This screen contains information on Payroll-related legislation topics.
The Frequently Asked Questions (FAQs) on each topic, as noted over years of experience in the industry, are available to Moorepay's Clients in order to help and guide the users through different payroll concepts, processes, and legislation updates.
This area is currently being compiled and will be expanded over time
Important Notes to Remember
- The information on this page may be updated from time to time, in line with actual legislation updates. Should you notice any inconsistency, please log a call to the Support Team.
- Links to external sites are also available on this screen. The links are provided for reference; you may go to the website to learn more details about a topic.
Frequently Asked Questions (FAQs) on Payroll
Parental Leaves and Payments
This section features information on parental leaves and payments.
Click on the dropdown options below to display the FAQs on each entitlement.
Statutory Maternal Pay (SMP) and Leave (SML)
Eligible female employees can take up to 52 weeks' statutory Maternity leave, which includes 39 weeks of statutory Maternity pay.
How can an employee qualify for SMP?
A female employee must be employed by her current employer for 26 weeks at the qualifying week and she must have earnings in excess of the Lower Earnings Limit (LEL). In addition, an 8-week average earnings calculation has to take place 15 weeks prior to the expected week of confinement
The maternity leave will commence once the employee provides the correct proof of pregnancy (i.e. MATB1 cetificate) and notice of when to commence this. The first 6 weeks are paid at 90% of the employee's Average Weekly Earnings and the remaining 33 weeks are paid at the Lower SMP rate as set by law. If the Average Earnings is lower than the Lower SMP rate, then the lower of the two amounts is paid.
The employee may return to work at any time after a minimum of 2 weeks' leave, or 4 weeks if the employee is a factory worker, have been taken. The employer can also reclaim 92% of the cost.
Click this link to view the Employee Guide on statutory Maternal pay and leave.
Is it possible to arrange for KIT days, ShPP, and/or SPLIT days when the employee is on Maternity leave?
Keep In Touch (KIT) days may be arranged by the employer with the employee but she is not obliged to accept. Refer to the KIT Days section below for more details.
Shared Parental Pay may also be requested by the employee to the employer. Refer to the ShPP section below for more details.
Furthermore, Shared Parental Leave In Touch (SPLIT) is available during a period of ShPP. Refer to the SPLIT Days section below for more details
Keep In Touch (KIT) Days
During a period of statutory Maternity leave or pay, an employer may ask an employee to attend work on up to 10 occasions during the leave period. This does not break the leave period or entitlement to SMP.
How are KIT days paid?
The employee can discuss with the employer the additional payment that will be made for such days, but she does not have to agree to attend these.
KIT days are also available during a period of statutory Adoptive pay.
Click this link to learn more about employee rights when on leave.
Statutory Adoption Pay (SAP including Surrogacy) and Leave (SAL)
Employers are required by law to provide SAP and SAL when an employee takes time off to adopt a child or have a child through a surrogacy arrangement.
How can an employee qualify for this entitlement?
In order to qualify for SAP, a male or female employee must be employed by his or her current employer for 26 weeks at the matching week and he or she must have earnings in excess of the Lower Earnings Limit (LEL). In addition, an 8-week average earnings calculation has to take place at 15 weeks prior to the matching week.
Once the employee provided the correct proof of Adoption (i.e. proof is not needed for the leave but it is needed for pay - proof includes the copy of a matching certificate) and the Adoption leave has commenced, the first 6 weeks are paid at 90% of the employee's Average Weekly Earnings and the remaining 33 weeks at the Lower rate as set by law. If the Average Earnings is lower than the Lower rate, then the lower of the two amounts is paid. The employer can also reclaim 92% of the cost.
Click this link to view the Employee Guide on statutory Adoption leave and pay.
Is it possible to arrange for KIT days, ShPP, and/or SPLIT days when the employee is on Adoption/Surrogacy leave?
Keep In Touch (KIT) days may be arranged by the employer with the employee but he or she is not obliged to accept. Refer to the KIT Days section above for more details.
Shared Parental Pay may also be requested by the employer to the employee. Refer to the ShPP section above for more details.
Shared Parental Leave In Touch (SPLIT) days are also available during a period of ShPP.
Statutory Paternity Pay (SPP) and Leave (SPL)
This is available to fathers or partner of a couple Adopting a child or through Surrogacy arrangements.
What are the qualifying criteria for SPP?
An employee may be eligible for statutory Paternity pay and leave if he and his partner fulfill the following criteria:
- Must have worked for the employer continuously for at least 26 weeks by the end of the 15th week before the expected week of childbirth (known as the ‘qualifying week’)
- Or must have a matching certificate
- Must be employed by the employer up to the date of birth / adoption
- Must earn at least the Lower Earnings Limit (LEL)
Once the employee qualifies for SPP, he will get the Pay for 1 or 2 weeks at either the statutory payment rate or at 90% of the Average Weekly Earnings, whichever amount is lower. The employee needs to decide if he will take the pay for 1 or 2 weeks; if he chooses the latter, it must be 2 weeks consecutive. The employer can reclaim 92% of the cost.
Click this link to view the Employee Guide on statutory Paternity pay and leave.
Shared Parental Pay (ShPP) and Leave (ShPL)
ShPP and ShPL refer to the untaken balance of leave and pay of the mother or the primary adopter which can be shared with their partner.
