What will HR look like in the future

PURELY
PAYROLLA ONE STOP MAGAZINE FOR BUSY PAYROLL & HR PROFESSIONALS
Auto enrolment and SMEs
Charities and Equality Act
Managing Office
Relationships
The end of the SSP scheme?
Why social media will not
work for you
2014 TUPE changes
Payroll for international
employees
FEBRUARY 2014
What will HR look
like in the future
ALSO IN THIS ISSUE...

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PURELYPAYROLLMAGAZINE THE TEAM 03
meet the team
editorial
contributors in this issue
ADRIAN HOBBS
SUSAN BALL
MELANIE PIZZEY
KATE UPCRAFT
RICHARD LINSKELL
BILLIE EADIE
TIM KELSEY
STEVE PHILLIPDENIS BARNARD
EMMA BARLETT SINEAD STACK
STUART HALL
LEE HAMILTON TREVOR BETTANY
ANNE-MARIE
BALFOUR
Contributing editor
Editor
Contributing editor
Contributing editor
Contributing editor
Contributing editor
salespublisher
PURELYPAYROLL.COM FEBRUARY 2014

CONTENTS PURELYPAYROLLMAGAZINE
04
cont
06
08
13
22
18
23
News: Things
you really
need to know
Charities
and
Equality Act
Dates
for your
diary
Managing
Office
Relationships
What will HR
look like in
the future
Auto
enrolment
and SMEs
Managing Office Relationships
Auto enrolment and SMEs Charities and Equality Act
Why social media will not
work for you
What will HR look like in the future
26
The end
of the SSP
scheme?

PURELYPAYROLLMAGAZINE CONTENTS 05
ents
30
A word from our editor
2014 is going to be a very important year
for the automatic enrolment of eligible
employees into pension saving. This is
because 2014 sees a ‘spike’ in numbers of
employers having to comply – employers
with little or no pension experience. And
payroll will be at the forefront of making
automatic enrolment work. In her article on
Automatic Enrolment & SMEs, Kate Upcraft
highlights the challenges ahead for those
professionals who’ll be at the forefront
of helping employers comply with their
automatic enrolment duties.
Another payroll article highlights the
important tax issues when you have
employees going outside the UK to work;
and we speculate on whether the Statutory
Sick Pay scheme may end up fading away.
Sinead Stack presents Part 2 of her coverage
of running a payroll in the Republic of
Ireland.
Our lead feature by Denis Barnard, What
will HR look like in the future?, engages in
some crystal ball gazing; some practical
advice is offered on how to deal with
workplace romances; a review of the TUPE
changes that came in from 31st January
is highlighted; and there’s coverage of
how the Equalities Act 2010 applies to the
charities sector.
Enjoy!
Why social
media will not
work for you
33
34
46
40
50
Questions
you ask
2014 TUPE
changes
Payroll for
international
employees
Find a new
business
partner
Payroll in
Ireland,
Part 2

NEWS PURELYPAYROLLMAGAZINE06
Thingsyou really
need to knowChanges to administration
of employee share
schemes from April 2014
Do you operate any kind of
employee share scheme in your
business? If so, the following
is a must read. This is because
HMRC is changing the way both
new and existing employee share
schemes and arrangements are
administered.
Further...
HMRC publishes
guidance on ending the
tax year 2013/14 under
RTI
HMRC have published guidance
to help Real Time Information
employers cope with what will
be for the majority their first tax
year-end under RTI.
Further...
Guidance on the
amended TUPE
regulations coming into
force 31st January 2014
The Department for Business,
Innovation and Skills
has published guidance,
Employment Rights on a Transfer
of Undertakings, on the changes
to the 2006 TUPE regulations
that have recently become law
Further....

Updated Real Time
Information guidance
published by HMRC
HMRC have made software
developers aware of changes to the
operation of Real Time Information
from the start of the tax year
2014/15 and where developers,
employers, and agents can go for
further information.
Further...
Requiring SCONs to be
shown on Full Payment
Submissions
HMRC have provided some further
information about the mandatory
requirement to show Scheme
Contracted-out Numbers (SCON) on
FPS returns from the beginning of
the tax year 2014/15.
Further...
Reasons for submitting a
late RTI return
From the start of the tax year
2014/15, HMRC is changing its RTI
specifications to enable employers
to insert a reason code as to why a
particular Full Payment Summary
return is ‘late’ being submitted
online to HMRC.
Further...
Could automatic
enrolment into pension
saving be about to derail?
The National Employment Savings
Trust (a government sponsored
national not-for-profit pension
scheme) sees serious problems
ahead for all those smaller
employers who must start staging in
to automatic enrolment during 2014.
Further...
Sharp increase in
numbers of employers
staging into auto
enrolment during 2014
The Pensions Regulator has
published updated statistics
showing around 30,000 medium-
sized employers (50-250 workers)
will reach their automatic
enrolment staging date between
this April and the end of 2014.
Further...
Government consults
further on use of zero
hours contracts
On 19 December 2013, the
Department for Business,
Innovation and Skills issued a
consultation concerning Zero hours
employment contracts.
Further...
Employers set to see
£200 per employee
wiped off their NICs
bill by end of this
Parliament
From 6 April 2014, the new
‘Employment Allowance’ will
wipe out up to £2,000 off the
total National Insurance bill of
every business.
Further...
Sharp rise expected in
penalties for failing to
pay minimum wage
On 15 January, it was announced
that rogue employers who do not
pay their workers the National
Minimum Wage (NMW) will face
an increased penalty of up to
£20,000 as part of a government
crackdown.
Further...
PURELYPAYROLLMAGAZINE NEWS
07
Sponsored by

AUTO ENROLMENT AND SMES PURELYPAYROLLMAGAZINE08
Auto enrolm
c
f

PURELYPAYROLLMAGAZINE AUTO ENROLMENT AND SMES 09
Whether you, as an accountant, IFA,
or payroll bureau, are willing or able
to take on that role needs serious
consideration, even if you have the
expertise, do you have the capability
to support all your clients who may be
staging simultaneously?
Kate Upcraft
ment-
challenges
for SMEs
and their
agents!
The largest employers not only already
had pension schemes; they also had
extensive in-house technical knowledge of
government pension policy and legislation
– not quite the same for the small business
owner.
So in this article we will explore some
of the common areas of concern that
will allow payroll bureaus and agents to
prepare for the tidal wave of questions.
Resource crunch?
The statistics in respect of the numbers
of SMEs (Small and Medium Enterprises)
who are staging in 2014 indicate the
huge demands that will be placed on
the ‘support’ community, be that an
accountant, Independent Financial Advisor,
or payroll bureau. In April, May, and July
2014, 30,000 schemes will stage; that
compares to around 6,000 in total who
staged in the first 12 months of the auto-
enrolment duties.
Those large employers were able to
engage the services of employee benefit
consultants and pension administrators
and to establish internal project teams
covering every affected discipline from
procurement, to IT, to payroll. SMEs do not
have the luxury of the financial resources
to source external support nor the expert
resource internally.
Whilst we can learn some useful
lessons from the experience of
the large employers who have
already gone through auto-
enrolment staging, as the duties
roll out to small and medium
sized employers new and
different challenges present
themselves, not least because
this group may well look to
their accountants and payroll
agents as their single source of
expert support.

