The escalation of the COVID-19 (Coronavirus) pandemic across the UK is likely to have significant and wide-ranging implications for businesses nationwide, with the payroll department at the frontline in terms of implementing many of the measures and incentives introduced by the UK Government to keep GB plc trading.
What are the main payroll implications of Coronavirus?
1. Changes to Statutory Sick Pay (SSP)
The Department for Work and Pensions has announced a range of temporary measures to support employees who have been affected by COVID-19, both in terms of absence from work due to sickness and those absent as a result of preventative self-isolation.
These measures include the following changes to Statutory Sick Pay (SSP).
- Statutory Sick Pay (SSP) must now be paid to eligible individuals diagnosed with COVID-19 or those who are unable to work because they are self-isolating in line with Government advice, even if they haven’t yet presented with symptoms;
- SSP is now payable from Day 1 of absence instead of Day 4 for affected individuals;
- Those employees advised to self-isolate for COVID-19 can self-certify for the first 7 days and then obtain an alternative to the fit note via NHS 111 online rather than visiting a doctor. This fit note will refer specifically to COVID-19 related absences;
- Small and medium sized businesses and employers will be able to reclaim any SSP paid in relation to COVID-19. The eligibility criteria for the relief is as follows:
- Refunds will be available to employers who had fewer than 250 employees as of 28 February 2020.
- Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19.
- The refund will cover up to 2 weeks’ SSP per eligible employee who has been absent from work because of COVID-19.
- Employers should maintain records of staff absences, but employees who are absent in relation to COVID-19, do not need to provide a GP fit note for the first 7 days of absence.
- The eligible period for the scheme will commence the day after the regulations on the extension of SSP to self-isolators comes into force.
- The government will work with employers over the coming months to ensure the repayment mechanism is in place as soon as possible, as the existing system is not set up to facilitate employer refunds for SSP.
The full DWP guidance can be found on gov.uk
2. Coronavirus Job Retention Scheme
The UK government has announced the introduction of the Coronavirus Job Retention Scheme, a temporary measure designed to provide financial support to employers and employees during the coronavirus outbreak, and particularly during the projected peak period when the country will be in lockdown. The scheme is open to all UK employers for at least 3 months, starting from the 1st March 2020.
Under this scheme, employers can ‘furlough’ an employee, whereby they remain employed and subject to the terms of their employment contract but are asked not to undertake any work on behalf of the organisation. Employers can apply for a grant totalling 80% of a furloughed employee’s usual monthly wage cost, up to £2,500 a month, plus the associated employer’s national insurance contributions and minimum employer pension contributions from HMRC. The employer can then choose to top up the salary to 100%, should they wish to do so.
The Coronavirus Job Retention Scheme is open to all UK employers that created and started a PAYE payroll scheme on or before 28 February 2020 , enrolled for PAYE online - (this can take up to 10 days) and have a UK bank account
While this is great news for struggling employers and will hopefully reduce the amount of redundancies during the pandemic, this new element of payroll creates another layer of complexity for the payroll processor, and will require a good understanding of the legislation to ensure it is enacted properly.
As businesses face economic uncertainty and cash flow difficulties as a result of the pandemic, many will inevitably be forced to make redundancies. The process involved in administering redundancy payments is not something that many payroll managers and payroll departments will have dealt with in the past, and so it is highly recommended that expert advice is sought to ensure accuracy and the correct interpretation of statutory redundancy guidelines.
4. Self-Isolation of Payroll Managers or Payroll Team Members
As employees continue to be forced to self-isolate, the likelihood that the payroll manager or processor usually responsible for processing payroll is absent from the business is increased. As payroll (including the administration of income taxes, national insurance, deductions and workplace pension contributions) requires specialist knowledge and is of a very confidential nature, this is typically a task that cannot be easily carried out by someone else within the business, as doing so could potentially result in late payments and hardship for employees and financial penalties from HMRC.
5. Financial Year End
Financial year end is always a busy time for payroll departments, particularly with the generation of P60s and P11Ds in addition to the usual monthly or weekly payroll. However, with key members of staff out of the business, processing the payroll year end in a timely fashion could be difficult to achieve, and lead to errors and financial penalties.
What extra steps should my business implement to protect and maintain the payroll function?
It is vital that businesses consider the implications that the coronavirus is likely to have on UK payroll processing, and particularly whether they have processes and specialists in place to run payroll if the current team are unable to work as a result of the pandemic.
Specifically, your business should ensure arrangements are in place for the following:
- Ensure that the member(s) of staff that processes payroll has sufficient knowledge and experience to be able to deal with the changes to SSP, claiming back monies for furloughed employees and if necessary, the payroll aspect of the redundancy process;
- Ensure that a contingency plan is in place if any or all in-house payroll processors are out of the business.
What should be included in a payroll contingency plan?
In some situations, there may be a senior member of staff with a good working knowledge of payroll who is permitted to access sensitive data such as salaries, deductions and pension payments. This however would be an unusual situation. With this in mind, the contingency plan for most businesses will represent outsourcing the payroll function to a specialist UK outsourced payroll company.
How can Paycheck Plus help?
Paycheck Plus is an outsourced payroll company, specialising in all aspects of payroll. Our team of outsourced UK payroll experts are well-versed in all payroll-related complexities, including UK income tax and national insurance calculations, workplace pension administration, absence and deduction legislation, the processing of redundancy payroll and year end submissions, and all the usual day-to-day aspects of payroll management.
As a specialist outsourced payroll company in the UK, Paycheck Plus can offer payroll solutions to companies of all sizes. Our UK payroll experts will cut through the jargon to provide pragmatic, commercial guidance on how best to help your business through the provision of cost-effective payroll solutions.
Additionally, our own robust business continuity plans will ensure the smooth and uninterrupted running of our day-to-day business, even in difficult times, such as those that the UK economy currently faces with the COVID-19 crisis.
If you would like to know how we could help your business, contact us today on 0161 464 8720.