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7 Signs that you work in payroll and you’re working too hard!

Working hard is important. Indeed, as everyone who works in Payroll knows, working too hard is sometimes necessary, particularly around the busiest times of the year.

Payroll deadlines can cause stress levels to rise and if a problem occurs and payments are incorrect, then the midnight oil starts to burn. Payroll is a critical function, getting it out, correctly and on time can make or break a business. The ramifications of a delayed or incorrect salary payment run can be significant because overpaying, underpaying or not paying employees at all will result in knock-on effects that can rock a business to its core. Disgruntled employees can become lose faith in their employers and seek employment elsewhere. Overpayments can be a nightmare to recover. Directors may hold the payroll department responsible. The stress can be unbearable!

At JGA Recruitment we specialise in payroll recruitment so I speak to payroll professionals every day, and many in my view are overworked, overstressed, undervalued and underpaid. So before you reach your breaking point, what are the signs we should be looking out for? Are you working too hard?

There is a serious side to this too. Work can be depressing, and those who work long hours are twice as likely to experience mental health problems such as depression. A study by the Finnish Institute of Occupational Health at University College in London discovered a clear link between overtime working and depression. Another study found a 67 percent higher risk of coronary heart disease among stressed workers too.

In some cases, people just do not know how to switch off. In others working too hard may only occur at critical times such as the end of the monthly payroll run. However, some people simply work too hard, all of the time. Worse still is the fact that many of you will not even be aware you are doing it. If you are reading this now, this could apply to you! So what signs should we be looking out for?

Here are seven tell-tale signs that you work in payroll and you are working too hard.

Working more than 50 hours a week — a number of studies have shown that working past a certain amount of hours can make a person unproductive. In fact, studies show that working either 55 hours a week or 70 hours a week results in the same level of output and productivity. If you are working long hours, you may be making an impression of being a committed Payroll team player by being at the office a lot, but you won’t be producing much more than the person next to you that comes in and leaves for regular working hours. Rather than working too hard, you would be better off doing your set hours, but focusing on doing an excellent job within that time and being highly productive. Ultimately the long hours are counter-productive as you could burn out and end up having to take time off sick — and that won’t impress anybody.

Trouble switching off — if you have trouble switching off when you’re away from work, and can’t keep your hands off your phone for checking for work emails; you’re working too hard in your Payroll role. There are very few tasks in Payroll that can’t wait until first thing the next morning, compared to say, emailing someone at 10pm at night. Again, to avoid burn out, you would be better off not checking work email, or making work calls out of hours, as this will allow you to properly switch off and relax. That way, when you are at work again, you will be fresher and ready for everything the day throws at you.

Making mistakes — when you work too hard, you are more likely to make mistakes. This is linked to working too many hours since after a while you become tired and burnt out and cannot think straight. If you start making more mistakes in your work than in the past, keep check of your hours for the next week or two, and compare this to the hours you were doing in the past. It is very likely you’ll find that you’ve been working too hard.

Not exercising — when you are working too hard it is all too easy to cut back on essential health aspects of life such as exercising. You think to yourself, “I won’t run tonight, I’ll just finish this off, and I’ll go tomorrow instead.” This is a slippery slope, mainly since exercising helps clear your mind and make you more productive in general. Famous, successful executives such as Richard Branson swear by exercising as part of a healthy routine that supports work, and the Harvard Business Review even goes so far as to suggest that exercising is part of your job. The Harvard Business Review states that mental agility is related to physical routine and that there are many cognitive advantages of exercise. If you avoid training so you can work more, you are not only working too hard, you are also engaging in behaviour that will make you less productive, so this is a problem to watch out for.

Not socialising — similarly to not exercising, if you are cutting down on time spent socialising so you can spend more time in your Payroll job, you are working too hard. Socialising does not necessarily bring about the same benefits that exercising does, but it does help you to take your mind off work for a while and focus on other things. This does have productivity benefits when you go back to work.

Feeling frustrated and fed up — when you feel entirely frustrated and fed up with everything this could be a sign that you’ve been working too hard. Long hours can make a person irritable, and unproductivity can also have the same effect. Your irritability could well be caused by working too hard, so watch out for this one.