Middleware
The large employers in many cases
also either had the resources to have
bespoke systems created or were able
to deal with the complexities of the
auto-enrolment legislation by taking the
radical approach of contractual auto-
enrolment. This avoided assessment
and a plethora of communication with
employees and also to took the bottom
line hit if opt-outs did not materialise to
expected levels – which they didn’t!
Neither of these options will be open
to SMEs, as the cost imperative means
that they will need to use existing or off
the shelf systems to assess and postpone
in order to auto-enrol as few individuals
as possible.
From a systems’ perspective, the
pensions industry is keen to recoup
its investment in developing both
bespoke software and middleware hub
solutions by selling these to the next
tranche of staging employers. However
the landscape has changed and with
RTI live, the vast majority of payroll
software providers now have at the
very least assessment capability within
their products, rendering middleware
unnecessary.
For the large employers, middleware
was essential to deliver the statutory
notices to the workforce if their payroll
and HR software had no such facility or
it was a chargeable extra module, as
manual preparation of notices was not
feasible. But middleware came with a
surprise impact for many of those who
signed on the dotted line - the failure
to realise that in order to carry out
assessment and comms, that week’s
or month’s payroll data had to be
captured early so it could be processed
by the middleware and delivered back
to the employer ready for the payroll
run. Because of this some employers
have had to totally re-engineer payroll
processing deadlines that wouldn’t have
been necessary if middleware was not in
use.
As the volumes of statutory notices
are much smaller as we move into
SME territory the message has to be
‘find out what your current HR and
payroll systems can do for you and
then just plug the gaps’, don’t rush
out to buy middleware that you may
not need.
Costs
Preparation is everything with auto-
enrolment and it is a salutary lesson
that a quarter of large employers felt
they spent more than they needed to on
the project because of rushed decision
making due to allowing insufficient time
before staging.
According to ‘Finding your way
out of the auto enrolment maze’ -
new research from the independent
economic consultancy Centre for
Economic Business Research (Cebr), the
cost of auto-enrolment implementation
for small businesses (1-4 employees)
was £8,900, this figure rises to £12,600
for small-medium businesses of 100
employees, and £15,600 for companies
employing 250 people. This is further
supported by a survey in May 2013 by
consultancy Benefex that found that 79%
of employers felt ongoing administration
was the biggest challenge in terms of
resourcing and cost.

For example some providers have
higher charges if the employer does
not hold email addresses for 80% of
prospective members as the provider
wants to be able to communicate
electronically with them to contain costs.
Decisions, decisions
One of the real benefits for SMEs is that
they can learn from the experience of
others. As auto-enrolment involves such
key strategic decisions no one should be
afraid to ask for references from others
in their sector in respect of the chosen
pension provider or those who are already
using an auto-enrolment solution from
their payroll software developer.
PURELYPAYROLLMAGAZINE AUTO ENROLMENT AND SMES 11
Data
Much of the feedback from those
already staged into auto-enrolment
has centred on the need for clean
and good quality data to smooth the
implementation process. Whilst a lot of
personal data will have been cleansed
ready for RTI there will doubtless
be areas that did not feature in RTI
preparation that are key to the success
of pension interfaces and achieving good
terms from a pension provider.
Therefore, a cheaper upfront solution
that leaves the employer with a lot
of manual workarounds could be
fine for those with small numbers
to auto-enrol and few employees
with variable earnings, but a real
issue for example in a weekly payroll
retail environment – one size most
definitely does not fit all.
Of course that presupposes that the
key strategic decisions are taken
quickly, getting auto-enrolment on
the directors’ agenda can use up
valuable time and that’s before the
talking starts!

A typical payroll bureau with 300 clients
may find that
not only are all of them staging very
close together
but that each has chosen a different
pension provider
and all need a bespoke electronic
interface of employee data after
each payroll run to set up schemes as
cheaply as possible.
It is a brave payroll agent who doesn’t
consider the chargeable time involved
in creating all these bespoke interfaces.
Some agents I have spoken to have
naively assumed all their clients would
use NEST (National Employment Savings
Trust) or that all dealings are with The
Pension Regulator who then farms out
files to providers - this may seem basic
but pensions are new territory for both
SMEs and some of their agents.
Opt-outs
Opt-out rates will be key to cost control
for SMEs so is vital that they carry out
an initial assessment of eligible, non-
eligible and worker numbers using live
payroll data to consider the cost impact.
Experience from the large employers
indicates that opt outs are higher
amongst the over 50’s who are likely to
have already secured their retirement
finances. Other reasons for opt out
naturally relate to financial priorities
and, interestingly, the likelihood of
moving on from the employer in the near
future. SMEs will be able to use these
trends to assess their likely opt-out
percentage and whether they will differ
from the average of around 10%.
In conclusion…
So whilst there are lessons to learn from
year one of auto-enrolment, perhaps the
key message is that the challenges for
SMEs are very different and we shouldn’t
underestimate how much support these
clients will need.
The legislation around auto-enrolment
is very complex and some will need legal
advice just to decide who is in scope as
a worker and what pay elements need to
be included in qualifying earnings.
The good news is that Steve Webb
the pension minister has listened to the
concerns of the payroll industry and
introduced simplification around pay
reference periods that took effect on 1st
November 2013; with longer windows
to action auto-enrolment in place from
1 April 2014; and further simplification
promised.
But there’s no room for complacency
- RTI was a walk in the park compared to
auto enrolment!

PURELYPAYROLLMAGAZINE CHARITIES AND THE EQUALITY ACT 13
CHARITIES AND
THE EQUALITY
ACT 2010

CHARITIES AND THE EQUALITY ACT PURELYPAYROLLMAGAZINE14
There are three main triggers when
the Act must be actively considered by
Charities; when a new charity is set up,
when charities merge and if a charity
changes its “objects”.
There are few legal reference points
for charities, save the Catholic Care case
which showed the drastic consequences
of failure to comply with the Act. If an
existing charity operates in a prohibited
way, its Trustees should take immediate
remedial steps or risk claims and financial
liability. A prospective charity risks its
registration being refused if its purpose
is prohibited by the Act. Every charitable
activity or restriction by a charity of its
activities, triggers obligations under the
Act.
Emma Bartlett
The impact of the Equality Act 2010
(the Act) on Charities is not well
understood and there is limited
guidance available. The Act tightened
exceptions in anti-discrimination
law previously protecting charities.
Charities will discriminate in favour of
particular persons to the exclusion of
others and therefore need to ensure
that their charitable activities are
compliant.

PURELYPAYROLLMAGAZINE CHARITIES AND THE EQUALITY ACT 15
Charity Commission guidance on the
Act is light. In 2013, the University of
Liverpool published an in-depth study
of the impact of the Act on charities,
concluding that older charities, religious
ones, and higher education charities
were most at risk or most affected by
the Act.
What is unlawful
discrimination?
The Act makes it unlawful to
discriminate, because of one or more
of nine protected characteristics
and identifies different types of
discrimination. Unlawful discrimination
need not be intentional. It is easy to fall
foul of the Act’s restrictions.
For example, indirect age
discrimination can arise if a charity’s
policy disallows help to unemployed
people with less than five years’ work
experience; older unemployed workers
are more likely to be able to meet this
criteria leading to younger workers being
prejudiced.
The charities exception
The Act recognises when a charity’s
purpose may favour or exclude a
particular group with a protected
characteristic.This will be lawful
provided the purpose falls within the
charity’s statutory exception.
For example, a charity for the
promotion of a particular religion within
the community will need to rely on the
charities exception to avoid unlawfully
discriminating against other religions
excluded from benefit.
The exception is subject to two
conditions:
1. The charity’s governing document must
detail the principal purpose of allowing
only persons sharing a particular
protected characteristic to benefit.
2. The restriction must be (i) a
proportionate means of achieving a
legitimate aim or (ii) for the purpose
of preventing or compensating for
disadvantage linked with the protected
characteristic.
For example, a charity’s aim is to help
high unemployment of a particular
religion within the community, could
potentially fall within 2(ii) if the
unemployment of that particular religious
group in the community is higher than
that for the general population (i.e. the
group is sufficiently disadvantaged).
Other exceptions
Trustees need to be aware of other
statutory exceptions:
Men or women only fundraising - it is
permissible for there to be a men only
or women only fundraising in aid of
that charity.
For example, Race for Life is a
nationwide women only event that raises
money for Cancer Research UK.
Membership based on religious belief
- membership of charities can be based
on religious belief, even if the charity
is not set up for religious purposes,
provided the requirement was in place
prior to 18 May 2005.

