|From the 1st October 2015 the new National Minimum Wages (NMW) will come into force
With a further increase in April 2016 for over 25’s to £7.20 per hour. The April 2016 wage will be called the Living Wage.
Penalties for non compliance are already harsh and as reported by the BBC on 1st September 2015 they are getting tougher…
These include doubling penalties for non-payment and disqualifying employers from being a company director for up to 15 years.
The government also announced plans to double the enforcement budget for non-payment and to set up a new team in HMRC to pursue criminal prosecutions for employers who deliberately do not pay workers the wage they are due.
Penalties for non-payment will be doubled, from 100% of arrears owed to 200%, although these will be halved if paid within 14 days. The maximum penalty will remain £20,000 per worker.
Are you paying enough?
If you employ anyone under 21 years old you will no longer have to pay Class 1 secondary National Insurance contributions on earnings up to the new Upper Secondary Threshold (UST) for those employees. This comes into effect from 6 April 2015 so be prepared to change the NI Category letters of those employees to ensure you’re paying the correct amount of NI contributions.
The Abolition of employer National insurance contributions for under 21’s section of GOV.UK has been updated and now includes more detailed guidance for employers, plus detail on the new category letters and rates.
NO EMPLOYERS NIC FOR THOSE UNDER 21 FROM 6 APRIL 2015 A Government policy to reduce the number of school leavers not in employment, education or training is to abolish employers NIC for those under the age of 21. This exemption starts 6 April 2015 and will not apply to those earning more than the Upper Earnings Limit (UEL), Employers NIC will be charged as normal beyond that limit.
THE £2,000 EMPLOYMENT ALLOWANCE CONTINUES FOR 2015/16 The £2,000 “employment allowance” introduced in 2014/15 continues to be available for 2015/16. Note that this allowance provides relief from paying employers NIC on the first £2,000 of contributions. The £2,000 allowance is set against employers NIC on a cumulative basis during the tax year. The allowance is available to most employers, although those under common control are restricted to just the one £2,000 allowance. Husband and wife companies with no other employees charged to national insurance may find it tax efficient to change the mix of salaries and dividends to take advantage of the £2,000 allowance. From 6 April 2015 it may be advantageous to increase directors’ salaries to the new £10,600 personal allowance instead of the NIC threshold of £8,060 (£155 a week). The extra £2,540 will save £508 (20%) corporation tax (£1,016 for two directors) whereas the additional employees NIC would be just £305 each. Husband and wife company – from 2015/16: Salary £10,295 net = gross £10,600 Dividend up to BR band £28,606 net = gross £31,785 Top of BR band £42,385 Net cash extracted (each) £38,901 Total extracted £77,802 for couple There would however be 20% corporation tax payable. Profits before tax £71,515 @ 20% = £14,303 corporation tax, thus profits before salaries and tax would be £92,715. This results in an overall tax and NIC rate of just 16.1%. A salary in excess of £10,600 would attract income tax (at 20%) and employee’s NIC at 12%.
The Pensions Regulator has started to send out letters for businesses with staging dates in May 2017!! That seems a long way off but you need to start taking action now – have you received this letter? – see here – please make sure you keep it and let LIRIC have a copy if you wish us to register on your behalf. DO NOT delay in registering.
Even the best employee can have an off-day (or week, or month). Before deciding if an employee is difficult, managers must first step back and neutrally assess the situation. The first question to ask is whether the behavior is critical enough to implement a formal HR process. Another important concept to consider is that ‘different’ does not equal ‘difficult’. There will always be employees that a manager does not gel with, understand or even like. However, this is not enough to deem an employee difficult. To constitute a “difficult employee”, behavior must exceed acceptable standards, policies and procedures or interfere with productivity.
Define the Problem
It is important that both the manager and employee are absolutely clear on individual roles. The manager’s role is to ensure business success by leading, coaching and supporting employees. The employee’s role is to meet predefined performance and behavior standards, and function as a cooperative team member. A key concept that employees must grasp is that it is not only the level of their performance that is important, but also how their performance affects the functioning of their team, department and the company overall.
This is where the manager should clarify four things – the employee’s performance, responsibilities, impact of their behavior and the consequences if it dozen’t change. A follow up and ongoing review should be scheduled and regular updates between the manager and the employee will help to move things forward and get the employee