I try to find any information about allocating wages figures to Sage 50.
We now start to charge all employees week-in-hand - deposit from the first wages. When they give us a notice, we give their money back. I am not sure how to correctly input these info sage.
So:
Once we run payroll, we charge week in hand and it is shown as Pre-Tax Deduction in payment summary report.
Once they are leavers, we give them back their week in hand and this one is shown as Post-Tax Payment in payment summary report.
We also charge employees expenses (penalties, mobile bills if they are higher etc), this one is shown as Post-Tax Deduction.
Now, I am not sure if that is correct and also how to post it in the sage?
So far I can see that someone before me try to allocate it as:
Gross wages DR
Employees N.I DR
Net wages CR
PAYE+NI CR
Post Tax Ded (2212) CR
Pre Tax Ded (7003) CR
which the balance in journal is equal however if I will do it this way, the week-in-hand is not allocating anywhere ?
Hope I find someone who had this before and will be able to help me resolving this problem.
-- Edited by NATALIA on Friday 22nd of July 2016 02:40:20 PM
We now start to charge all employees week-in-hand - deposit from the first wages.
Is this legal?????????
Surely you should make them work eg two weeks, then pay them for one, so they are always owed a week.
This goes against all the rules of RTI as well I wouldve thought?
Plus what happens if your company goes bust?(I know that wages are always the ones that never get paid when a company does, but seems to me these workers are being further penalised. I also guess you are trying to compensate for people having left and been paid too much potentially, but there are better ways round this)
Sorry I know this doesnt answer your question - but I think you need to get your client some legal advice/ACAS freebie advice before going any further?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Company I am working for is a cleaning company and people come in and out each time when they want to. This is only option to make sure we do not loosing out clients and we also can cover agency worker if the employee left us without notice. I believe the owners have been given legal advise already.
Also they have their wages every 4 weeks not every week.
Anyway I asked a question about PAYE not about legal advise as you said..
-- Edited by NATALIA on Friday 22nd of July 2016 02:59:29 PM
-- Edited by NATALIA on Friday 22nd of July 2016 03:03:50 PM
Hi Natalia, I realised it was not your company, sorry I meant to type your clients company (missed words as rushing as bombed with work and popped on here for a minute!). Although typing 'we' could indicate to folks that it is your company.
This may not have been about the side issues, BUT we are constantly being expected by clients to flout the rules and frankly break laws and so it needs to be said -sorry if you know this already, but others reading it might not.
But am I missing something - this is clearly in breach of RTI as you are reporting pay that you are then not paying? I cannot see where in employment law it states you can do this but am happy to stand corrected. Certainly if it was my client I would be asking for the copy of the advice they received, especially if you are doing the payroll, so that you cannot be dragged into any future claim.
I understand the frustrations in such an industry - having looked after some major clients looking after agency staff and the type of workers who move on after a day or a couple of weeks of doing a job, but there are clear ways to handle such scenarios which as I said means only paying them after they have done the work - use a week or two in arrears policy and eg then they will be owed a week as they leave, BUT their tax records will be correct.
The unpaid portion of the wages would normally show in net wages until its paid, you could of course journal it out from there into a 'staff owed week in hand' creditor account.
edited for typo
-- Edited by Cheshire on Saturday 23rd of July 2016 10:10:07 AM
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Company I am working for is a cleaning company and people come in and out each time when they want to. This is only option to make sure we do not loosing out clients and we also can cover agency worker if the employee left us without notice. I believe the owners have been given legal advise already.
Also they have their wages every 4 weeks not every week.
Anyway I asked a question about PAYE not about legal advise as you said..
-- Edited by NATALIA on Friday 22nd of July 2016 02:59:29 PM
-- Edited by NATALIA on Friday 22nd of July 2016 03:03:50 PM
Just noticed you edited your post after I had answered. If they get paid every 4 weeks, is it ALL always in arrears? If so - Im confused about what is being attempted here. Perhaps just me being a burk today!
-- Edited by Cheshire on Friday 22nd of July 2016 06:25:47 PM
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Sounds like a complete mess, and I wouldn't want to attempt payroll like this. You are making a pretax deduction then adding it back as a post tax repayment? It should be pretax for both. As Joanne says you will need to allocate the unpaid wages to a creditors account until they leave, but 7003 will throw your wages account on sage out, so I would suggest something in the 22xx range.