CHARITIES AND THE EQUALITY ACT PURELYPAYROLLMAGAZINE16
For example, the Scouts Association
which requires children joining to
promise to do their best to do their duty
to God.
Restricting membership of
associations - some charities are also
associations (for example, the British
Deaf Association). An association is
any group with 25 or more members
which has rules to control how
someone becomes a member. It is
permissible under the Act to restrict
membership to people who share
a protected characteristic (apart
from a person’s colour) which would
enable, for example, the BDA to limit
membership to people who are deaf
or have hearing loss.
Positive action - charities can take
positive action (such as giving a
particular disadvantaged group
accelerated access to services or
training opportunities) providing it is
a proportionate means of achieving
one of the following aims: (i) enabling
such a particular group to overcome
or minimise a disadvantage connected
with it; (ii) meeting needs specific
to people who share the protected
characteristic; (iii) enabling a
particular group to participate in an
activity where their participation is
disproportionately low.
For, example, a children’s centre charity
working specifically in a community
which is predominantly Polish, but where
few Polish parents and children use its
services. Permissible positive action
includes short term waiver or reduced
admission fees to encourage attendance.
Permissible activity - if the charity
in the above example simply took
steps to advertise and explain its
children’s centre services to the Polish
community, there would arguably
be no less favourable treatment to
others; permissible activity under the
Act.
Religious or belief organisations -
charities, and non-commercial
organisations, whose purpose is
to: (i) practice, teach or advance
a religion or belief, or; (ii) enable
people of the religion or belief to
receive a benefit or engage in any
activity with the framework of that
religion or belief, or; (iii) promote
good relations between people of
different religions or belief beliefs;
can restrict membership and access to
activities, services or facilities on the
basis of religion or belief, where this is
necessary to comply with the purpose
of the organisation or to avoid causing
offence to members of the religion or
belief.
Such charities can also discriminate on
the basis of sexual orientation in order
to avoid conflict with the strongly held
convictions of members of the religion or
belief, but not in relation to any activity
carried out on behalf of a public body
under a contract with that body.

The Catholic Care case
In the Catholic Care (Diocese of Leeds)
v Charity Commission for England and
Wales and another [2010], the faith based
adoption society appealed against a Charity
Commission decision not to approve amended
objects intended to bring it within anti-
discriminatory provisions. Catholic Care had
initially appealed the Charity Commission’s
rejection to the Charity Tribunal and then
appealed that decision to the High Court. The
High Court gave a small victory to Catholic
Care, directing the Charity Commission
to reconsider its application to change its
objects clause in order to come within the
statutory exception.
The decision provides useful clarification on
the interpretation of this legislation. The
case was the first in which a court or tribunal
had to consider the correct interpretation of
the statutory charities exemption.
Charities can ignore the statutory exception if:
It does not restrict who may benefit (i.e. there is therefore no disadvantage to a
particular group with a protected characteristic and so no contravention of the
Act).
It does restrict who can benefit from its work, but the restriction does not relate
to particular group with a protected characteristic (i.e. so no contravention of the
Act, although be vigilant to any indirect discrimination risk mentioned above.).
A restriction does relate to particular group with a protected characteristic, but it
can be justified using other provisions in the Act.
The charity is for the benefit of disabled people generally. Please note that if a
charity’s purpose is restricted to benefit people with a specific disability (e.g.
cancer) then this will need to fall within the charity exception or the Act’s other
exceptions.
PURELYPAYROLLMAGAZINE SHARED PARENTAL LEAVE 17
We recommend charities review
restrictions in their governing
document which favour persons
with a protected characteristic.
Trustees should ensure that the
charity’s purpose falls within the
Act’s exceptions.
Trustees should be aware that a
change in circumstances could lead
to the charity’s purpose falling
outside of a statutory exception.
For example, if a charity’s purpose
is to help a particular religious group
whose unemployment rates are
higher than the national average,
that purpose may cease to fall within
the charities exception if over time
that unemployment rate decreases.
Amendments to charitable purposes
would warrant detailed legal advice.

WHAT WILL HR LOOK LIKE IN THE FUTURE PURELYPAYROLLMAGAZINE18
What wi
like in th

PURELYPAYROLLMAGAZINE WHAT WILL HR LOOK LIKE IN THE FUTURE 19
Two of the questions that
people seem to like asking
me (usually over a glass of
wine) are: What impact will
increasingly sophisticated
HR software have on the
profession? and: What will HR
look like in the future?
I’ll try to give my own very personal
viewpoints on these in the course of this
article.
Over the past year or two I have
written and spoken at some length
about not only making the business case
for choosing the best HR and payroll
software, but also ensuring the right
priority is attached to the project.
When I talk to clients about the
elements that comprise the economic
argument, they seem to think of cost
savings expressed in money rather than
in terms of FTE (Full Time Equivalent);
and yet nearly all of my empirical
findings come back to time saved by
smarter technology, and this translates
more readily into FTE. As I start to talk
about this, there is an embarrassed
ill HR look
he future? Denis Barnard
shuffling of feet; HR don’t want to be
seen as putting people out of work,
especially their own.
Coupled with that reaction is the fear
of comfort zone loss. On the one hand,
HR proclaims that is could be more
strategic if it wasn’t bogged down with
administrative functions,
with the other, it clings on fiercely
to what it has, perpetuates the
gatekeeping role, and gratefully
accepts more new stuff that no-one
else wants.
Whether the profession likes it or not,
there are technological advances in the
software that they use – or will be using
- that render a lot of administrative
activities defunct. And the gatekeeping
will have to end, too.
Let’s consider some typical tasks:
Organisation Charts These can very
often be the Organisational Development
version of painting the Forth Bridge;
they are an ongoing work in progress,
compiled manually in Visio or PowerPoint,
are never accurate in real time; many
departments seem to keep their own
versions that are at variance with the
central one.

WHAT WILL HR LOOK LIKE IN THE FUTURE PURELYPAYROLLMAGAZINE20
Approvals When it comes to things
like recruiting replacement staff,
organisations with low trust and poor
processes often require multiple
signatures, even though the salary and
post were already established in the
headcount budget at the beginning of
the year. Who, more often than not, gets
the task of collecting these signatures? I
always remember at one place the CEO
needed a new manager and went out
and recruited the person; it took HR five
weeks a posteriori to garner the necessary
six signatures to approve the hire.
How much holiday do I have left? How
many HR (and some payroll) departments
field a barrage of requests for information
on remaining holiday entitlement from
employees?
Starters and Leavers How do we
ensure that an incoming new employee
has access to the computer system
from Day One, is included in the Life
Assurance and Pension schemes, is known
to reception and on the phone list, and so
on? That their probation period is tracked
and remaindered? How do we remember
to have property such as mobile phones,
laptops, and security passes returned?
Generating management reports
for the Board or functional directors
Whether we are prepared to admit it
or not, many HR people do not have
sufficient confidence to run a raw report
and distribute it, either because it has
not been set up correctly, or because
there is a lack of knowledge of the report
writing application. To compensate for
this, there exist manual interventions,
data manipulation, work-arounds and,
in extreme cases, parallel employee
databases held in Access or Excel.
Do all or any of the above seem
familiar? Of course they do, and the
interesting thing is that they – and
other administrative chores – can all be
streamlined and automated by a good HR
& payroll software product where tools
such as Work Flow, Triggered Actions, and
Self Service are featured. Not only will
such a system take the heavy lifting in its
stride, but it also reduces the potential
for error or omission.
I have some rule of thumb calculations,
gathered over some years, that indicate
the amount of FTE that can be saved over
the five to seven year typical lifetime
for this type of software, and the figures
are significant. Let’s assume a modest
total saving of ten FTE over a seven year
period, what are the implications for the
staff currently engaged on these routine
tasks? Can they in fact be re-deployed to
function as strategists?
This is a question that the whole
profession will have to confront
sooner rather than later. That there
should at least exist the possibility of
administrative staff being strategic
should be evidenced by the number of
20-something HR Masters holders I have
encountered doing routine tasks in their
departments.
And the vision for HR in the future? In
the 1970s and ‘80s many organisations
had what was known as a “machine room”
where an array of NCR- type machines
were operated to run the organisational
ledgers. Those same ledgers are now run
by a smaller number of professionals on
accounting software. So where are those
former operators now? Did they transfer
over to being accountants? I think we can
figure out the answer to that.