This is only available in England, Wales, and Scotland.
What are the qualifying criteria for Shared Parental Pay and Leave?
The employee may be eligible provided that he or she and his or her partner fulfill the following criteria:
- Must have worked for the employer continuously for at least 26 weeks by the end of the 15th week before the Due date (or date they are matched with their adopted child)
- Must still be employed by the employer while they take shared Parental leave/pay
This can be taken by either one or both parents or guardian, individually or together take leave and pay during the Maternity or Adoptive leave period.
Click this link to view the Employee Guide on shared Parental pay and leave.
What are the entitlements under ShPP and ShPL?
There is a maximum of 50 weeks' leave and a maximum of 37 weeks' pay. ShPP is paid at a statutory level each week of £140.98 (2017/18) or at 90% of an employee's Average Weekly Earnings, whichever amount is lower. A entitlement calculation needs to take place when the employer is for the Father/Secondary Adopter (i.e. Mother/Primary Adopter should have already taken place).
What should eligible employees do to commence ShPP and ShPL?
A curtailment notice must be given by the Mother/Primary Adopter to their employer in order to cease SMP or SAP payments.
Afterwards, both parents/guardians must inform their employer by giving notice and completing a Booking form for the leave they wish to book off work (i.e. maximum of 3 periods). The employer can refuse shorter periods such as one week on one week off. The employer can also reclaim 92% of the cost.
Is it possible to arrange for SPLIT days when the employee is on ShPL?
The employer/employee can agree on SPLIT days of up to 20 during this period. This is similar to and should be calculated on top of KIT days.
Shared Parental Leave In Touch (SPLIT) Days
An employer can ask an employee to attend at work for up to 20 days during an ShPP period without it affecting entitlement to ShPP.
How are SPLIT days paid?
The employee can agree with his or her employer the additional payment that will be made for such days but the employee does not have to agree to attend these.
These days are in addition to the 10 Keep In Touch (KIT) days.
Click this link to view the Employee Guide on Shared Parental Leave In Touch days.
National Minimum Wage (NMW) and National Living Wage (NLW) Rates
These rates are proposed each year by the Low Pay Commission to the Government. Once approved, both rates are then implemented on 1st April each year.
These are minimum wage rates that must be paid to employees of a certain age.Click this link to know the National Minimum Wage rates.
What should be considered when paying minimum wage rates?
Certain deductions/reductions (such as Salary Sacrifice) that cannot be made if this then brings the minimum wage rate below the required minimum hourly rate according to age.
Other factors such as traveling time and sleeping whilst at work for certain types of workers are also considered when calculating this rate. Click this link for more information on Night Working Hours.
What will happen if the employer does not pay the minimum wage?
Employers who are found not paying the minimum rates are named and shamed by the Government, in addition to being fined for non-payment.
NB. The Living Wage is not mandatory and is governed by the Living Wage Foundation, and is not to be confused with the National Living Wage, which is mandatory.
Click this link to view the Advisory, Conciliation and Arbitration Service's (Acas) guidelines on NMW and NLW.
Auto-Enrolment - Pensions
This is introduced on a mandatory basis for employees who are a.) not in an employer's qualifying pension scheme, b.) aged between 22 and state pension age, and c.) earn £10,000 or more per year. Employer duties began on their Staging date from 2012 for the larger employers and they are now down to micro employers.
Click this link to learn more about auto-enrolment.
What is the minimum contribution for auto-enrolment of pension schemes?
Minimum contributions for auto-enrolment of pensions are set at 2% (i.e. wherein 1% is paid by the employer and the remaining 1% by the employee), although the employer could decide to have made this a non-contributory scheme This will increase on 6th April 2018 to 5% (i.e. wherein 3% is paid by the employee and 2% is paid by the employer).
In line with this, eligible job holders may Opt out (with the Opt out window) while non-eligible job holders may Opt in. New employees must be assessed for auto-enrolment.
Student Loans
Currently, there are 2 Plan Types that are dependent upon whether the SL was taken out before or after 1st September 2012:
- Plan Type 1 – These are the established loans, wherein the level of annual earnings (i.e. earnings upon which Class 1 Nic’s is deducted) that trigger any deduction has increased each year. Once this level is exceeded (pro-rata), a deduction of 9% is made on any excess.
- Plan Type 2 – These are the ones that attracted the increased fees and started with a much higher earnings trigger (i.e. earnings upon which Class 1 Nic’s is deducted) of £21,000, which has not yet increased. Once this level is exceeded (pro-rata), a deduction of 9% is made on any excess.
Click this link to learn more about Student Loan repayment.
When should an employer start deducting Student Loan?
The employer should only commence Student Loan deductions where indicated:
- On a New Starter's P45
- Employee indicates on Starter checklist
- Received an SL1 Start Notice from HMRC
As the P45 will not show the Student Loan's Plan Type and if the employee does not know which type he or she has, then the employer must use Plan Type 1 until HMRC advises otherwise.
The employer can only STOP a Student Loan once he or she receives an SL2 STOP Notice. The employer must not make any refunds.
In the case when the employee leaves the company and he or she is still paying a Student Loan, the employer must indicate such on the P45.