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Employees' Bank Accounts

Employees' Bank Accounts

I have had a few situations now where employees have put a third party's bank details on their employment forms - in one case definitely a parent; in other cases I presume their living partner.  The employees have to fill in the form informing us of the bank details but don't have to sign this particular form.  Maybe I'm being over-cautious coming from a practice background (money laundering etc) into industry but should we be getting signed confirmation from both parties if the account name is not that of the employee?  Having said that, how would we know if J Bloggs on the account name was Joseph or Jordan Bloggs?  It would only ever be a different surname or initial that would alert us to the fact that it's not their account.

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By John R
02nd May 2014 17:22

Get a signature

I have used the following wording although it has not been checked with a lawyer:

"I hereby authorise and direct you to pay my salary into the following bank account: ........ I confirm that although this account is not in my name, the payment of my salary to that account will be accepted by me as if it had been made to an account in my name. This authority is to remain in force in respect of all future salary payments and until three working days after I cancel it in writing.

Full name..................

Signature..................

Date................"

I do not see why you would need the account holder's agreement.

We advise our clients to obtain signatures to the HMRC starter form and to the bank authority form although there is no legal requirement for this.

If you are in a regulated industry and suspect a money laundering offence e.g. you think the employee is trying to hide the salary from the Benefits Agency, then you/your MLRO may need to make a ML report and seek the authority of the NCA before carrying out the first transaction.

 

 

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02nd May 2014 17:48

Paid or not ?

Personally, I wouldn't be comfortable with paying a salary into an account which didn't bear the employee's name.

I can't think of a good enough reason for the employee wanting to do that.

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By lisler
to atleastisoundknowledgable...
07th May 2014 21:51

Is it compulsory to have a bank account?

Whilst it is obviously very convenient to have a bank account, is there any statutory provision that makes it compulsory for an individual, or a body corporate for that matter, to have a bank account. In the absence of that condition why on earth should it not be acceptable for anyone to have money paid into someone else's bank account if they choose?

I think what is less acceptable is for an employer to refuse to pay an employee in cash if that is what the employee prefers.

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By Tosie
03rd May 2014 16:22

One reason

Maybe the employee has been unable to open a bank account for whatever reason

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07th May 2014 20:53

When I worked as a payroll manager we allowed any change to bank details as long as it was signed by the employee confirming the change.

I guess the thought is that if they didn't tell you it was someone else's account how were you ever to know?

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09th May 2014 17:58

Precisely
Obviously if the account name appears to be that of the individual, i.e. the initial and surname is the same we are unlikely to question it - for example my dad and my brother have the same initial but if my brother gave me my dad's bank details I'd be none the wiser. The cases I've come across are all cases where it is the bank account of the person named as their emergency contact. As I'm not judge and jury and am not in a regulated industry, I think I just have to accept it but might suggest to the powers that be adopting a form similar to the one mentioned above. As stated (or asked) it is not compulsory for an individual to have a bank account but we do require bank details to pay employees as they are at remote locations which don't hold cash for security reasons and don't have access to business bank accounts.

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By zebaa
09th May 2014 20:12

Employee can not insist on cash.

Not any more, anyway. The Truck Act has been repealed. An employer can make a bank or building Soc account a condition of employment.

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