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doing to ensure you are supported
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Tax month 7 payments to
HMRC by cheque must reach
HMRC by this date.
FEB
07
Tax month 10 payments to HMRC by
cheque must reach HMRC by this date.
Tax month 10 electronic payments must
clear HMRC bank account by this date
(the 22nd is a Saturday). The employer
may be able to make a Faster Payment
that will clear on or by the 22nd.
Tax month 11 payments to HMRC by
cheque must reach HMRC by this date.
Tax month 11 electronic payments
must clear HMRC bank account by
this date (the 22nd is a Saturday).
The employer may be able to make a
Faster Payment that will clear on or
by the 22nd.
Forms P46(Car) for the quarter ended
5 January to reach HMRC by this date.
Dates for your
Diary
FEB
19
FEB
21
MAR
19
MAR
21
FEB
01
DATES FOR YOUR DIARY PURELYPAYROLLMAGAZINE22

PURELYPAYROLLMAGAZINE MANAGING OFFICE RELATIONSHIPS 23
Managing office
relationships
Stuart Hall
Whether their
eyes meet across
a crowded board
room or sparks fly
as they both reach
for the hole- punch,
office romances
are inevitable. The
long hours spent
together, the mutual
interests, and the
romantic fantasies
imprinted on our
minds by Hollywood,
can lead to whirlwind
romances sprouting
up all over the office.

MANAGING OFFICE RELATIONSHIPS PURELYPAYROLLMAGAZINE24
But what is one couples real life Rom-com can fast become the HR
department’s nightmare. From messy breakups to disgruntled ex’s,
love affairs can take their toll on the entire office affecting morale and
performance. Yet the days of banning workplace lovers has passed, so
how exactly should office romance be managed?
But what happens when the
honeymoon ends…
When cupid’s arrow strikes and
employees enter a relationship it can
cause serious, well founded, concerns
for an employer and conclude in
potential complications to the business.
Witnessing examples of public
affection can make others feel
uncomfortable and distract them from
the task at hand. This feeling of unease
is multiplied further when displayed
between two employees of differing
work levels. Jealousy takes hold of the
masses, fearing that favouritism will be
shown to the lower ranking partner.
Worse still is when a relationship
ends. The disruption caused by couples
who never quite reached ‘happily ever
after’ can be calamitous. After or even
during a break up tensions are high,
the mood is low, and the affects can be
seen rippling through the entire office.
A feeling of discomfort will embed
itself in employees creating a tense,
prickly atmosphere. If the problem fails
to resolve itself quickly a boss may be
obliged to set up disciplinary hearings
potentially leading to official warnings or
perhaps worse.
It all becomes very messy when one
(or both) of the love-struck parties
are either married or in a relationship
When romance
blossoms…
Romantic liaisons in the workplace are
not uncommon with 40% of employees
confessing to having met their spouse at
the office and 56% of workers admitting
to having an inter-company relationship
at some stage.
Happiness is infectious. When a
relationship is flourishing, a couple’s
morale will be through the roof. Their
all round happy demeanour and can
do attitude will most certainly rub off
on their co-workers; consequentially
improving the office’s work efficiency
and team spirit.
A couple with mutual interests and
commitments can benefit the business.
By understanding the stresses that come
with their job, and that occasionally
one of the partners may be busy, it can
relieve some worries that come with
out of work relationships. Instead of
panicking about whether their partner
won’t understand their long hours they
can give their undivided attention
to work. The capacity to discuss
work issues at home with someone
who appreciates the scenario can be
constructive to working through an
employee’s problem, allowing them to
approach it appropriately the following
day.

PURELYPAYROLLMAGAZINE MANAGING OFFICE RELATIONSHIPS 25
with someone else. It’s not unheard of
for the estranged lover to storm into
an office and confront their partner’s
new interest. This would clearly be an
unwelcome distraction in the office
and is highly unprofessional. What if
potential clients witnessed it?
It is essential that office relationships
are handled carefully by employers.
Steps to Managing Office Relationships
1. Be open and honest with your employees. Sensible employers construct a very
clear policy revolving employee romances and within it, stipulate what behaviour
is deemed as unacceptable and how professionalism must be a priority. This
honesty however works both ways with the employer requiring full disclosure, i.e.
if two employees decide to be in a relationship they should make the employer
aware.
2. Make it clear you do not encourage office relationships. Although it’s seen as
unwise to ban them completely you can make it clear that you do not encourage
them. This is important in case the worse should occur; your standpoint is
recorded and clear from the outset.
3. Have a contract in place for employees. Despite seeming over the top,
stipulating the rules and regulations surrounding behaviour and sexual harassment
will be crucial to avoiding lawsuits. Their signed recognition of these policies
releases the employer of any legal worries.
4. Keep managers properly informed. Ensure line managers are aware of the
situation and are prepared for concerns from other employees. A relationship in
the office, if not managed, could affect them.
The financial ramifications of a poorly
handled case can be disastrous with
some employees being known to sue
their company for millions. In 2011,
a UBS employee who had broken up
with her supervisor brought a sexual
harassment lawsuit against the
company. UBS were made to pay £10.6
million.
The fundamental issue regarding office relationships is that employers are involved
despite their wishes to the contrary. They should put as many systems in place as
possible to safeguard not only their company but themselves from prosecution. This
being said, with it being a month for valentines, don’t stand in the way of love. Who
knows it could just be the real thing…

SICK PAY PURELYPAYROLLMAGAZINE26
Two of the proposals put forward in the above document
were the abolition of the Percentage Threshold Scheme,
which is taking place from 6 April 2014 (more below), and
the removal of the statutory requirement on employers to
maintain sick pay records.
The end of the
Statutory Sick
Pay scheme?
Back in January 2013, the
Department for Work and Pensions
published Fitness for work: the
Government response to ‘Health at
work – an independent review of
sickness absence
Keeping SSP records
In their Review, the DWP stated:
“Under current legislation, employers
are required to maintain records of
sickness absence lasting four days or
more and details of Statutory Sick Pay
(SSP) payments for each employee for
three years after the end of each tax
year. The Government recognises the
importance of maintaining records for
sickness absence and payroll, and their
key role in helping businesses to manage
absence and costs. However, bearing in
mind the statutory burden it places upon
employers, the Review recommended the
abolition of obligatory SSP record keeping
requirements.”
But then a few lines down it goes on
stions You Ask...
wers that Work
Answer from Adrian Hobbs
ng
CO2
pay.
first
s. At
ng
be
were
s.
ables
rice.
Diesel cars generally have a much lower CO2 rate
than equivalent petrol cars. But they’ve been hit by
an extra 3% supplement. The good news is that this
supplement is being withdrawn from 6 April 2016,
so that diesel cars are subjected to the same level
of tax as petrol cars. So providing diesel cars may
still be one of your best options – they have lower
CO2 emissions, and they manage more miles to the
gallon. However, against this must be set the often
additional capital cost of purchasing a diesel car, and
the currently much more expensive price of diesel.
Of course, LPG fuelled cars, whether a petrol/LPG
hybrid or a car that only runs on LPG, could prove
tax efficient. They also generally have lower CO2
emissions than cars that just run on petrol. Also, LPG
Answers from
Adrian Hobbs

PURELYPAYROLLMAGAZINE SICK PAY 27
to state: “Employers are required to
maintain records to comply with PAYE
regulations, and in the event of a dispute
with an employee around non-payment
of SSP they may be asked by HMRC
to produce evidence of absence and
payment to defend a case. Employers
who fail to pay SSP or pay incorrect
amounts of SSP are also liable to a
penalty.”
This is what I cannot get my head
around – if employers are still required
to pay Statutory Sick Pay (SSP) to eligible
workers, and they can be required to
“produce evidence of absence and
payment” where there is a dispute, how
can the “obligatory SSP record keeping
requirements” be abolished?

