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Payday – that day of the month that so many of us look forward to and rely on. So it's vitally important that this process of your business is carried out smoothly, efficiently and in a timely manner.
There can be times however, when it can go wrong. If your company is a UK-wide chain the ramifications of a payroll glitch can affect thousands of employees and leave them struggling if they've got bills to pay.
No boss wants to leave their workers in a sticky situation so it's vital that your payroll system is capable and run robustly to minimise the possibility of mistakes and accidental errors.
It's also important to keep up-to-date with minimum and national living wage levels to ensure you're paying your staff the right amount every month – especially in light of the government's recent clampdown on those firms that don't.
Here, we look at the consequences of when a payroll system goes wrong and discuss Whitehall's policy to name and shame companies that don't adhere to legal wage levels.
It is a criminal offence for employers not to pay their staff either the minimum or national living wage so when they don't – either deliberately or by accident – they can expect a hefty fine.
In February Argos was fined nearly £1.5m by HMRC after it was found to have been paying staff less than the minimum wage, by asking them to attend briefings and carry out security checks outside their working hours.
On top of the seven-figure fine the catalogue chain was ordered to pay £2.4m in wages to more than 37,000 current and former workers. Each staff member was underpaid about £64.
The under payments dated back to 2014 and came to light ahead of Sainsbury's takeover of Argos. In the end the catalogue and online retailer paid £800,000 to HMRC as it agreed to pay the fine within 14 days.
A few weeks later Tesco hit the headlines after it emerged that 140,000 current and former staff were paid below the minimum wage – and it would be reimbursing them a total of £9.7m.
The supermarket giant put the error down to payroll glitches and said the under-payment was uncovered while implementing a new system. The workers affected were those who paid into voluntary schemes such as pensions, childcare vouchers and cycle to work programmes and each was set to receive up to £40.
In recent months the government has taken to naming and shaming companies that fail to pay their staff the required minimum. As we already discussed in October, while examining the new minimum wage levels [link to http://amrbookkeeping.co.uk/news/the-new-minimum-wage], HMRC listed close to 200 firms last August that had broken the law by underpaying staff.
This year it named even more with a record 360 companies included on its list of shame, which it published in February. Debenhams topped the roll call after nearly 12,000 of its staff were short-changed by just under £135,000, resulting in a £63,000 fine.
Business Minister Margot James said at the time that every worker in the UK was entitled to "at least the national minimum or living wage, and this government will ensure they get it."
HMRC also published some of the excuses given by employers as to why their staff had been underpaid. These included using tips to top up pay, docking workers' wages to pay for their Christmas party and making staff cough up for uniforms out of their salaries.
Mistakes can happen in any area of a business but making one in payroll can be costly, as demonstrated by the above examples.
To avoid the pitfalls the payroll process can throw up, many firms now choose to appoint outside specialists – such as bookkeeping and payroll companies – to take care of this area of the business for them. Outsourcing your payroll can also be more cost effective and time efficient as no member of your team is bogged down by what can be a complex process.
As fully qualified and highly experienced bookkeeping and payroll specialists, we at AMR are proud to offer a comprehensive payroll service to our clients across Kent, Medway and further afield. Our adaptable service can be tailored to suit your needs, with payroll issued on a monthly, fortnightly or weekly basis.
There is no upper limit to the number of staff we can look after and we can easily organise BACS payments, while taking care of RTI returns and end of year P60s.
For more information about how we can help get your payroll on point, give one of the team a call on 01892 559480 or complete our contact form.