Common Mistakes Made by Employers When It Comes to Paying Their Staff in the UK

As an employer, paying your staff is an essential part of your employment contract. Your team carries out their duties, and you reward them for their work. Paying your employees is critical, but so is paying them correctly. Unfortunately, it is easy to make mistakes when paying your staff. This is a standard error of many employers, including large employers such as renowned shops. Employment law contains many requirements in terms of pay, such as the National Minimum Wage and the requirement to produce payslips. If you do not follow employment law correctly and make mistakes, you could face an employment tribunal. Therefore, it is essential that you, as an employer, avoid mistakes when paying your staff. This article will explore some common mistakes employers make when paying their staff.

Not Keeping Up With Legal Changes

Failing to keep up with changes in employment law and other laws relating to pay is a common mistake employers make when paying their staff. Employment law is a vast area of law but is also renowned for frequently changing. For example, paying the National Minimum Wage is an obligation for employers like you. However, this area of law has changed numerous times since its introduction in 1999. Furthermore, even large firms make mistakes regarding pay affecting many employees, sometimes citing the complexity of this area of law. Therefore, you must keep yourself informed of laws relating to paying your staff.

Lack of Expertise

Payroll requirements can be complex and are subject to change, as is employment law. Therefore keeping up with what you are required to do as an employer when it comes to paying your staff can be a challenge. You may find that you are the one in charge of your payroll, or the person you have delegated to also has other HR tasks to carry out. Thus, giving this work to an individual without the relevant skill or expertise is a common employer mistake. HMRC, for example, prioritises compliance. Thus, it is worth investing in your payroll process and seeking an expert to carry out your payroll.

Missing Deadlines

As an employer, you must meet deadlines associated with HMRC. Accordingly, you should make yourself aware of these and stick to them. Not adhering to payroll deadlines is a common mistake employers make. Avoiding that mistake can be as simple as writing important dates on a calendar.

Not Correctly Distinguishing Categories of Staff

You should be aware that you can potentially have different categories of staff, such as employees, workers, freelancers and contractors. Ensuring you know which your staff members are is crucial when it comes to paying. Unfortunately, however, employers often need clarification.

Getting it correct is essential because some employees have certain rights, such as pensions and holiday allowance, that others may not. You need to be aware of this to include what is relevant to them in their pay.

Wrong Payment Codes

Many employers use the wrong tax code when paying their staff. This is a mistake you should avoid as it can result in your staff paying too much or too little tax. Therefore, ensure that you regularly check your records regarding your employee’s tax codes.

It is also common for employers to use other internal wrong codes related to pay due to mistakes made on employees’ timesheets. Using the incorrect code can mean you pay your staff the wrong amount for the type of work they have completed.

Software Reliance

Payroll software is a tool you are likely to use when paying your staff, and it can be beneficial in the process. First, however, you must ensure that you input correctly. Incorrect data input is a common mistake employers make when paying their staff, and the software itself can incur problems.

Key Takeaways

You as an employer can easily make mistakes when paying your staff. Even large and experienced employers can make them. However, errors can cause future problems, such as fines with HMRC, so you must avoid them. Employers often make common mistakes such as an over-reliance on software. Alternatively, they may simply fail to keep up to date with changes to legislation affecting pay. 

If you need help understanding common mistakes made by employers in England, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.

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