Abolition of PTS scheme
from April 2014
From 6 April 2014, the Percentage
Threshold Scheme for the recovery of SSP
is being abolished. The PTS compensates
employers for higher-than-average
sickness absence. Currently, only about
100,000 employers claim PTS recovery
each year with a cost to the Exchequer
of approximately £50 million per annum.
Most SSP recovery payments are for small
sums.
Instead, the PTS funding will be moved
into a new health and work assessment
and advisory service to help employees
who’ve been incapacitated for four
weeks or more get back to work. Chapter
2 of the above Review provides more
information concerning how the new
service is expected to work. The new
service is expected to be introduced by
the end of 2014.
DWP expect the annual cost of the
new service to fall between £25 million
and £50 million and that around 560,000
absentees will use it every year. The
new scheme will employ occupational
health nurses, occupational therapists,
physiotherapists, occupational physicians,
and other appropriate experts, and will
recommend interventions at a total cost
SICK PAY PURELYPAYROLLMAGAZINE28
In other words, these are the very statutory
records that would be required to settle
a dispute about absence and payment of
SSP. And yet the DWP recommends such
statutory record keeping requirement be
abolished. You see what I mean?
The current statutory requirement to keep SSP records extends to keeping
a record of (as per HMRC Helpsheet E14 to 5 April 2014):
all dates of employee sickness lasting four or more days in a row, including for employees who are under
16 years old
a record of the payment dates and the amount paid during each PIW [Period of Incapacity for Work]
the date the pay period began
a record of any unpaid SSP with reasons
form SSP2 Statutory Sick Pay (SSP) record sheet to help you keep a record of your payments.
The only way the keeping of SSP records
could be abolished is if employers didn’t have a
statutory liability to pay SSP in the first place.
May be that’s what the government
is leaning towards. Another proposal
recommended by DWP is “commissioning
research to explore the details of sickness
absence management and sick pay regimes
in different types of organisations.” In
other words, if the majority of employers
are meeting a satisfactory level of sick pay,
why impose statutory requirements on all
employers that really only apply to that
minority of employers who only currently
pay SSP? Therefore, might it be that
employers will no longer be required to pay
SSP, but rather be encouraged to devote
more resources to managing sickness
absence and getting incapacitated workers
back to work more quickly?
The first step towards this possible
eventuality is the abolition of the
Percentage Threshold Scheme (PTS).

of between £20 million and £85 million.
The benefit to the government of
this outlay is the increase in revenues
from income tax and National Insurance
contributions from workers getting back
more quickly to productive working –
forecast at £100 to £215 million, and in
reduced benefit expenditures of a further
£30 to £60 million. DWP estimate that
employers will save £80 to £165 million
a year in reduced sickness absence
payments, while economic output will
increase by £450 to £900 million. The
DWP estimate that it costs employers £9
billion a year to deal with work absences,
so any reduction in these figures must be
welcome.
With the abolition of PTS, DWP
estimate that employers will save the
cost of the additional administrative
burden associated with the scheme,
saving employers costs of between £2.5
and £5 million per annum.
Although PTS is being abolished from
April 2014, employers will still be able
to make claims for reimbursement of SSP
under PTS (paid for sickness periods up to
5 April 2014) until the end of the 2015/16
tax year.
Tax exemption for employer
financed health-related
interventions
A targeted upcoming tax exemption was
announced in the 2013 Budget, so that an
employer can obtain a certain amount of
income tax exemption on monies spent to
help employees back to work.
In the 5th December Autumn
Statement 2013 it was announced: “As
announced in Budget 2013, legislation
will be introduced to exempt from
income tax expenditure by employers on
recommended medical treatment where
an employee has been absent from work
due to ill-health or injury. Following
consultation, the Government will extend
the exemption to medical treatments
recommended by employer-arranged
occupational health services. The
exemption will be subject to an annual
cap of £500 per employee, and is likely to
come into effect in autumn 2014.”
Therefore, in conclusion…
The government’s whole policy thrust
seems to be geared towards the better
control of sickness absence in the first
place, and then the rapid intervention of
employers and their health advisors to
get incapacitated workers back into work
as quickly and as reasonably as possible.
PURELYPAYROLLMAGAZINE SICK PAY 29
Therefore, in conclusion…
The government’s whole policy thrust
seems to be geared towards the
better control of sickness absence
in the first place, and then the rapid
intervention of employers and their
health advisors to get incapacitated
workers back into work as quickly and
as reasonably as possible.
Therefore, as employers will no
longer be able to recovery any SSP at
all from April 2014 onwards, and with
the new health and work assessment
and advisory service coming on-
stream later in 2014, and the
upcoming income tax exemption for
an employer’s medical interventions,
may be the statutory requirement to
pay a specific amount of SSP will end
up being scrapped?

WHY SOCIAL MEDIA WILL NOT WORK FOR YOU PURELYPAYROLLMAGAZINE30
Disappointingly, the conclusion I have come
to is that for many of the people who engage
our services, social media will be a complete
waste of their time! And here’s why…
Steve Phillip
One of my greatest frustrations is
witnessing the initial enthusiasm of some
of our clients to learn how to use LinkedIn
and other social media to grow their
business, and then watching it turn into a
complete lack of any progress.
For some time, I have asked myself, why
it is that Pareto’s 80/20 principle appears
to apply itself so rigorously to the progress
of these clients? Often, once training has
happened, 20% of our course participants
go away and do great things, building
networks, engaging with useful contacts,
and then turning that engagement into
new business. As for the remaining 80%…
Why social media will
The unpleasant truth
There’s a well-used saying ‘If you always
do what you’ve always done, you’ll always
get what you’ve always got’. This saying
applies to social media and it’s
why many individuals and teams
are failing to make LinkedIn et al,
work for their businesses.
Disappointingly, the conclusion I have come
to is that for many of the people who engage
our services, social media will be a complete
waste of their time! And here’s why…
Sir Ken Robinson, the brilliant creativity
expert, explains in one of his Ted Talks, how
many people have become brainwashed by
an education process which has much akin
to the fast food industry. This franchise

PURELYPAYROLLMAGAZINE WHY SOCIAL MEDIA WILL NOT WORK FOR YOU 31
a known, as well as a like and trust, factor
with your audience.
The mistakes most businesses
make
Unfortunately, the mistake I see most
businesses make is to expect social media to
work when applying a fast food, franchise
mentality.
Let me use a further analogy – Most of us
can drive a car and often with the minimal
of conscious effort. A Formula 1 car has the
power to enable you to drive faster than you
could ever imagine and in the right hands
it can help you become a world champion.
l not work for you -
h
concept, applied to the objective of building
brand awareness and marketing, would
have us believe that if we replicate other
successful models and implement their
strategies, to the letter, then we will be
successful. To some degree this may be true.
However …
The greatest challenge you face in
business, I believe, is how you stand out
from the crowd, especially, when faced with
previously unparalleled levels of competition.
The solution can be found in your uniqueness
– your ability to differentiate what you
have to offer your clients and how you
communicate that difference, whilst building

WHY SOCIAL MEDIA WILL NOT WORK FOR YOU PURELYPAYROLLMAGAZINE32
To succeed in business, using
social media, it is vital that
you “disenthrall” yourself
(free yourself from a controlling force or
influence) of the things you have
always done, recognise that
professional networking and
marketing has changed and then
rise with the occasion – only
then will you truly succeed.
However, it only takes a few seconds, sat in
the cockpit of such a vehicle, to appreciate
that just getting out of first gear, into
second, is a major feat in itself.
You need lessons and a significant number
of laps under your belt to make any kind of
progress in a Formula 1 car. With practise
and time, you will eventually manage to get
into, 2nd, 3rd, 4th gear and beyond – your
lap times become faster, and eventually
you’re competing with the big boys. You’ve
just had to learn to drive a car all over
again, and I’d suggest that mastering social
media is no different.
When in history, as a professional, have
you had the facility to search, locate, and
engage with virtually anyone in business you
choose, often for free and generally within
seconds – from a device that fits in the palm
of your hand? You now have the Formula 1
of marketing vehicles and you want to use it
to become a world champion – but without
lessons and without putting in the laps?
No wonder so many are failing to win the
constructor’s championship, when it comes
to using social media!
Here is the uncomfortable truth… If
you really want social media to work and
generate more opportunities for you to do
business, with more people, then you need
to identify your uniqueness, communicate
it clearly via your social media profiles and
messaging and… you must put in the laps.
Certainly, your regularly scheduled
LinkedIn status updates and tweets will
get your brand seen by more people,
more often. However, they will do little to
create interest and barely achieve anything
if you’re looking to attract new clients
– unless you’re prepared to engage and
involve yourself in conversations, with those
you want to do business with.
You see, if you’re someone who
struggles to reply to emails and phone
messages, what makes you think you’re
going to be any more effective with your
communication when using social media?
The truth is, you probably won’t be.
We must all recognise that times have
changed and if you keep on doing what is
comfortable and familiar, you will not grow.
Ken Robinson, in his talk, explains that
anyone who is over the age of 25 still wears
a wristwatch, when those under 25 choose
not to. Why is this? The over 25s have
always worn a wristwatch and would not
consider not doing so. The under 25 year
old has grown up in a digital age, where
time is everywhere; they have moved with
the times.
Abraham Lincoln’s Second Annual
Address to congress on 1st December
1862 sums it up extremely well. “The
dogmas of the quiet past are inadequate to
the stormy present. The occasion is piled
high with difficulty, and we must rise with
the occasion. As our case is new, so we
must think anew and act anew. We must
disenthrall ourselves, and then we shall
save our country.”