Feeling Depressed or Anxious — As the Finnish Institute of Occupational Health study has shown, there is a clear link between working too hard and an increase in mental health problems. Mental Health Awareness week in October highlighted the rise in mental health problems in the UK with 65% of people saying they have experienced a mental health problem. Acknowledging you have a mental health problem can be difficult but if you are feeling depressed or anxious then it could be a sign that you are working too hard or that you are setting work expectations for yourself too high. Perhaps it is time to reconsider your work-life balance. A healthy mind and good wellbeing will typically result in better quality work too.

While working “too hard” may seem like a good thing on the surface of it, dig just a little deeper, and it can be seen that this can lead to burn out, mental health problems and ultimately a lack of employee engagement. If you’re making mistakes and feeling frustrated and fed up, you are not going to present the image to your boss of a person who is ready for new opportunities or promotion either. Instead of working too hard, why not work hard while you’re in the office but make sure you get that all-important downtime you need to be productive. Kick back and watch some TV once in a while, or get out and do some sport. That way, when you are at work, you’ll be better able to engage in what you’re doing, and you’ll make a much better impression too.

Love payroll, love what you do, work smart, work hard — just be careful not to overdo it.

Change

Change Has Nothing To Do With January 1st

As the owner of a growing business, I have to keep a watchful eye on events in my industry, in the market and on business life in general.

It always amuses me every year when hundreds of industry commentators come out of the woodwork, metaphorically turn over a “new page” and tell us how this year will be different to last year. Given the nature of change, this never comes as a surprise, and some of their predictions are fascinating, but I don’t quite agree with the timing of this information overload.

Why do we primarily analyse what we need to change at the start of a year? Shouldn’t we be making incremental changes to our activity all the time?

Maybe the secret lies in our inner desire to “compartmentalise” our lives into certain periods of the year (or the week). The summer is for the beach, Christmas is for annoying long-lost relatives, January is for job searching and naval gazing and Fridays are for winding down in the afternoon.

Some of these assumptions are holding you back.

December was one of our busiest months as recruiters in 2015, although there is no denying that January will be mega busy. Your chances of finding a role in December may well have been better than now because your voice would have been heard above the crowd. Now, the world and his wife want a new job. Of course, we will do our best to assist!

I find that the summer is a great time for bedding in different business strategies and starting to work with new business partners. Yes, it tends to be a little bit quieter, but this gives time for reflection, and if you don’t use that time wisely, the summer is over before you know it.

As for the January contemplations, well, I stand in the shower every morning thinking about how grateful I am for my life (but, at the same time thinking about how I could do things a little differently). No one stops being interested in improving their life just because January has passed. You don’t miss out on the opportunity to change your life just because your “resolutions” weren’t quite firm enough on January 1st.

I promised myself something on New Year’s Eve:
“I will give my resolutions every ounce of effort this year. If I try something, I will try it with all my being. I don’t know when they will come, I don’t know what life may hold in store, but whenever a certain idea appears, I will approach it to the best of my ability – Life is about stories and I intend on creating new ones every day”

It tends to happen that our dreams reside in a constant state of flux – the great big melting pot of life will alter and change them. What I do know, however, is that they don’t suddenly become fixed on January 1st. When you are aware of your dreams and open to the changes that life may introduce, you can make it happen on any day of the year or any day of the week.

Write it down, commit to it, and you have every chance.

Pablo

Counteroffers Are Evil

Giving into temptation is one of the most unfortunate of human traits. We salivate at the thought of taking that forbidden apple – we know deep down that it is bad for us, but push those feelings to one side. It simply looks too tasty.

Temptation is not only about physical treats, it is also about the promises of feelings and experiences that are yet to pass. We know that these things are never going to happen, but we choose to believe, and it is this very choice that makes us complicit in the promise. When we buy into a lie, we accept the lie, and it becomes part of our life.

These feelings often cross my mind when candidates accept counteroffers from their companies.

For the uninitiated, a counteroffer is when a person informs their company that they will be leaving, and the company offers them improved employment terms in order to “convince” them to stay. This may be an increase in salary, a better bonus scheme or even a promotion.

You might say that this is a sign that a company values their employee, but in the vast majority of cases, a counteroffer is an attempt temporarily to mitigate the business impact of losing that person. Finding a replacement is rarely a simple matter, and as soon as a person offers their resignation, the search for a replacement begins in the heads of their superiors, no matter whether that person stays or leaves.

