Tag: PAYE

Mitigating Seasonal And Temporary Recruitment Risks

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In today’s economy, seasonal and temporary staff can be found in audit offices as well as the shop floor and in the ski resort. As companies strive to have the exact amount of people on board to fulfil fluctuating business demand, finding optimal temporary staff has become a priority for many employers. So what are the risks and rewards associated with temporary staff and what steps can organisations take to build a reliable and flexible workforce to meet seasonal as well as ongoing business demands?

According to the latest figures from the International Confederation of Private Employment Agencies (CIETT), the UK has the highest number of temporary workers in Europe, with over 1.3 million temps working in the UK; thats around 5% of the UK workforce.

Since the 1970s, temporary staffing has expanded rapidly to become a significant feature of many national labour markets. Temporary employment, be it seasonal, ad hoc or interim work, is now a permanent feature of the business landscape and for many organisations, it is a form of working that has become integral to business strategy. Indeed, recent research from the University of Manchester has found that the recession has led many firms to have in place a buffer zone of temporary agency workers. During tough economic times, firms may increase the proportion of their workforces which are externally sourced from temporary recruitment agencies as a means of managing the risks of any future recessions. While for most firms, this strategy is a short term one, there is also evidence that it has developed into a longer-term approach to workforce management.

Temporary staff can be quickly deployed to cope with unforeseen demand, cover sickness, holiday absence and maternity leave and provide extra support due to seasonal demand like the Christmas rush or financial year end. During times of recession, using temporary staff also allows organisations, at least in the short term, to avoid the costly need to sack permanent, core members of the workforce.

The use of temporary staff can also help to reduce the fixed costs associated with labour hiring and recruitment. Temporary workers, for example, represent a relatively low cost method of screening for potential permanent employees, monitoring their on their job performance and culture fit. Recruiting permanent staff from a pool of temporary workers enables businesses to try them out for size over a longer period of time than would be possible under most probation schemes. Conversely, for other employers, using temporary staff can be a way of securing additional time to use for searching for permanent employees.
In more recent years, there has also been a rise in the use of independent contractors by organisations. Contract workers provided added flexibility when a company requires it. They can do one off jobs or provide a service which no other member of staff can provide. In many cases, they can often begin work at short notice which helps employers to meet a sudden demand. The added benefit for the employer is that they are not responsible for their PAYE or national insurance contributions.

Clearly, hiring temporary staff offers a number of specific advantages to employers. However, they do come in all shapes and sizes. The good ones can help a company thrive in the difficult times or offer valuable help and support at short notice. The very best temporary workers are often highly motivated, some seizing on the opportunity to gain valuable experience and may see the role as a stepping stone to a permanent position. Others may resent the fact the role is not permanent, they might lack motivation and commitment and could be detrimental to a companys business. At their very worst, a temporary worker may gain employment under false pretences, which potentially could have very serious repercussions.

The organisations which tend to have seasonal peaks and a greater demand for temporary workers, also tend to be organisations where these seasonal or temporary employees are most likely to have close access to customers, either directly (in the case of retail and the hospitality industry) or indirectly (in the case of call centres or financial institutions). In both cases, the implications of placing the wrong person in a temporary job could be severe and have potentially high financial, legal and reputational consequences.
Experian has found that organisations use temporary staff and contractors while largely ignoring or being unaware of the risks. While the timescales associated with recruiting temporary staff are short, this should not be an excuse for not carrying out appropriate background screening on temporary staff. By doing so, these employers are taking massive risks affecting their own organisations and the public at large.
So what are the specific risks and what implications do these have for employers?

Many organisations, which have fluctuating seasonal and temporary demands, employ a significant number of migrant workers. The immigration, Asylum and Nationality Act 2006, makes it a criminal offence to employ someone who is subject to immigration control and who has no permission to work in the UK. In 2009, the UK Border Agency imposed 2,210 civil penalties on employers of illegal workers totalling 22.1m, almost double the number of civil penalties issued in 2008.
With forged identity documents often very hard to spot without specialist equipment or Scotland Yard level expertise, the importance of electronic identity validation and appropriate background screening should not be underestimated when it comes to temporary employees and complying with immigration legislation.