questions answers
Can you please tell me how the payment of bank holidays fits
in with an employee’s entitlement to a minimum amount of
paid annual leave each year?
Firstly, ordinary employees are not
legally entitled to be paid for bank
holidays; it’s only bank employees
that have that right. Whether other
employees are entitled to be paid is up
to what is agreed between employees
and employer. It’s always recommended
that, for example, any details about
paid bank holidays are expressly stated
in terms and conditions.
When the statutory entitlement to
paid annual leave was first introduced,
employees were entitled to four weeks’
paid annual leave (e.g. 20 days for
someone working five days a week).
Employers were allowed to include as
part of this, for example, 20 days, any
bank holidays. Effectively this meant
employee’s annual leave could end up
being only 12 days, with eight days
having to be taken as bank holidays.
QQuestions You
Answers that W
Answ
Question
The whole of the government’s thrust concerning
company cars is to drive down pollution. This
means the more fuel efficient and lower a car’s CO2
emissions the less income tax an employee will pay.
When deciding what type of car to go for, the first
step will be to ascertain any car’s CO2 emissions. At
Appendix 2 ofHMRC booklet 480(2012), you can find
tables for the tax years 2011/12 to 2013/14 setting
out the percentage of a car’s list price that will be
taxed depending on its level of emissions. AtBudget
2012, tables for the tax year 2014/15 to 2016/17 were
published.
These tables show the ‘squeeze’ on emissions.
Except for ultra-low carbon emission cars, the tables
start with a percentage of 15% of the car’s list price.
For 2011/12, a car needs to have a rounded down CO2
figure of 121g/km to be taxed at 15%; for the tax year
2016/17, the car will need a CO2 figure of less than
95g/km to be taxed at the same rate. In other words, if
Diesel cars generally hav
than equivalent petrol c
an extra 3% supplement
supplement is being wit
so that diesel cars are su
of tax as petrol cars. So p
still be one of your best
CO2 emissions, and they
gallon. However, agains
additional capital cost o
the currently much more
Of course, LPG fuelled
hybrid or a car that only
tax efficient. They also g
emissions than cars that
is cheaper than petrol or
fuel stations selling LPG
at 4 April 2012, average
78.7p/litre for LPG; 141p
litre for diesel. But then w
Answers from
Adrian Hobbs
The unions objected to this practice
and the government agreed, from
April 2009, to introduce a minimum
entitlement to 5.6 weeks’ paid annual
leave (e.g. a maximum of 28 days for
someone working at least five days a
week or more). Therefore, where an
employer includes bank holidays in an
employee’s statutory entitlement to
paid annual leave, most employees will
still end up with being able to take an
additional four weeks’ paid leave (e.g.
20 days for someone working five days a
week).
Many employers now allow employees
to take a full up to 28 days’ paid annual
leave, and pay for bank holidays taken
in addition. Employers can agree
whatever they like with employees as
long as they comply with an employee’s
minimum statutory rights.
PURELYPAYROLLMAGAZINE Q&A 33

2014 TUPE CHANGES PURELYPAYROLLMAGAZINE34
The Transfer of Undertakings (Pr
Regulations 2006 (TUPE) provide
there is a business transfer. The G
employment rights legislation as p
commitment to deregulation and
unnecessary “gold plating” of EU
Anne-Marie
Balfour
Trevor
Bettany
2014
TUPE
changes

PURELYPAYROLLMAGAZINE 2014 TUPE CHANGES 35
As a result, amending legislation has
been put in place. On 10 January
2014, a final draft of the snappily
entitled Collective Redundancies and
Transfer of Undertakings (Protection
of Employment)(Amendment)
Regulations 2014 was laid before
Parliament. These Regulations came
into force on 31 January 2014. What
changes do these new Regulations
contain?
rotection of Employment)
es protection for employees when
Government has been reviewing
part of its ‘red tape challenge’
to avoid what it regards as
Directives.
The most eye-catching original proposal
put out for consultation was to abolish
“service provision changes”, which the
UK introduced in 2006 to make clear
that TUPE applied to outsourcing,
the changeover of contractors, and
contracting back in-house.
However, the underlying EU Acquired
Rights Directive did not require the UK to
apply TUPE to service provision changes
and therefore represents “gold-plating.”
The consultation exercise provoked an
outcry of complaints that the abolition
of “service provision changes” would
restore the uncertainty which they were
introduced to avoid. The Government
hastily changed its view and now regards
service provision changes as an example
of “where good regulation, additional to
that required by the European Directive,
can deliver benefits for both businesses
and individuals.” In this instance, it is
correct.
Whilst some of the more far-
reaching original proposals
have been dropped,
significant changes remain.

Service provision changes
Whilst service provision changes have
been retained, they have also been
clarified. The new regulations make it
clear that the activities to be performed
post-transfer must be “fundamentally
the same as the activities carried out
previously”.
Narrower unfair dismissal
protection
Prior to 31 January 2014, a dismissal was
automatically unfair if the reason for
that dismissal was either (i) the transfer
(unless for an ETO reason) or (ii) a reason
connected with the transfer.
Following the changes, only a dismissal
on ground (i) will be automatically unfair.
A dismissal for a reason merely connected
with the transfer will not be automatically
unfair.
In practice, there will be disputes about
whether a dismissal is because of the
transfer or for a reason ‘connected with’
the transfer.
Variation of terms
Following a TUPE transfer, the transferee
(the ‘new’ employer) often wishes to
harmonise the terms and conditions of the
transferred employees with the rest of
its workforce. However, TUPE provided
that detrimental changes to terms and
conditions by reason of the transfer or a
reason connected with the transfer would
be void – even if the employee agrees –
unless the change is for an ETO reason.
Harmonisation is not an ETO reason.
The Government wanted to make
variations easier for transferees. It is,
however, constrained by the provisions of
the EU Directive. The amendments that
the new regulations make in this area
are:
Variation is now permitted (subject to
normal principles) if:
The sole or principal reason for the
change is not the transfer itself;
The sole or principal reason for the
change is an ETO reason, provided
that the employer and employee
agree that variation; or
The terms of the contract permit the
employer to make such a variation
(which begs the question - is it a
variation at all?);
The terms being varied are
incorporated from a collective
agreement and:
More than one year has passed since
the transfer; and
The overall rights and obligations
in the employee’s contract, when
considered together, are no less
favourable.
ETOs - economic, technical
or organisational reasons
A dismissal by reason of a transfer will
not be automatically unfair if it is for an
‘economic, technical or organisational’
reason entailing changes in the workforce
(ETO).
Similarly, a variation of contract by
reason of a transfer will not be invalid if
it is for an ETO.
However, it is not always easy to
identify what counts as ‘changes in the
workforce’ when seeking to establish
an ETO. Redundancy dismissals and

variations of contract often arise when
the transferee changes the place of
work. The new regulations assist by
confirming that changes in the location
of the workforce count as ‘changes in the
workforce’.
Terms and Conditions
determined by collective
agreements
Some employees’ terms and conditions
are determined by collective agreements
made between a trade union and the
employer. Previously, it has been unclear
whether, and to what extent, terms and
conditions determined by collective
agreements would be amended post
transfer by changes in a collective
agreement to which the transferee is not
party and therefore has no opportunity to
negotiate.
The new regulations provide statutory
clarity that a ‘static’ approach applies.
Terms and conditions determined by any
collective agreements will be frozen at
the point of transfer. Any subsequent
changes will not automatically transfer,
so long as the transferee is not a
participant in the collective bargaining
process for such change.
Further, those terms can be varied
when more than one year has passed
following the transfer, provided that
the contract terms are, overall, no less
favourable to the employee.
Pre-transfer collective
redundancy consultation
A transferee will often wish to implement
redundancies or vary contracts on
or following a transfer. If 20 or more
PURELYPAYROLLMAGAZINE 2014 TUPE CHANGES 37
redundancies are proposed, a collective
“redundancy” process will be triggered.
This requires a 30 day consultation
period, rising to 45 days for 100+
redundancies. This consultation is distinct
from the separate statutory duty to
inform and consult with representatives
of affected employees under TUPE.
Previously, a transferee could only
lawfully commence the collective
redundancy process once it became the
employer – i.e. on or after the transfer
date. In practice, many employers took
a chance and consulted earlier to limit
delay.
The new regulations confirm that,
where a TUPE transfer is likely,
collective redundancy consultation by
a transferee that takes place before
that TUPE transfer still “counts”. There
is, however, no obligation to do so and
the transferor (the ‘old’ employer)
must agree. Sometimes, of course,
the transferor will not want to give the
transferee direct access to its employees,
for commercial reasons.
Employee Liability
Information
Where TUPE applies, the transferor has
always been obliged to provide ‘employee
liability information’ to the transferee.
This involves providing certain
information about the employment terms
and liabilities which the transferee will
inherit and must honour.
Having originally proposed the removal
of the obligation altogether, as a result
of further opposition to the proposal,
the obligation has not only been retained
but beefed up. Employee liability
information must now be provided 28