It goes without saying that no one should leave a company without attempting to improve their situation before it comes to a job search. Performance reviews give a chance for two-way feedback: if your company is open to giving you that raise, they should do it on the back of good performance, not just when their backs are forced against the wall when you send that fateful ”I’m leaving” email.

Most candidates are aware that their company will possibly try to keep them, and too many are swayed by the comforting thought of getting something “extra” with no added risk of starting a new job. However, the reality is that once you have tendered your resignation, you are a “dead man walking.” There are many statistics quoted, but the one that sticks in my mind states that 80% of candidates, who accept a counteroffer, are back on the market within six months. Why would you do it?

Have the courage of your convictions and don’t keep eating the last few tasty apples on the already rotten tree. There are many trees out there with all manner of all-you-can-eat goodness, but it takes a leap of faith to climb onto the next one.

The counteroffer tempts far too many people to delay their move to that next tree. Life is too short to waste if on false promises. Once you have made that decision to go, follow through with it with all your energy.

Change can sometimes fuel the most amazing growth – don’t let any sort of comforting temptation get in your way.

Morning blog

All Before 9:00am: Your Morning Routine Dictates Your Day

There are few periods in the day that are more “yours” than the hours between 0600 and 0800. You get to work after your commute and are thrust into the maelstrom of noise, pulling you this way and that, inevitably ruining any best-laid plans.

Or maybe you are like me, in that you can never just “go home”; instead, you find yourself tending to the needs of your children or are ferrying them to activities! Perhaps, you have busy social calendar? Whatever your circumstances, if you are like me, you will find that very few evenings finish without some sort of family or social related drama or activity.

But in the mornings, when everyone is (relatively) quietly going about their own business, that is the time when you can truly shape your life in your own design. Therefore, for the most part, there is every chance that your morning routine should remain relatively uninterrupted.

I often wonder why we don’t put more thought into this period of our lives? I call this “All before 09:00 time”!

Far too many of us see our mornings as a frantic sprint to get “ready” for the day in the least time possible. Brushing your teeth in the shower? Easy. Ironing a shirt while eating a piece of toast? Down to a fine art. Slurping a coffee while speed walking on the way to the station. Don’t we all do that?

It is easy to feel like a high-flying go-getter if we can go from mild slumber to a caffeine-fuelled world-beater in 30 minutes. What role could an early morning possibly have, other than a prelude to the real events of the day?

Well, if your morning is organized it can not only saves you vital energy for the first crucial events of the day; but it can also stimulate you into getting a head start on everyone else. Knowing how the first 60-90 minutes of your day is going to be structured lets you feel in control, and allows you to save your energy for the important decisions to come when the “day proper” starts. Ever wonder why Mark Zuckerberg wears those boring hoodies? Well, it is one less decision to make in the morning. Let’s face it, the guy has enough on his plate. But why should we be any different?

I don’t want to tell you all what the perfect routine involves, as we are all different. But I can say for certain that it starts with waking up at the “right” time. If you wake when you are in a period of “light” sleep, you feel refreshed and energised and alert. There are apps available, which measure your activity, and even waking 30 minutes earlier than usual can make all the difference. Yes, you can wake up at 06:00 and feel more refreshed than if you woke up at 06:30! Play with your own alarm, alter it in 10 minute increments until you find the “perfect wake up time” for you. It really does work!

For many people, a great morning routine involves some exercise and some creativity. Rather than a sluggish and meandering first few hours of the day, why not get the blood pumping and the brain cells ticking over? If a rapid 30 minutes on the exercise bike and 15 minutes of stimulating reading (or even creative writing) don’t do it for you, I don’t know what will.

Many of us have ambitions to read more, write more, exercise more or maybe we just want to spend a little more quality time with our children (who always seem to be up at the crack of dawn). The hours before 09:00 make all of these personal ambitious possible. Personally, I like to run. Every Tuesday, my alarm goes of at 05:30. My trainers and running gear is already laid out ready for me to to wake up to. No excuses now. This is my “half-marathon” morning. This is a weekly ritual and watching the sun rise has become a morning picture I cherish. 21km and 90 minutes later I am ready for breakfast and keen to take on the day and it is still only 07:30.

A morning routine is like signing a contract with yourself. If you commit to it, and try not to let anything disturb it, your life can be transformed. If you know that you are going to start every day on the “right” foot, your chances of having a successful day are going to be that little bit higher.

