loan deduction have to be applied to this payment? A: Firstly, you will need to decide whether this payment after leaving will attract class 1 National Insurance contributions (NICs) or not. If the payment after leaving attracts class 1 NICs liability then you will need to apply the student loan deduction. Please see the following link: https://goo.gl/aDI845. Then it will be dependent on whether the payment after leaving exceeds the student loan threshold for the pay period as to whether a deduction would be taken. Q: During the earlier really bad weather some of our employees were unable to get home from work, so they had to buy additional clothing. The company would like to reimburse the employees for the clothing they bought. Would this be considered as a taxable benefit? A: Unfortunately, this kind of reimbursement would be classed as a benefit in kind, as it is not classed as protective clothing or a uniform. Any clothing that an employee would wear for common decency and normal protection against the elements would not be exempt from tax and NICs. Also, as you are reimbursing the cost of the clothing to the employee you should do so through the payroll and the payment would be subject to pay as you earn (PAYE) income tax and class 1 NICs.

Q: I’m seeking clarification on company cars and capital contributions from employees. What is the amount of the capital contribution that is reported: is it whatever the total contribution is for the tax year, or would it be the cumulative amount over the lease of the company car? A: A capital contribution is usually a lump sum paid by the employee to the employer at the start of the provision of the company car, and there is a limit of £5,000 that can reduce the cash equivalent of the benefit. So, if the employee makes a capital contribution of £3,000 this means for each year the employee has the use of the car that will reduce the cash equivalent of benefit reportable in the P11D return accordingly. Q: We have several employees who are apprentices and are being paid the national living wage. Do we use National Insurance (NI) category H or do these employees have to actually be paid on the apprenticeship pay rates to use it? A: To use the apprenticeship NI table letter H the employee must have a contract for ‘apprenticeship’. They must also be under 25 years of age and be taking appropriate training. If the employees concerned are apprentices over age nineteen who are in their second or third year of apprenticeship you would need to pay them the appropriate national minimum/living wage (NM/LW) rate. So, the actual apprenticeship rate of pay is not a factor in the NI category you choose. Please use the following link to HM

| Professional in Payroll, Pensions and Reward | June 2018 | Issue 41 6

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Policy hub

A: In a true TUPE arrangement it is not the outgoing employer’s responsibility to pay all the remaining SMP to the employee who is being TUPE’d out as the liability passes smoothly and seamlessly over to the new employer. So, this should not impact on the employee at all and the SMP will just continue to be paid. Q: I am about to set up a payroll for a new client who has started their own company, with their position being a director. I have received a copy of their last P45 which includes all their taxable earnings made to date. Will these earnings be used and included in the threshold for director NICs or is this separate and only taken into consideration in month 12? A: You are probably aware directors can have irregular payment patterns and they often have the power to influence how and when they receive their pay. This means that if class 1 NICs for them were calculated under the ‘normal’ basis they could pay their annual salary in one single week which would result in them paying less NICs than a normal employee who is paid the same amount but spread over the whole year. Under legislation, directors’ NICs are calculated based on an annual earnings period, in a similar way to PAYE. However, the one difference is that you do not include previous employment earnings in the calculations. The standard annual earnings period method is a cumulative method involving calculating the NICs liability in each pay run on a year-to-date basis using the annual earnings thresholds. This means that the NICs are calculated on NICable earnings to date using the annual thresholds then deducting the amount of NICs paid to date, with the balance being the amount of NICs due for the pay period. This means that the director does not have to pay any NICs unless/until the earnings exceed the annual primary threshold. And they would pay 12% until the earnings exceed the annual upper earnings level (UEL). In this scenario the director has been appointed during the tax year therefore NICs will be calculated on a pro-rata cumulative basis. This method is only used for directors who join a company part-way through a tax year and you would not include any NICs paid prior to this date. Where a director leaves during the tax

year there is no pro-rata calculation, so at the time of leaving the NICs must be reassessed. If you wish to check the calculations, there is quite a useful tool on GOV.UK; visit https://bit.ly/2I4Eok8. You should only use this calculator to do a reassessment at the end of the tax year or when a directorship ends; do not use it for any other assessments. You will need the following information to use the calculator: l the director’s NICs category letter l the earnings for the tax year, and l details of any employer and employee NICs paid in the tax year Q: Is travel insurance classed as a benefit in kind? Our purchasing manager has to travel internationally quite often to meet new suppliers. The company therefore pays for his travel insurance costs which typically cost a minimal amount of £86 per annum. Would this be reportable in the P11D return or would it be exempt as it is for business travel? A: It would really depend on how the insurance was arranged and paid for. For example, if this was a corporate policy that covers employees generally and not just a certain named individual, there would be no benefit in kind to report. However, if the insurance was only taken out for the individual concerned it would be reportable as a benefit in kind as it is classed as a pecuniary liability and could be used by the employee for personal use as well as the means in which it was purchased. If this is an individual policy, the way in which it is paid for will then depend on how it is reported. If the contract is between the employee and the provider and the employer pays the provider direct, then it will need to be declared under section B of the P11D return for tax and included in the payroll to account for class 1 NICs. If the employer reimburses the employee directly, then the costs will need to be processed via the payroll to account for PAYE tax and NICs. n

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For more information or to enrol: Visit: cippqualifications.org.uk Email [email protected]

Call: 0121 712 1023 Live chat with us

cipp.org.uk @CIPP_UK

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Issue 41 | June 2018

| Professional in Payroll, Pensions and Reward |

*correct at time of publication

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The Payroll Technician Certificate will equip you with the skills necessary for the timely and compliant administration of payroll in your organisation; and provide a grounding in areas such as statutory payments, court orders and student loans.

Stuart Hall MCIPPdip, Executive director, CIPP

Tell us about your career and background in payroll I first started in payroll back in the early 1980s. For twenty years’ I worked in a variety of payroll positions with major payroll providers including ADP, >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56

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