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Average number of employees

Disclosure

Do you disclose that there are no employees or just miss out the note?  VT defaults to omitting the note if there are no emplyees. Im sure the recent SWAT course I attended suggested it was good practise to disclose that there were no employees. 

 

Any thoughts?

 

Thanks

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By Matrix
15th Mar 2019 10:11

So not even any Directors?

The original VT templates did not even include this note in micro 105 accounts so some accounts have been inadvertently filed without the note since I did not copy the data to a new file the following year. I now use the new template and don't think anyone has nil employees but you can unhide the note if you wish. Although I wouldn't worry too much.

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By thomas
to Matrix
15th Mar 2019 11:55

There are directors - but not on the payroll. They also have no employment contract, so I dont consider them employees. I would have thought it would be misleading to show 2 employees but no wages for either.

If I unhide the note, it re-hides when I update the accounts as the value is zero! Very annoying. I'm not sure how to change this....

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By Matrix
to thomas
15th Mar 2019 13:13

What do you mean by update the accounts?

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15th Mar 2019 10:30

I'd always say something.

I do realise that there is a dichotomy of opinion on whether directors without service contracts are, in fact, employees.

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to lionofludesch
15th Mar 2019 11:27

Yes - I include them. I realise this might not be quite right, but I'd rather have a set of accounts that has two names of the directors at the front, and then a statement there are two employee later on (rather than nil) to be consistent.

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15th Mar 2019 11:14

I don't think it's incorrect to say nil when the directors aren't employees, though we always count them as one and have amended the default note to say "Employees and Directors" instead of "Employees".

I think, as a mandatory disclosure, it should always be in there even if it is nil, otherwise there's no clear difference between your accounts for a company with no employees and the accounts of a company not complying with their disclosure obligations.

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15th Mar 2019 12:17

ICAEW guidance as to when you count directors:-

ICAEW wrote:
The answer is yes if, and only if, the directors also have service contracts for operational roles. If they only receive director’s fees and have no day-to-day operational role for which they are entitled to remuneration, then they are not generally employed under a contract of service.

so I count them in your 'average' small company if:-
a) they have a contract and/or
b) are paid

For 'nil' employees ICAEW also state:-

ICAEW wrote:
If a company determines it has no employees, it should still disclose that fact.
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to Wanderer
15th Mar 2019 14:49

My thinking on this was to record nil if its "director only" or its asking for trouble with the NMW regs if we say on the accounts they are employees, but if NMW bods ask we cant find the contracts....

Must admit i didn't see that bit on the ICAEW's guidance.

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15th Mar 2019 13:08

Who's policing this ?

Is it the usual "nobody" ?

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to lionofludesch
15th Mar 2019 14:09

I think we filed about 80 sets of accounts before I rather red-faced updated our template.

The world didn't end, and I didnt tell any clients!

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to ireallyshouldknowthisbut
15th Mar 2019 14:22

Don't think there was any need to be embarrassed.

The sequence of events between the CA, changes in the CA, FRS105 then the rather lame 'clarification' of FRS105 following the triennial review and effective 1 January 2017 makes it completely understandable.

I have earlier FRS105 disclosure checklists which make no mention of the requirement, and later ones that do.

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to lionofludesch
15th Mar 2019 14:15

Companies House!

Hah, j/k

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15th Mar 2019 19:18

@ Wanderer.

To take the ICAEW guidance in your post at 12.17 today at face value, I would have to respectfully disagree your view that where directors "are paid" (ie impliedly irrespective of whether such pay is solely remuneration for holding office as Directors) then the Directors should be included in the number of Employees.

The wording of the ICAEW guidance could be improved upon but, after the word "remuneration", the words "(under service contracts)" are implied.

The word "generally" is weak and thus misleading. Whilst no replacement to that word is necessary, it could be replaced by "regarded as".

Where there are no service contracts, then (if the ICAEW guidance is correct, and irrespective of whether the remuneration is classified as "Fees", "Salaries" or anything else) one should not, in my submission, include the Directors in the number of Employees in the "Note" at issue.

Basil.

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to fawltybasil2575
16th Mar 2019 05:00

Hi Basil

I think you have to be careful not to try to apply an almost barristers technical analysis to some words written as guidance.

If you want to apply such technical analysis you should apply it to the law.

I am comfortable with the conclusions I have reached taking the law & guidance into account in the circumstances of my clients.

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16th Mar 2019 11:36

@ Wanderer (your 5.00 post).

[A] In intending no offence:-

(1) I prefaced my comments by saying that I had taken the ICAEW guidance at face value, my comments therefore being based SOLELY on that ICAEW guidance;

and, more importantly,

(2) Your post at 12.17 yesterday said :-

"ICAEW guidance as to when you count directors . . . . . . . . . .

SO (my emphasis) I count them in your 'average' small company if:-"

As you can see therefore, and at the risk of appearing to don my "barrister's gown", you stated that your conclusion (of the requirements re employee numbers) represented your interpretation ONLY of the ICAEW GUIDANCE quoted by you. Your comment therefore that:-

"If you want to apply such technical analysis you should apply it to the law"

(and with respect of course) is a non sequitur, and thus holds no water.

[B] As an entirely SEPARATE matter, and noting your NOW saying that your conclusions (of the employee number disclosure requirements) are based not upon that ICAEW guidance alone, but partly on the law and partly on (impliedly the ICAEW) guidance, it appears incumbent upon you to now direct us to the specific part of the "law" which you consider supports the conclusion in your post at 12.17 yesterday. I should be grateful if you would thus so direct us.

[Purely as an aside, when I (as I have done recently in relation to an entirely separate matter) have reason to find fault with ICAEW guidance, then I contact the relevant ICAEW department to notify them thereof - on that recent occasion ICAEW advised that they will correct their guidance. I feel that so contacting ICAEW is in the public interest. You may consider it appropriate to contact ICAEW in this "employee numbers" case, if you remain of the view that their guidance is wrong].

Regards.

Basil.

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to fawltybasil2575
16th Mar 2019 11:54

Hi Basil

You are doing it again!

I'm certainly not going to contact ICAEW.

Nor am i going to get further involved in a technical analysis of the law, the guidance, my words and your words.

Like I say I am comfortable with the conclusions I have reached taking the law & guidance into account in the circumstances of my clients.

Feel free to contact ICAEW if you want to.

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20th Mar 2019 11:07

It amazes me how people get so wound up about trifling matters such as this.

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to andrew1211
20th Mar 2019 11:17

andrew1211 wrote:

It amazes me how people get so wound up about trifling matters such as this.

What ???

The Law of the Land is not a trifling matter !!

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to lionofludesch
20th Mar 2019 14:30

lionofludesch wrote:

andrew1211 wrote:

It amazes me how people get so wound up about trifling matters such as this.

What ???

The Law of the Land is not a trifling matter !!

Have to be honest and say I love a good trifle!

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