Blog

5 Reasons To Make Friends With Our Clients

With the boundaries of work and personal life increasingly blurring, it is understandable that you are on friendly terms with (most of) the people in your office. However, apart from chats over lunchtime and sitting in various meetings, it will not always be the case that you will spend your working days communicating with them.

With so many people working in the service industries (78% of the UK economy), communication with “external” people is far more frequent

Why therefore can’t we make friends with our clients as well?

On first consideration, the word “professional” comes to mind. There should be certain boundaries in communications, and professionalism is often equated with keeping a certain emotional distance, but it is my experience that as people get to know each other better, these boundaries are being broken down.

I do believe that, with time, we can be friends with our clients, and here are five reasons why it is worth getting to know each other a little better:

You’re in it together. A problem shared is definitely a problem halved, and when you take on anything as “brothers in arms” (or sisters), it will be all the easier to overcome the difficulties. When you have a problem, you will be able to talk about what worries you, knowing that you will get a genuinely concerned and considered reaction from the other person. You have their back and they have yours – you will face up to issues together.
You’ll keep each other honest. Transparency is crucial in any business relationship, and if you are not afraid to show each other your hands, knowing exactly where you both stand will allow you to reach the optimal agreement for both parties. A policy of honesty makes doing business straightforward – if something doesn’t work, that’s the way it is, you simply have to explain why.
They will be your advocate. Everyone needs new business sometimes, and who better than a current client to be your cheerleader? Friends are more than happy to help each other out, and in a world increasingly driven by social media, the currency of goodwill that you cultivate with your clients will drive your personal and company brand to new levels. Helping each other has never been so easy.
Friendship outlasts business. Not every business deal with last forever. The cyclical nature of the economy might dictate that certain projects are curtailed, or the person may move on to a new employer. In any circumstances, there is a decent probability that your paths will cross in the future, and in any case, it is no bad thing to have an extra friend in the world.
Work becomes more meaningful. Having an extra reason to get up in the morning is never a bad thing. You want to do well for your family and your colleagues, but genuinely wanting to make a difference to your client (because you like them) gives you that little push to go the extra mile.

Certainly for me, many clients have become close friends. Over the years I have experienced stag dos (where we were also joined by Robert Downy Jnr for a short time), parties and even cycling holidays with them – and all of these friendships were borne out of an initial professional relationship.

Do you have close relationships with some of your clients or customers? Does it matter? Do you think that it will matter more in the future?

Health Blog

I Can And I Will

We are awarded the long-anticipated promotion, and we subconsciously relax for a couple of years – no one moves up again so soon, so why bother trying?

The first-time entrepreneur stays as a one-man-band because they don’t believe that others will share their vision or will work as hard as they do. A mum-to-be underestimates her worth to the company and quits instead of working out a suitable plan for returning to work after a while.

Doors close in their minds where they have no right to be closing. If you work hard enough, you can be promoted within another six months, why not? Of course you can get people behind your fantastic idea – you only have to tell your story. And as for new mums being truly welcome and integrated back at work, well, this is one of the biggest losses for our society over the past few decades.

These people can do all these things, but for whatever reason they choose not to.

There are however a few unique individuals out there, who are told that they “can’t” do something, but they choose to do it anyway. They can and they will. No matter what.

I am lucky enough to call one such person my friend. This friend is charity ambassador, athlete & adventurer, Gavin Sandford.

Gavin Sandford, for charity, has just completed one of the most gruelling endurance races known to man, the Marathon Des Sables across the Sahara Desert back-to-back! This Challenge saw him running over 300 miles in 45°c heat carrying all that he needed to survive on him. He got an award from the founder of the MDS we he also auctioned off to support the charity “Wounded soldiers and Children with Cancer.”

No one had ever done this before, so in the spirit of his charity “I Can And I Will”, he set out to achieve the hitherto unachievable. To make this feat even more astounding, two days before the first leg of the race, he slipped and injured his ankle. The doctor’s advice was seven days total rest, but two days later he was pumped up on painkillers, pounding the sands of the Sahara. To say that he was close to death on a couple of occasions would not be an exaggeration – the BBC even covered his extraordinary journey.

I have the pleasure of competing with (against) him on some elite obstacle course races, and the guy is a machine. His body isn’t so different from my body, but what truly gives him the edge is his utter determination to move the bar of what is possible.