The Corporate Manslaughter Act places a legal obligation on employers to ensure that the staff they employ do not pose a threat to themselves or others. For sectors like retail and hospitality, ensuring that customers have a safe and pleasant experience is critical to their success but dependent on having honest, reliable and trustworthy staff. In order to protect themselves from legal and financial repercussions further down the line, organisations must satisfy themselves that the temporary staff they employ have the appropriate qualifications, a full and valid employment record and no previous convictions.

The possibility of hiring someone who may pose a direct criminal threat may seem rare, but the fact that the value of reported fraud in the UK has increased by 153% since 2003 reminds us how serious a threat this is to UK businesses. The latest figures from CIFAS, the UKs fraud prevention service, show a substantial rise in the number of cases of employee fraud identified in 2009 compared to 2008. CIFAS also reports an increase in the number of cases of employees selling personal data. The implication of this finding is that more staff are being approached by organised criminals and bribed to reveal personal customer data. Indeed, it has been claimed by the police that one in ten of Glasgows financial call centres has been infiltrated by criminal gangs.
Clearly, organisations which hold large data repositories or deal with sensitive financial information are at greater risk from insider fraud. In these days of identity theft, criminals will pay a healthy price for personal information and the temptation for someone in financial difficulties is clear. For these organisations, temporary or contract employees are often the biggest threats when it comes to employee fraud. Generally, they have less to lose, have less loyalty to the company and can also have wide access to sensitive customer information. Fraudsters are also more likely to obtain entry to an organisation through temporary or contracting roles where background screening may be lax or often non-existent.
When it comes to combating employee fraud, these organisations should consider developing an employee screening policy which includes carrying out identity checks, credit checking and criminal record checks specifically on temporary and contract staff and not just those in permanent positions.

Top tips for meeting seasonal recruitment demands and minimising exposure to risk are:
Dont rely on the recruitment agencys screening process – organisations should also undertake internal background screening of temporary applicants
Build a temporary talent bank consider pre-screening a group of recurring seasonal employees who come back during the busy periods
Use background screening to deter timewasters and potential fraudsters – Experians own experience has found that its not uncommon for as many as 15 per cent of applicants to drop out when made aware that a thorough background check is used in the recruitment process
Effective workforce planning – plan well in advance for busy periods and line up a pre-screened workforce that can be called upon at short notice
Outsource the background screening process not only will this save time and money but will also ensure legal obligations are met

Replacing P60 The Easy Way

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A P60 form

At the end of each fiscal year, you will receive a P60 form from your employer, which shows your total amount of pay for income tax purposes and how much has been deducted in tax and National Insurance over the tax year. P60 is an important document – and therefore, make sure you keep it safely each time you receive it.

You will need your P 60 form when you want to do your tax return, claim back any tax that you have overpaid, or apply for tax credits. Besides that, the P 60 form also lets you know whether your employer is using the correct National Insurance number and deducting the right amount of National Insurance Contribution. And lastly, you may need it as a proof of your earnings when you want to apply for a mortgage or a loan.

As mentioned earlier, your employer will issue the P60 form at the end of each tax year, which falls on April 5. This is, however, provided you still work for your employer by then. If you are no longer employed before the fiscal year ends, you will only be given a P45 form at the end of your job. Often, employees do not receive their P 60 forms even after the tax year has ended. If you are one of them, do not hesitate to ask for it from your employer as you are entitled to it by law if you still work for the employer.

