I have passed the Payroll exam from the ICB - but I worry about real life situations I have no idea how things operate.
For instance, employees are entitled to 28 days holiday a year (or 5.6 weeks) - what would happen in the following situation. An employee starts work on the 1st December. At Christmas the business closes down on Christmas Eve and remains closed until the 3rd January. What happens to the employees wages as they won't have accrued enough holidays. For simplicities sake the employee is paid weekly.
I will no doubt come up with countless other scenarios as they day is arriving soon when I will need to start looking for clients.
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Never buy black socks from a normal shop. They shaft you every time.
Half the time, especially with salaried employees, the employer won't bother asking you to differentiate when the employee is away. The employee will just receive their regular salary and somewhere in the small print will be a reference to the holiday pay being inclusive.
There may be mention in the contract about accrued holiday pay; for instance, only full accrued days may be taken. In this case, then only 1 day would be payable, and the employee should be aware of this when he takes the job. If he'd made a good impression and approached the management, they might very well make a loan, say £100 payable back over 10 weeks; but it's a short time in which to make a good impression and reassure them that he'll come back after the holidays.
If there is nothing in the contract there might be an employer document stating general procedures. In my experience though, the most common solution has been to calculate how many days would be earned by week 52, and allow this to be taken in advance.
The approach would vary from employer to employer.
Some employers would pay the employee their normal salary for December, and take the advance holiday out of next year's allocation. Some would not pay the employee for the excess holiday in December, and some would simply pay the employee the excess holiday and write it off.
Right - so I'll just have to take it on a case by case basis.
My only experience of holiday pay is when they holiday pay is from an external fund. Let me try and explain - the employer every four weeks pays money to an external holiday fund. Many years ago the external company would send the employers stamps for each employee and they were stuck on a card. Part of the stamp was also used to pay for sickness benefit (in addition to SSP). When it came to paying the employee this amount was not subject to national insurance or pension deductions. When the holiday was taken by the employee these completed cards were returned to the external company and a cheque sent for the amount (minus an admin charge per card). Now they pay the company before the holiday is taken.
Been looking through the Sage workbooks and so far this scenario has not yet arrived.
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Never buy black socks from a normal shop. They shaft you every time.
Yes, NI free holiday pay is some kind of special concession for construction industry employees. Don't try this in any other business.
The external fund thing where the employees get the holiday pay through an external fund and PAYE/NI is avoided sounds illegal to me (even if it may have been legal at one time)
Yes, NI free holiday pay is some kind of special concession for construction industry employees. Don't try this in any other business.
The external fund thing where the employees get the holiday pay through an external fund and PAYE/NI is avoided sounds illegal to me (even if it may have been legal at one time)
They don't avoid the tax. Even when the employee is paid directly by the external company (for instance after they have left the employment of the original employer) they have tax dedcted using a BR code (I think). I am fairly certain the NI free ends in October 2012. A bit odd it ending halfway through a tax year - but there must be a reason for that.
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Never buy black socks from a normal shop. They shaft you every time.
I've never dealt with it, but was asked to research it once by a Chartered Surveyor. From what I remember, it was introduced to serve mainly Irish navvies coming over to work here in the summer. Thus they didn't have a real stake in the economy and didn't make a great demand on UK social services. The surveyor didn't have any employees, he was the owner/director of his Ltd and wondered if the scheme could apply to himself!