I Can And I Will. He lives these words, and the blog of his two races is well worth reading for anyone who is standing in front of an obstacle in their lives at the moment. Until you have tried it and it has worked out for you, it will remain a far-off fairy tale, but if you adopt the motto and make it your own, you never know what you might achieve. When you look back yourself, you at least have a chance to achieve the unexpected. When you shrink from a challenge, you can only imagine that you would have failed.

Finsh Blog

Don’t Relax Until You’ve Crossed the Line

When you start a race, it is useful to visualise the path ahead, but this is never a perfect science. There is always an element of unpredictability, and you have to live on your wits until the very last stride.

Many amateur athletes have a tendency to relax when the finish line comes into sight, but this is the moment when you should be pushing yourself the hardest. One of your competitors may have been conserving their energy for a sprint finish – the moment you relax is the moment that they breeze past you.

In life and business, you can observe similar “self-defeating” tendencies when you feel that the race is over.

Individuals strive for years to put themselves in the frame for a promotion, but in the weeks before it is made official, they do something stupid and waste all those years of hard work.

Entrepreneurs spend their lives chasing huge amounts of investment, many getting carried away with their own hype and forgetting that they have a business to run. Money in the bank, let’s kick back and relax. Nope, that isn’t the “line” – the finishing line for any entrepreneur is a profitable business!

Companies monopolise markets for years, only to grow fat and inefficient, to be disrupted by hungry start-ups whose founders are fresh out of University. In this case, admittedly, there is no “finishing line”, the race just keeps going, but easing up when you feel that you have “made it” is the beginning of the end.

Don’t look back, and don’t look around. Concentrate on what you have to do to get to where you need to be, and don’t relax for a minute. Plan future goals and as you achieve them, plan more. This repetitive goal-setting cycle will keep you motivated and hungry to continually achieve and exceed.

I came across a video a year ago on YouTube. Faten El-Helw, an Egyptian lion-tamer came into the cage with two of her lions. She walked to the front of the cage, smiling and waving to the clapping crowd, her back to the two lions. Then she started dancing. The inevitable happened and one of the lions smashed her to the ground. For English rugby fans, this would be the equivalent of Maro Itoje taking out a seven-year-old kid. The hit was fast and brutal. The girl got up, but you can’t but help thinking that if she was just a little bit more aware of the lion’s mood that she wouldn’t have been so relaxed. She had the somewhat arrogant attitude of someone, who had already crossed the line, but she paid the price. The same was also true in the 2005 film, Grizzly Man which chronicled the life (and death) of bear enthusiast Timothy Treadwell. Complacency when you think you have something mastered can be catastrophic.

Every time that I feel that things are going well for me, I remember that video with the lion or that documentary with Timothy. Have I really crossed a particular line? Is the job truly done and dusted? Could something unexpected happen to scupper my best-laid plans?

Whatever you are doing today, keep doing it until it is totally finished to the best of your ability. If you slack off during the last part of the job, maybe it isn’t going to be as good as it could be. There is sometimes a fine line between mediocrity and excellence.

Those last few metres before the finishing line could make all the difference.

 

Payroll Video: https://www.youtube.com/watch?v=GDGX-DWixP0
HR Video: https://www.youtube.com/watch?v=dXx2-4ZxOfg
About Us Video: https://www.youtube.com/watch?v=7ooY5rcUmfI 

Payroll Blog

Payroll Will Always Need People

I have worked in the payroll industry for over 14 years. In recruitment, I get to work with payroll people who have a range of skills, dealing with ever more complex processes, getting to grips with ever-changing legislation and government interventions.

During this time the systems I have seen used have changed considerably. Who, reading this still remembers the days of Kalamazoo clock card software or Unipay payroll software developed by Peterborough Software?

Fast forward over a decade, and we are now living in a world of ERP, SAAS and Cloud based offerings. Dedicated payroll systems have transformed into multi-faceted packages that can support entire shared services functions.

Let’s face it – machines are on the march!

In my view, any occupation that involves logical thinking and meticulous organisation is now at risk of being automated by machine learning algorithms and sophisticated artificial intelligence (AI).

It is true that much of the payroll process can be automated, but with all the required checks, balances and legislation involved in ensuring its compliance and accuracy, I still believe that businesses need a human payroll team at its core.

