As an employer in the 21st century you have a whole raft of legislation to deal with that was never an issue 30 or 40 years ago, and the biggest problem for most employers is the amount of time that it all takes. When you set up your business as an estate agent, manufacturing plastics, a website designer, or garden centre, it probably never really crossed your mind that you would have to study accountancy and law as well!
Apart from any other consideration, one of the complex things that we have to deal with is payroll, and it can get very complicated because you will have employees on different salaries, they may do overtime, you may have to give them sick pay, they may work on a commission, so it is often the case that individual employees will be paid a different amount each payday. That also means that you have to calculate their taxes and remit to HMRC. You may also have employees on benefits so even if two employees earn the same amount their pay cheques may be different. And, of course, you can expect fines from HMRC if you get things wrong.
This is why so many companies today prefer to outsource their payroll to us at PayCheck because we understand all of this, and we keep up to date with all of the changes in the laws surrounding tax. We also have sophisticated software so that we can run your payroll for you and take all the hassle off your hands.
In addition, today we also have the auto-enrolment pension scheme. This is another area that can become very complicated, because you have to set up a pension scheme as soon as you hire your first employee, unless that employee is exempt.
All businesses are required by law to set up a pension scheme and automatically enrol eligible employees into it. Even if you only have one employee who is eligible, you are automatically involved in auto enrolment pensions administration. You can even have to get involved if that employee is not eligible for auto enrolment, but nonetheless asks to join your pension scheme that you don’t actually have. Yes, a non-eligible employee can still ask to join your pension scheme and if he or she does then you have to oblige.
Eligible Or Non-Eligible?
A non-eligible employee is one who is aged between 16 and 21 or state pension age and 74 and is earning more than £10,000. In addition, an employee aged between 16 and 74 and earning between £6,136 and £10,000 is also non-eligible. An eligible employee is one aged between 22 and state pension age and earning over £10,000 a year. You have to auto enrol those eligible employees as soon as you employ them.
However, an auto enrolled eligible employee can ask to opt out, but not before he or she has been enrolled. They have to do so before a deadline that is on their auto enrolment notice and if they do that, they are entitle to a refund of any contributions they have made. If it is after the deadline there are no refunds and you as the employer do not have to pay further contributions. However, that employee can also choose to opt in again.
However, if they have opted out, after three years you have to auto enrol them again! And they can choose to opt out again. It’s rather like the hokey cokey – in, out, in, out, and shake it all about!
In addition, an employee aged between 16 and 74 and earning less than £6,136 is an entitled worker and can ask to join the scheme and if this happens you have to enrol him or her.
It is all just so complicated. But if you would like to get rid of all this as well, at PayCheck you can take advantage of our auto enrolment pensions administration and we will do it all for you.