Statutory Payment Penalties
Part of the reason many companies chose to outsource payroll provision is to have help with statutory payments. These payments include SSP (Statutory Sick Pay), SMP (Statutory Maternity Pay) and SPP (Statutory Paternity Pay) but there are more.
HMRC have issued a reminder that they will always seek to issue a penalty if an employer fails in their duties with statutory pay. If an entitlement to a Statutory Payment has been established, and the employer fails to meet their liability to pay, HMRC will take action.
The penalty could be up to the legal maximum of £3,000. Although the exact penalty will vary case by case, HMRC charges will normally be in excess of the Statutory Payment the employer has failed to pay.
You can find more details here.
Part of the duties of the employer is to keep records of statutory payments. This is good practice and should form part of your payroll solution. As well providing records to potentially defend an HMRC action, failure to keep records can generate a penalty in itself.
Calculating Statutory Payments
Statutory Payments are not always straightforward. For some types the employee could be eligible for payments as soon as they join your business, and others have complex eligibility criteria. The current rates of pay also change, although usually just once per year. The current rate for SSP is £88.45 per week for instance (tax year to April 2016).
If you want more guidance on statutory payments you can find it here
The Payroll Solution
As an employer you probably do not wish to know the rate for a 3 day worker entitled to one day’s SSP is £29.49, whereas for a five day worker it is £17.69 (for tax year to April 2016). This is where payroll outsourcing comes in; provide the information and the people at payroll make the calculation.
Some statutory payments can be recovered, partially recovered or even an enhanced recovery. Outsourcing the payroll to a bureau can simplify this process, as calculations and reductions to your HMRC bill will be made and reported automatically.
If you have any questions please contact us or visit the HMRC website.