How much more of the industry can still be given over to our future robot overlords? The main reason that people come to work is to get their salary at the end of the month – can we risk the “computer saying no” when we live in a world of debt and credit, and we have mortgages to pay?

Payroll is a delicate, niche and highly skilled industry where compassion meets computers. Yes, on the face of it, there is nothing overtly complicated about calculating the required figures if you know what you are doing, but for every twenty standard cases, there is one who is non-standard. Every single payroll department is different and comes with its unique complexities. Can systems truly grasp the individual nature of each payroll operation? The reasons might vary, but often it is only a human discussion and an agreed compromise that can resolve the issues.
Last time I looked, computers weren’t so good at compromising.

Also, I’m not sure how happy I would be if I knew that I had to take two hours off work one morning to find out the “automated payroll system” has docked me a morning’s pay? I might have agreed with my manager that I would make up the time at home, and may have even copied in the payroll team. With a human payroll professional at the end of the phone, I can rest assured that my pay won’t be affected. Relying on an automated system would make this almost impossible. How expensive is it then for businesses to correct automated systematic errors?

If artificial intelligence is allowed to take over, tracking the different income streams of an increasingly flexible and remote workforce would require a significant amount of human effort direct from the direct managers in question. Having a payroll team takes the hassle away from them, and managers know that all issues and enquiries can be fired in their general direction.
For me, this is the key point – remunerating someone for a job well done still involves a considerable amount of judgement. Has the work been done, how much has been done and should it be rewarded as agreed? No computer can make these calls. For a payroll team, that is their professional “bread and butter”.

I am all for AI allowing people the time to add the “human” value in processes, but you can never remove the human element entirely. Everyone talks about automated trucks, but I would imagine that there will be experienced truckers behind a video screen somewhere, watching out for hidden dangers. Maybe payroll activity will change more to assessing productivity and crunching the data of the organisation, but the human element will always be there in the background.

I’m not sure that everyone will agree with me. Some see such discussions as humanity hanging onto the coat-tails of inevitable technological progress, but for me, when it comes to rewarding people for their ever more sophisticated efforts, I’m not sure that we can put the machines in total control (especially considering how easy it might be to hack them).
There you go Mr Day; your March salary is £1,340,567.64 – Oh yes, thank you very much 🙂

This article was submitted by Nick Day, Managing Director of JGA Recruitment – the leading Payroll, HR & Reward Recruitment Specialists.

Nick Day
Managing Director
James Gray Associates Ltd
Payroll, HR & Reward Specialist Recruiters
Email: nick@jgarecruitment.com
Website: www.jamesgray.wpengine.com
Tel: 01727 800 377
Payroll Video: https://www.youtube.com
HR Video: https://www.youtube.com
About Us Video: https://www.youtube.com

Payroll Blog

What will affect the Payroll Industry in 2017 ?

As we approach Christmas and start looking forward to the New Year, I thought I would take a quick look at what is likely to affect the payroll in 2017.

What do you think will have the biggest impact on the payroll industry? Please comment, like or share and let us know!

1. The Brexit Effect
One of the major game-changers that will drastically affect the UK payroll in the coming years is the UK’s decision to finally “Brexit” from the EU. How will this impact the UK payroll industry in 2017? This decision will undoubtedly affect the UK payroll industry but to what extent is still unknown. The questions that remain are not just “what” changes are to be expected but “when” the impact of this decision will take effect on the UK payroll industry. The UK still needs to trigger Article 50 of the EU Treaty, and it will still take about two years or more until we have fully exited from the EU – which means that this significant game-changing event is likely to happen at a slow pace. This will give time for companies and providers to prepare their payroll departments, systems and processes to ensure that their respective payrolls remain legislatively compliant with all the changes that may be necessary as a result of Brexit.

In the meantime, according to Helen Hargreaves, the associate director of policy and research at the CIPP (Chartered Institute of Payroll Professionals), it remains “business as usual” for payroll departments until all the Brexit discussions are finalised.

2. New Tax Year, New Changes
There is no doubt that the new tax year 2017-18 will bring with it major payroll changes that will impact both employers and employees. The Chancellor, Philip Hammond delivered his Autumn Statement and hinted towards some significant changes being expected especially concerning taxation.