Personally I would pay the employee 3 weeks on their first pay, and an extra week on their last pay, so that they are constantly a week in hand. A lot less hassle and more RTI compliant.
As an aside, and I've noted your comments to Joanne about legality, but feel it right to make you aware. Are the penalties/deductions covered by the contract of employment? I'm not sure whether penalties would be illegal altogether but certainly deductions are illegal if not specified in the CoE. eg a checkout person being deducted wages if the till is short.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
NATALIA wrote:Anyway I asked a question about PAYE not about legal advise as you said..
I think that in many instances it would be quite unprofessional to answer the questions that people ask on here rather than the one that hey should have asked.
Is not the reality of this scenario that you are making the payment but then taking a guarantee from the employee's equivalent to one weeks wages?
The guarantee is a liability to the employee who has effecively loaned the business that money. It is quite seperate to the treatment of the wages which Joanne was completely correct (sorry Joanne, as if you need me to approve your statements! Just concurring with your initial analysis and expanding upon).
Imagine it this way. You have paid the employee their salary and the employee loans the amount after tax and NI back to you. You process the salary as normal through RTI. The employee has effectively been paid.
You MUST ensure that the employee has agreed in writing to loaning the money to the business. Also ensure that it is included in the contract of employment and that it has been pointed out to the employee otherwise the firm may find a citizens advice lawyer parked on their doorstep!
As the bookkeeper in the eye's of the law of negligence you are responsible for :
- What you know
- What you ought to have known
- What you ought to have done about it
So its not a matter that one can simply hide behind the employer telling the bookkeper that somethig must be done in a certain way as your position means that you should know that what you have been asked to do may not be correct making it your responsibility to bring it (initially) to the employers attention.
And that in a nutshell is why the posters here answer the questions that people should have asked.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
To be honest guys, even if its in their contract a good employment law specialist could drive a bus through that, especially if a few of them get together. All it takes is a clause to say - no notice/no pay, plus details of what get paid on what date, use of different cut off and payment dates and payment in arrears. It aint rocket science. Frustrating though it may be in such an industry, there are many many ways and means without having to re-invent the wheel.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
NATALIA wrote:Anyway I asked a question about PAYE not about legal advise as you said..
I think that in many instances it would be quite unprofessional to answer the questions that people ask on here rather than the one that hey should have asked.
I might just go to the Law forum
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Your post is very confusing. What are you charging employees? Yo0u don't charge employees, you pay them. They can work a week in hand yes, even a month in hand but your client can not make unlawful deductions.
Many thanks for all answers! I will probably do it the way Joanna advise, creditors account. I cannot only pay them 3 weeks as I want to make sure they can see deduction on their payslip so everything is clear.
Total net to pay: Payment £800 - £200 week in hand = £600
What is then a difference if they work week in hand or if we deduct week in hand cause I am confused now ? By the end of the day money stay same anyway, am I correct ?
Only problem I have now is how to post it in sage and if that should be taxed in advance or later, when we paid it back to the employees (when they leave us)
Only problem I have now is how to post it in sage and if that should be taxed in advance or later, when we paid it back to the employees (when they leave us)
Sorry Natalia, but putting this into Sage is NOT your only problem.
Working a week in hand needs to be in their contracts (verbal or in writing) but working a week in hand is NOT making a deduction, it is just not yet paid. Very different in law. Week in hand is acceptable in both employment law and with the wages system that is run via HMRC. There are other legal permutations eg two weeks in advance and two weeks in arrears.
But you are effectively saying you are paying it then borrowing back from the employees, without their agreement. Witholding payment after you have reported to HMRC that you are paying them AND reporting via the payslip that you are paying them (THEN DEDUCTING IT) - this is an illegal deduction. Unless you have it in writing from each and every staff member that you can do this. Even then Im not convinced of its legality as its being 'forced' on them.
By carrying on with this you are assisting an illegal act.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I am sorry but can you remind me where did I say "ut you are effectively saying you are paying it then borrowing back from the employees, without their agreement" ????????????????
they all sign the relevant paperwork BEFORE employment starts. They all aware about the procedure. I checked it with the management.
