Contractual Aspects of Payroll Administration

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MODULE 2.

CONTRACTUAL ASPECTS OF PAYROLL ADMINISTRATION

Introduction

This report will outline and compare existing employee contracts to legislative requirements, and assess where Global could be at risk for not complying with these requirements.

Global is the world's leading provider of Aerospace insurance with clients who are engaged in every aspect of the Aviation and Space industries. The office is based in London with other offices across the world. London currently employs 123 employees. The payroll department consists of two people, the payroll manager and the payroll administrator. The department is responsible for the correct and timely administration of all payroll duties within the London office.

This report will conclude with any findings, and a number of recommendations are made as to how the company can improve existing practises.

2. Legislation and Payroll

“A contract is an agreement between two parties and is enforceable by law. A contract of employment is a contract of service and comes into being when an employee agrees to work for an employer in return for pay”. (Acas, 2012). The contracts used at Global contain start date, pay rate, pay method and date, notice of resignation or termination of employment, holiday entitlement and job title. These particulars must be included in all written contracts. (Gov.uk, 2013). The company only composes new contracts if there is a major variation in an employee’s circumstances, like change of role. Any other changes are confirmed via letter and filed, so the majority of original contracts are never modified.

All starters are issued a contract before the start date which is signed by HR and sent to the new employee for signature. This is in line with the Employments Right Act 1996, where a written contract must be provided within 8 weeks of employment starting. (CIPD, 2012). Included with the contract is the company handbook, which contains all current terms and conditions and legislation that affects the employee whilst working at Global. (Employeradvice, n.d). These must be reviewed by the employee, signed and then returned to the company before commencement of employment. The employee at this point can raise any queries regarding any terms and conditions that are not clear. (ehow, n.d).

As per the Employments Rights Act 1996, all employees at Global have access to an itemised payslip on or before pay day. (Carvel, 2012). The payslip must include all statutory deductions, gross salary and net amount payable. (HM Revenue & Customs (HMRC), n.d). Payroll also includes all voluntary deductions on all payslips, all deductions on the payslip are itemised individually so that payroll does not need to provide a written statement. (CIPP 2012 p.9).

HR performs various checks that are requested by law to comply with current legislation. (UK Border Agency, 2012). Once these checks are completed and approved the employee is fit for work at Global.

Upon commencement the new employee is sent to HR and payroll to complete all necessary in-house paperwork. This starter pack includes employee personal information, bank and emergency details; all forms must be signed by both the employee and payroll/HR. The new employee must present a P45 as soon as possible to enable payroll to make the pay run deadline. If this not applicable or the employee does not possess one a P46 is completed. (HMRC, n.d)

Due to the type of business and staff at Global, no employee is affected by the National Minimum Wage Act 1998 (Acas, n.d). All staff are employees and are paid in line with market rates which are above the minimum wage. Employees are advised that the first pay will be on the contractual pay date in line with the rest of the company.

New employees have induction training with payroll and HR on day one of employment...
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