When receiving your P 60 form, make sure the following information is included in it:
Tax year to 5 April
Employer PAYE reference
Employees National Insurance number, if known
Employees name
Employees payroll number
Pay and tax in previous employment
Pay and tax in ‘this’ employment
‘Total for year’ pay and tax
Final tax code including the ‘Week 1’ or ‘Month 1’ indicator if applicable
National Insurance Contributions information
Employers name and address
Statutory Maternity Pay (SMP) paid – if applicable
Statutory Paternity Pay (SPP) paid if applicable
Statutory Adoption Pay (SAP) paid if applicable
Student Loan Deductions in ‘this’ employment if applicable

It is quite common for employees to lose their P60 forms, or in some cases the forms are rejected because they are damaged or hand written. When one of these happens to you, we can help you replace them. We offer high-quality P60s that are prepared on approved Inland Revenue forms. Basically, you only need to tell us four things:

1.Your employer’s full address including postcode
2.Name of your employer’s tax district
3.Your employer’s tax district number
4.Gross salary paid in that financial year
With this information and our fully computerized payroll system, you are guaranteed to receive accurate results.

Other than that, we also provide payslip calculator on our website that you can use for free. By using this salary calculator you will be able to know whether your employer has been deducting the right amount of tax and National Insurance Contribution from your salary. What you need to key in are details of the gross monthly pay and PAYE coding.

Inland Revenue P46 Tax Questions With Notes On Accepting The P46 Form

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A new employee may not have a P45 due to circumstances of first job, student, first employment in the current financial year, immigrant worker, P45 lost or perhaps not issued by a previous employer or issued late. If a new employee does not give the new employer a P45 on the day employment commences then the employer has a responsibility to ensure the new employee completes a P46 form

Completing the Inland Revenue P46 form is the method an employer uses to advise HMRC about the employment of a new employee who does not have a P45.

2. P46 forms should be sent to HMRC on the first pay day they are paid allowing a short period of time for a new employee who does not have a P45 to obtain one.

3. A new rule was introduced from 6 April 2008 if the employee has ticked either box A or B then the P46 revenue form does not have to be sent to HMRC until that employee earnings reach the lower earnings limit. PAYE records still need to be produced by the employer but official notification to HMRC is not required unless the lower earnings level is exceeded.

Should the earnings of the employee continue to be below the lower earnings limit then the earnings and employment would still be advised to HMRC on the P35 annual employers return.

4. If the new employee does not complete the Inland Revenue P46 form before the first pay day then the new employer should complete section one. Section one includes the employee name and address, date of birth and national insurance number.

5. If the employee does not have a national insurance number then the employer must also advise the job centre. It is important to advise the authorities when the employee does not have a number to avoid illegal employment laws. The P46 revenue form can still be submitted to HMRC without a national insurance number who have the facility to trace the number from the information supplied.

While preferable for the employee to sign the P46 form the P46 tax form can be submitted by an employer without the employee signature.

6. If the employee does not complete the P46 the employer must deduct tax using a BR tax code taxing all earnings and excluding personal tax allowances.

7. The tax code to be applied to new employee earnings is dependent upon when the employee joined and which of the boxes A, B or C are ticked on the P46 tax form.

If box A is ticked then apply the emergency tax code which from 6 April 2008 is 543L and after 7 September 2008 and the new tax code 603L. Tax is deducted on a cumulative basis. If box B is ticked then apply the emergency tax code which from 6 April 2008 is 543L and after 7 September 2008 and the new tax code 603. Tax is deducted on a week 1 or month 1 basis.

If box C is ticked then apply the BR tax code. Income tax is deducted on cumulative basis.

If none of the boxes A, B or C are ticked then apply the BR tax code and deduct tax on a cumulative basis.

8. If the new employee has ticked box D then student loan deductions should be made with effect from the first pay date provided the earnings level for deduction of student loans has been reached. Refer to the student loan deduction tables at Student Loan Table to determine how much should be deducted.

9. P46 forms can be filed online by an employer. When the Inland Revenue P46 form is filed online the employer should also have kept a record of how the information submitted was obtained.

10. Before the P46 Inland Revenue form can be filed online the employer must have obtained the facility to do so by registering with HMRC for a PAYE scheme. The HMRC website contains free software that can be used for this purpose.