Here are just some of the few points discussed:

Salary Sacrifice or “Salary Swapping.”
Arrangements for changes to taxation treatment for those using salary sacrifice. This means removing the income tax and the employer’s NIC Contribution Class 1A advantages from salary sacrifice arrangements. Ultimately, this will mean that employees who swap salary for benefits will have to pay the same tax as employees who pay them out of their income.

However, other salary sacrifice arrangements like the following will be protected:
· Pensions
· Employer-provided childcare vouchers/benefits
· Cycle to work
· Ultra Low Emission Cars (75g CO2/km)

All arrangements that made before April 2017 will be protected until April 2018 the following year, while other provisions concerning accommodations, cars and school fees will be protected up to April 2021.

Employees’ Tax Relief
Employees who used their own money can now claim tax relief for purchased goods and services that they haven’t been reimbursed for. Travel fees, business mileage, services used and other products purchased are a few examples. Tax relief can be claimed through HMRC.

The New “Living” Wage
Starting April 2016, the new living wage for employees over 25 will be raised to £7.20 per hour from the current £6.70 per hour rate. Simply put, there will be a new minimum wage rate for workers over the age of 25. Employers all over the country must now consider a new wage scheme for employees with different rates while complying to the national minimum wage and considering the age group and other set rates by the living wage foundation.

Simplified Pay as you earn settlement agreements:
The significant event that started from UK’s decision to exit the EU; to the changes announced from the autumn statement concerning taxation treatment, measures are now being put in place to put the payroll system in line for proper transitioning.

Scottish Rate of Income Tax
Residents of Scotland will have to pay the required Scottish rate income tax based on their pension, wage and other taxable income. Employers are advised to await HMRC’s notice before using a Scottish tax code. HMRC will determine who the Scottish taxpayers will be.

To address this, employers are reminded to make sure that all employees update their correct address information in the HMRC’s database. This is a crucial step that will determine if he/she is a Scottish taxpayer. Updates can be easily made online.

Other Key Points Discussed:
· Termination payments
· Introduction of a new student loan plan – type 2
· Increase in personal allowance to £12,500
· HMRC will no longer grant dispensations from reporting certain expenses

These changes are just some of the issues that will affect payroll departments in 2017. Payroll departments will undoubtedly need to implement changes. The nature of payroll and associated legislation requirements are ever-changing subsequently the role of the sharp-eyed payroll manager remains as important as ever if businesses want to ensure they remain compliant in the New Year.

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This article was submitted by Nick Day, Managing Director of JGA Recruitment – the leading Payroll, HR & Reward Recruitment Specialists.

Nick Day
Managing Director
James Gray Associates Ltd
Payroll, HR & Reward Specialist Recruiters
Email: nick@jgarecruitment.com
Website: www.jamesgray.wpengine.com
Tel: 01727 800 377

Payroll Blog

Reviewing Auto Enrolment

Reviewing Auto Enrolment: AE now and AE in the future.

The UK pensions industry has experienced a period of unprecedented reform following the implementation of Auto Enrolment but where is AE now and how do we foresee it in the future?

So far it has been impressive in getting more people to save, and the Government predicts that by 2029, there will be 13 million employees in the UK saving in a pension scheme.

The goal of Auto-Enrolment is to ensure a greater proportion of the UK population starts saving so they have enough funds available for an adequate retirement. So, if 13 million employees are predicted to be contributing to a relevant pension pot within the next 12 years, surely if the Government achieves this figure, then the goal has been achieved right? Perhaps not. This is where the fundamentals of the scheme become interesting as we may be saving more, but it may still not be enough.

There is a consensus that for adequate funds to be available when retirement time comes then, the minimum contributions need to be increased. I believe the Government needs to address this issue and I will explain why.

At the moment, employees are only eligible for Auto-Enrolment when they begin paying income tax – currently £10,000. When Auto-Enrolment plans were initially announced the tax threshold was £7,454, but since then the income tax threshold increased to £10,000. Subsequently, the number of low earners cut out of Auto-Enrolment has rocketed. Band earnings, set by the DWP between £5,772 and £41,865, disadvantages all workers and means that even when contributions increase, no one will get an 8% contribution. In fact, the most anyone will receive 6.9%, and even this amount will only be for those right at the top of the earnings band. Somebody at the lower end of the band will only receive a total contribution of 4.9%. Hopefully, this will be considered in the next AE 2017 review as it is a solvable problem. If the Government removes band earnings and bases contributions on all salaries, it will help boost savings by allowing all savers to receive the full 8%.