(rather than 14) days prior to the transfer.
Whilst the change is helpful to
transferees, some regard it as a missed
opportunity to broaden the scope of the
information that must be provided. For
example, there is still no obligation to
provide information relating to employees’
share options or non-contractual benefits.
Micro Businesses and
consultation
Employers are obliged to inform and
consult with elected representatives
of affected employees affected by a
transfer.
The new regulations allow businesses
with ten or fewer employees to consult
directly with the employees, rather
than with their elected representatives
- unless there is a recognised trade
union or existing representatives.
A new TUPE guidance document
will be published in due course by the
Department for Business, Innovation
and Skills. Acas have also promised to
publish updated guidance.
Timing of the Changes
Employee liability information - must be provided 28 days, rather than 14 days,
prior to TUPE transfers that take place on or after 1 May 2014.
Collective agreements - the statutory clarification applies to transfers taking
place on or after 31 January 2014. However, given the decision in Parkwood
Leisure Limited v Alemo Herron, this merely clarifies the current legal position.
Definition of ETO ‘changes in the workforce’ and narrower automatic unfair
dismissal protection - applies to transfers taking place on or after 31 January
2014 and notice to terminate the employment is given (or, where no notice is
given, the employment terminates) on or after 31 January 2014.
Pre-transfer redundancy consultation - unclear, but unlikely to apply to
consultation taking place before 31 January 2014.
Micro businesses (direct TUPE consultation) - applies only to transfers taking place
on or after 31 July 2014.
Variation of terms - Transfers taking place on or after 31 January 2014 and
variations agreed on or after that date.
Service provision changes - new wording applies to TUPE transfers that take place
on or after 31 January 2014.

For further information contact: Billie@purelypayroll.com
purelypayroll.com
Purely Payroll
No.3, 8 Brentwood Road
Brentwood, Essex. CM13 3QH
T: 00 44 1277 888760
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Outsourced Payroll
Solutions
Carval Computing Ltd
t: 01098 787700
e: sales@carval.co.uk
w: www.carval.co.uk
c: Emma Clare
t: 0191 478 7000
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t: 01277 230656
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Frontier Software
t: 0845 370 3210
c: Sales Team
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c: Stuart Clark
Intelligo Software Limited
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Cegedim SRH
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Safe Computing
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PURELYPAYROLLMAGAZINE DIRECTORY 41

Sage
t: 0845 111 99 88
e: customer.
development@sage.com
w: www.sage.co.uk/outsource
c: Pierre Chan
Wealden Computing Services
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e: Sales@wealden.net
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P11D Expenses and
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INTERNATIONAL PAYROLL PURELYPAYROLLMAGAZINE46
Susan Ball Lee Hamilton
To get this right, there are some key
steps that should be followed in the
right orders:
1. Review and determine the tax
withholding position;
2. Review and determine the social
security position;
3. Determine how and where pay
should be delivered.
Payroll for UK employ
working overseas –
WHERE DO I START?
For as long as we can remember, organisations
have been sending employees overseas to work.
Despite the fact that international mobility is not
new, in the absence of a globally harmonised tax
and social security system, paying such employees
and operating payroll correctly can still present
some tricky issues.
The primary objectives for most employers are to ensure that the correct pay
is delivered to the employee, whilst also ensuring that the company meets its
compliance obligations in both the UK and overseas.
Many employers jump straight to the final
step, which can have serious financial
consequences for the employer and the
employee.
This area can be complex and often
requires specialist advice. The guidance
below is a broad overview to help you
understand the key issues, as it is hard to
give specific advice for every particular
situation.
Where, what, when and how
of tax withholding
The tax and social security position for a
UK resident employee who works solely in
the UK is straightforward - both PAYE and
National Insurance contributions (NIC) are
due on any employment-related earnings.
However, if you are expanding overseas,
the likelihood is that you will need to pay
someone who is working outside the UK.

PURELYPAYROLLMAGAZINE INTERNATIONAL PAYROLL 47
yees
?
If a person recruited overseas is
employed by a UK company, with a
UK contract of employment, UK tax
obligations should be considered in the
first instance.
If an employee recruited overseas is
not resident in the UK, generally no PAYE
is due unless the non-resident employee
performs duties in the UK which are
more than incidental to their overseas
work. ‘Incidental duties’ are subordinate
or ancillary to overseas work, such as
training in the UK or general meetings.
If there is no PAYE obligation, it is
possible to pay non-resident employees on
a gross basis via a UK payroll.
There is no need to apply to HMRC
to pay such employees without PAYE
withholding if they are:
working wholly outside the UK (apart
from incidental duties);
are not and have never been resident in
the UK; and
they do not intend to come and work in
the UK.
At this point, it all seems quite
straightforward – recruit the non-UK
individual, provide them with a UK
employment contract, and pay them on a
gross basis via the UK payroll.
However, if an employee is performing
duties in another country it is likely
that they will be subject to tax in that
country.
What is you have no business
presence in the overseas
country?
If a UK Company does not have a corporate
presence, such as a limited company or
branch, in an overseas territory, there will
usually be no withholding obligation in the
overseas territory (although the specific
rules within a territory should always be
reviewed).
Where no withholding is required
overseas, employees can be paid via the UK
payroll on a gross basis and can settle any
taxes due in the overseas country by filing
a tax return in that country. However, care
does need to be taken that the employee’s
activities do not unwittingly create a
deemed corporate presence for the UK
company.

INTERNATIONAL PAYROLL PURELYPAYROLLMAGAZINE48
Is it different if you do have a
business presence?
If a UK Company has specifically set up a
corporate entity overseas or has a deemed
corporate presence (as defined under the
local tax legislation or the relevant double
tax treaty with the UK) overseas, it is likely
that tax withholding will be required for
the employee.
In these circumstances, the most
appropriate solution is normally to set
up a payroll in the overseas territory and
pay the employee via the non-UK payroll.
This means that you can ensure that
the relevant tax withholding obligations
overseas are fulfilled.
If the employee’s duties in the UK are
more than incidental to the overseas duties
there may be a PAYE obligation as well as
a tax withholding obligation overseas. This
can lead to ‘double withholding’ of tax and
this situation would need to be managed
carefully as it can lead to serious cash flow
issues for employees.
What about employees
seconded overseas?
Whether a seconded UK employee will be
subject to PAYE will depend on:
whether they remain resident in the UK
when they go to work overseas and
whether they will remain employed by
the UK company while working overseas.
UK residence status for seconded
employees is determined using the new
HMRC UK statutory residence test indicator.
The indicator can be found Online.
If an employee remains UK resident
while working overseas, PAYE is due on
their income, even if they are paid from
outside the UK. The only way to avoid a
PAYE obligation would be for the employee
to be employed by the overseas entity and
paid from outside the UK. The employee
would still have a personal UK tax liability
which they would need to settle by filing a
UK tax return.
Where an employee is subject to tax
withholding overseas but remains on the UK
payroll it is possible to apply to HMRC for
the overseas tax to be offset against PAYE
each month so that the employee does not
suffer double withholding.
Where an employee will remain on the
UK payroll and becomes non-resident in
the UK following their departure overseas,
a request can be made to HMRC for a NT
code so any payments made from the UK
payroll can be made on a gross basis with
no PAYE.
For employees on short term
international secondments most companies
continue the employment via the UK
Company and UK payroll, because:
there may be no entity overseas to
employ the secondee;
an overseas employment may be
required so pension contributions can be
continued;
the employee may have financial
commitments in the UK and want
payment in GBP.
Where overseas tax withholding is also
due, in this case the company will need
to set up a ‘shadow payroll’ to facilitate
the payment of withholding to the tax
authorities overseas, although no income is
physically paid from the overseas payroll.