You can be sure I will keep an eye on it and get proper advise from the lawyer.
I mention the best think to do is finish this conversation as I am got getting help from yourself, I ve been more attacked then helped.
I try to find any information about allocating wages figures to Sage 50.
We now start to charge all employees week-in-hand - deposit from the first wages. When they give us a notice, we give their money back. I am not sure how to correctly input these info sage.
Sorry you are feeling attacked as that not the way any of this is intended. My statement of 'borrowing back from the employees' was on the back of your comments about 'charging the employees' and you will see that other people besides myself have all expressed concern and shock over this treatment.
I think it is one of those situations where all of us have said what we have said to attempt to help you and try to protect you as their bookkeeper to prevent a claim on your PII or worse, which is why I cannot in good faith assist with the sage entries which would effectively put me in a position of colluding with this.
Of course - if we do not have access to the full information base on which your question is asked, or due to the original post being written in such a way that that it has been mis-interpreted by us all on here and in fact there are no illegal deductions then that is another matter. Perhaps you could review your post and advise us of any wrong interpretations. But saying that I would suggest getting some advice of your own from the likes of ACAS, but bear in mind that you need to fully explain exactly what process the company is completing and ideally provide documentation otherwise they will only be able to answer on the information posed. Or better still your professional body.
If they say it is OK then a work through on sage can be sorted.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I cannot only pay them 3 weeks as I want to make sure they can see deduction on their payslip so everything is clear.
In which case you leave the Company with a potential employment tribunal claim, not to mention cocking up the RTI.
I strongly suspect that if the employee doesn't give notice, the company keeps the week in hand. That then becomes an illegal deduction of wages.
You have not been attacked personally, far from it. Joanne and others have been more than helpful in steering you away from messing it up, but if you want to go your own way on this, don't let us stop you.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I can only reiterate what Cheshire and leger have said. No-one is trying to attack you but the way you describe this transaction in your original post it comes across as an illegal deduction.
Working a week in hand is when an employee works for a week but is not paid that money until the following week has passed. They will not receive a payslip detailing that amount and it will not be entered onto Sage or declared on RTI until after the employee receives the money.
Even if they do as you say sign a contract saying I agree to be paid my first weeks then have that amount deducted as a deposit or whatever until I leave I agree with Cheshire that it probably won't stand up in court as it could be seen as being forced on them.
That's great but please be aware that accountants are not necessarily experts in employment law. You need advice from an employment lawyer or HR expert.
I've had a few technical debates on here myself with people and its always amazing how you can gather together a group of accountants/advanced bookkeepers and each of them will have a different answer to the same question!
As stated by Pictures, employment Lawyer trumps accountant (even chartered and chartered certified who had to study contract law as part of their qualifications).
Really not trying to gang up on you in any way here but in this one I'm with Joanne, John and Pictures in that if a contract that is either not properly understood by those signing it or a contract imposed under any form of duress (no matter how unintentional) then it may be open to being overturned by a court so you really need to ensure with specialist legal representation that what you are doing is completely watertight.
I just want you to realise when you are perhaps feeling that the answers in this thread were not saying what you wanted to hear that the people here were only trying to help you by answering the question that they feel that you should have asked even though that was not the question about Sage coding that you actually asked.
Where you go from here is down to you but I for one would like to say a big well done to all of those in this thread who for no charge went out of their way to attempt to save one of our own from making a potential mistake.
Well done fella's. Gold stars and get out of jail free cards all round for the thread contributors.
kindest regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Total net to pay: Payment £800 - £200 week in hand = £600
What is then a difference if they work week in hand or if we deduct week in hand cause I am confused now ? By the end of the day money stay same anyway, am I correct ?
Only problem I have now is how to post it in sage and if that should be taxed in advance or later, when we paid it back to the employees (when they leave us)
Just as an aside - these I am assuming of course, are example numbers, but if the payroll for the four months (represented here by the £800) is around this level then the employee would have overpaid their NI in that first pay packet.
-- Edited by Cheshire on Saturday 30th of July 2016 11:30:40 AM
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I might just go to the Law forum