The DWP is keen to build on the success of Auto-Enrolment. The Pensions Regulator (TPR) has released figures stating that more than 7 million people have now started saving into a pension as a direct result of Auto-Enrolment and more than 340,000 employers have now completed their declarations of compliance.

However, I believe the DWP may experience some troubled waters ahead…

So far, it is the larger businesses that have been auto-enrolling its employees, and many of these will have had dedicated teams to ensure that they are made compliant by the staging deadlines. I am not so sure this efficiency will be commonplace in 2017. The largest number of employers, i.e. the smaller companies that are at the foundation of the UK economy and total over one million in number; will start to see their workplace pensions duties start and will need to enrol between now and 2018. I have already spoken to some business owners who are not even aware that they have a legal obligation to implement the scheme for its employees. Clearly, there is a major problem with awareness. Others employers do not know where to start or have any understanding of how time-consuming it can be to become compliant. Subsequently, I expect many of these one million will miss their staging deadlines. It will be interesting to see how upbeat the DWP are then about its success. Like the DWP, we can all celebrate scoring a goal in the 45th minute to lead a game 1-0, but football is a game of two halves and right now, in terms of Auto-Enrolment; we are not even at half-time.

Another challenge I believe Auto-Enrolment efficiency will face is related to Generation-Y / Millennials (people born in the 1980’s and 1990’s) and the Generation-Z / Post-Millennials (people born in the 2000’s). I think the number of these employees “opting-out” will increase in the future as contributions start to go up. The elevated contribution rates are likely to change the behaviour of both Generation-Y and Generation-Z employees because when they start noticing deductions on their payslips many will start opting out. This is because they will be at an age where they are start thinking of having children or buying a house. These things are expensive enough already, and when you are already being squeezed financially trying to afford the costs associated with childcare or with purchasing your first house; I believe it is highly likely that opting out will become the more attractive proposition. Pennies start to count!

Just for a second, let’s imagine an Auto-Enrolment Utopia. In this world, all businesses are compliant, 13 million employees have enrolled and are contributing the full 8%, and no one is opting out. Sadly, even in this utopian context, figures and experts still suggest people will not be saving enough.

It will take years before contributions reach this 8% mark and even when they do; it will still be short of giving people a decent or “adequate retirement”. I hope the DWP will address this in its 2017 AE review because this is going to be the big challenge going forward. The question is can the Government of the future ‘cross the Rubicon’ and raise contributions to 10% or 12% like they have successfully managed to do in Australia? If rates don’t increase then arguably, Auto-Enrolment pension’s reform has failed in its primary objective, which was to provide an adequate income in retirement.

The DWP plan to publish a report setting out policy recommendations towards the end of 2017. Let’s hope that the DWP recognise that Auto-Enrolment is not just about employees paying a pension contribution. That has been the easy bit. Moreover, the DWP needs to ensure people save enough, that everyone’s represented, that full contributions advertised can be achieved and that people do not opt-in now only to opt-out later.

With all political parties behind the initial concept of Auto-Enrolment, it is important now that whoever wins the next election remains consistent in delivering the aims of the scheme. I believe it will need further reform and that contributions will need to increase for it to be successful.

Someone who has been instrumental in improving pensions and promoting pensions reform is Steve Webb who was the Liberal Democrat Pension’s Minister in the Coalition Government. Steve has just has been rewarded with a knighthood and he was pivotal in pushing through Auto-Enrolment. I would like to personally congratulation Sir Steve Webb (https://twitter.com/stevewebb1) for this achieving this deserved recognition. Without people like Sir Steve Webb behind pension’s reform in the future, sadly, I feel the more despondent about the likely long-term outcome of Auto-Enrolment and pensions in general for the future. A new Government in our new ‘Brexit Britain’ will want to undoubtedly make further changes to pensions reform and it is possible that Auto-Enrolment will change or even be scrapped altogether when a new “pensions solution” is brought to the political table. Let’s be honest, when it comes to pension policy, the Government as a whole isn’t exactly consistent.

What do you think?
• Have you opted in or out?
• Where do you see Auto Enrolment in 10 years’ time?

 

This article was written by Nick Day, Managing Director of JGA Recruitment – the leading Payroll, HR & Reward Recruitment Specialists.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please reach out for a 15 minute ignition call and I would be delighted to discuss how we can help.