For example, a UK employee who
is sent to Australia to work for three
years will still be required to operate
employer and employee NIC for the
first 52 weeks of the assignment,
even where the employee breaks
residence for PAYE purposes.
What are the key things to remember with employees based overseas?
In conclusion, whilst payroll for employees based overseas will also present some
challenges, employers can manage their risk and also ensure that the employee is
paid correctly, by following the key steps in each case:
1. determine the tax position;
2. determine the social security position; and
3. then determine how and where pay should be delivered.
The tax and social security position will always be a key driver to where an
employee should be paid and so should be reviewed in advance of setting-up
payroll for overseas employees.
PURELYPAYROLLMAGAZINE INTERNATIONAL PAYROLL 49
Where an employment overseas is
expected to be more than three years,
the normal approach is to employ the
individual via a corporate entity overseas
(where this is possible). The benefit of
this approach is that tax withholding (and
social security) is due in one location
provided the employ only works in that one
location.
One of the most common pitfalls
is the assumption that by paying an
employee from one country there will be
no withholding requirement in the other
country. This is not always the case, as the
withholding obligation is determined by
the employee’s tax position and not by the
location from where they are paid.
The where, what, when
and how of Social Security
deductions
One of the common errors made in
international payroll is that social security
is simply applied in the same country as
the tax withholding. The rules for social
security are completely separate from
tax in most countries, and subject to
agreements within the EU and between the
UK and certain other countries.
For expatriate employees, the social
security position will depend on:
the specific country to which the
individual has been seconded;
whether the employee will be employed
in the UK or the overseas territory;
the duration of the secondment.
The social security position can be
completely different to the UK tax
position.
Employees who need to make overseas
contributions may want to consider
making voluntary contributions to the
UK system in order to preserve their
contributions record for state pension
purposes.

PAYROLL IN IRELAND PURELYPAYROLLMAGAZINE50
PAYROLL
Last month I outlined the Pay
as You Earn (PAYE) taxation
system and the calculation
of net tax payable in the
Republic of Ireland. The
second part of this series
on Irish payroll provides an
overview of the Pay Related
Social Insurance (PRSI) system,
the Universal Social Charge
(USC) and the calculation of
net pay.
Sinead Stack

IN IRELAND
PURELYPAYROLLMAGAZINE PAYROLL IN IRELAND 51
Pay Related Social Insurance
(PRSI)
The social insurance system (contributions
and payments) is administered by the
Department of Social Protection. PRSI
withholding is the responsibility of the
employer with contributions remitted
under the PAYE system to the Collector
General (see Purely Payroll January
2014. Sometimes, PRSI contributions are
described as stamps. This term dates
from before 1979 when an employee’s
card would be stamped at the end of
each week of employment.
PRSI Classes and Subclasses
There are nine classes of social insurance
contribution (A, B, C, D, H, J, K, M, and
S). The class of contribution paid by an
employer and employee is determined
by the employee’s occupation in that
pay period. PRSI classes are further
divided into subclasses, 0 and 1 being
the most common, and determined by
the employee’s weekly reckonable pay
(note: cumulative earnings are ignored).
In 2014, the week starts on Wednesday
1st January and ends on Tuesday 30th
December.
Reckonable Pay
Reckonable pay is gross pay plus any
notional pay before pension deduction.
This may include certain share-based
earnings, however only the employee
and not the employer is charged PRSI
on shared-based earnings. Employees
with two different sources of pay can
have two different PRSI classes and an
employee’s PRSI class or subclass can
vary between pay periods depending on
their reckonable earnings.
Class A
This is the most common PRSI class and
applies to employees under the age of 66
in industrial, commercial, and service-
type employment with reckonable
earnings of €38 or more per week, as
well as civil servants recruited after the
5th April 1995. Class A (non-civil service
participants) is sub-divided as follows:
Subclass Weekly pay band Monthly pay band * EE ER
AO €38 - €352 inclusive €165 - €1,525 Nil 8.5%
AX €352.01 - €356 inclusive €1,525.01 - €1543 4.00% 8.5%
AL €356.01 - €500 inclusive €1543.01 - €2167 4.00% 10.75%
A1 More then €500 More than €2,167 4.00% 10.75%
*Reckonable earnings in each week of the month must be at least €38 per week.

PAYROLL IN IRELAND PURELYPAYROLLMAGAZINE52
Entitlement to Social Insurance Payments
This depends on an employee’s PRSI Class. Assuming qualifying criteria are met; employees
in Class A are entitled to the full range of payments available from the Department of
Social Protection. Employees insured under one of the other classes pay insurance at a
lower rate and are therefore entitled to a narrower range of social insurance payments.
Thresholds and Exemptions
If reckonable earnings fall below a threshold, for example €352.01 per week under Class
A, the employee does not have to pay PRSI. The employee is, however, still covered by
social insurance because their employer is still required to pay PRSI on their behalf. There
is also no annual PRSI threshold, meaning employees pay PRSI as applicable on their total
annual reckonable pay. Employees aged 66 and over are not liable for PRSI contributions.
Universal Social Charge (USC)
The USC came into effect on 1st January 2011 and replaces the Health Levy and Income
Levy which were abolished at the end of 2010. Similar to PRSI, it is a charge on gross pay
plus any notional pay before pension deduction and is calculated on an employee’s non-
cumulative reckonable pay for that pay period. USC withholding is the responsibility of
the employer and also remitted under the PAYE system to the Collector General.
The standard and reduced rates for 2014 are as follows:
Standard Rates 2014
Income per year Rate
Up to €10,036.00 2%
From €10,036.01 to €16,016.00 4%
Income above €16,016.00 7%
Reduced Rates 2014
Aggregate income for the year of €60,000
or less PLUS
a. 70 years or over OR
b. under 70 years + full medical card holder
Income per year Rate
Up to €10,036.00 2%
Income above €10,036.00 4%
Thresholds and Exemptions
Employees whose total yearly income does not exceed €10,036 and all Department of
Social Protection payments are exempt from the USC charge.
Test your knowledge (Answers at the end of the article)
Geraldine Byrne is single, 45 years old and earns €60,000 per year. A Tax Credit
Certificate showing the following tax credits and standard rate cut-off point is issued
by Revenue to Geraldine. Calculate her January net tax payable, total PRSI Class A
contribution, USC charge and net pay.
See Purely Payroll January 2014 for an explanation on tax rates and credits, SCROP
and the calculation of net tax payable.

PURELYPAYROLLMAGAZINE PAYROLL IN IRELAND 53
Answers:
1.€546.67 2.€929.33 3.€1476.00 4.€275.00 5.€1201.00 6.A1 7.4%/€200 8.10.75%/€537.50
9.€737.50 10.€16.73 11.€19.93 12.€256.57 13.€293.23 14.€5000.00 15.€1694.23 16.€3305.77
Tax Credits Weekly pay band
Single person’s tax credit €1,650
Employee (PAYE) tax credit €1,650
Per year €3,300 per year (€275.00 per month)
Standard Rate Cut-Off Point €32,800 per year (€2733.33 per month)
Step Taxable Pay €5,000
1. Tax @ 20% SRCOP @ 20% €
2. Tax @ 41% Taxable pay less SRCOP @ 41% €
3. Gross Tax Tax @ 20% + Tax @ 41% €
4. Less Tax Credit As per Tax Credit Certificate €
5. Net Tax Payable Gross Tax less Tax credit €
PRSI Class A
6. Subclass AO, AX, AL or A1?
7. Employee PRSI % €
8. Employer PRSI % €
9. Total PRSI EE contribution + ER contribution €
USC Monthly Income Rate
10. Up to €836.33 2% €
11. €836.34 - €1,334.67 4% €
12. Above €1334.68 7% €
13. Total USC €
Net pay
14. Gross pay €
15. Less Total Deductions (Net tax payable + PRSI EE + USC) €
16. Net Pay €

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