Share this content
0
749

Monthly salary paid weekly?

Is it illegal to pay employee a proportion of monthly salary weekly?

Didn't find your answer?

Search AccountingWEB

I'm doing bookkeeping for a small limited company with one employee.

The employee recently requested to receive his salary weekly.

My client was advised from his payroll accountant that monthly salary must be physically paid monthly.

Does he has to change employee's contract from monthly salary to weekly wages or can he pay the proportion of monthly salary on a weekly basis?

Replies

Please login or register to join the discussion.

avatar
17th Jul 2019 12:53

Are you are possibly confusing the issues being discussed and advised on?

If the person is paid monthly then the payroll must be processed monthly

If the person is paid weekly then the payroll must be processed weekly.

You can't process the payroll on a monthly basis to reflect what's been paid out weekly.

Thanks (1)
avatar
17th Jul 2019 13:05

on or before each time an employee is paid an RTI report needs to be filed with HMRC

under the normal circumstances if the employee is paid weekly, the payroll would need to be run weekly to allow the correct RTI submissions to be sent

i believe concessions ceased in April 2016, so potentially there is penalty for each inaccurate / non filed return

sounds like you have a mismatch between the reality of the employee's payment cycle and the payroll cycle - probably down to cost of running the payroll or to avoid hassle of doing it weekly

not really your issue if you dont run the payroll, but I'd advise them to get it sorted

Thanks (1)
avatar
By JoF
17th Jul 2019 13:22

[quote=Martina Khan]

''My client was advised from his payroll accountant that monthly salary must be physically paid monthly''.

I do wonder what the client said to the Accountant to get such an answer. The Accountant is of course correct that the payroll is run monthly then it is paid monthly (reported prior to payment under RTI as has been said).

The staff member cannot insist on being paid weekly. It is up to the business to decide if this is something that they are happy to assist with, bearing in mind the additional costs of a weekly as well as monthly payroll and the additional compliance issues. Would agreeing to such open the floodgates to other staff.

The business would need to reflect the changes in a contract. If there is no dedicated HR function, which I suspect there isnt, then ACAS are a good place to get some help (on both fronts).

Thanks (1)
to JoF
17th Jul 2019 13:34

JoF wrote:
Would agreeing to such open the floodgates to other staff.

Probably not, as there's just one employee.

Thanks (1)
avatar
By JoF
to lionofludesch
17th Jul 2019 13:49

Oops. Im scan reading - again!

Soz!

Thanks (1)
avatar
17th Jul 2019 13:25

I wonder if the payroll accountant actually said that if you want to run the payroll weekly then fine, but my fee will go up in proportion...

Thanks (1)
to WhichTyler
17th Jul 2019 14:42

You hit the nail on the head. I'm guessing the accountant increased fees to facilitate weekly payroll.

Thanks (0)
avatar
to Slim Freddie
17th Jul 2019 14:56

Exactly!

Thanks (0)
avatar
By Maslins
17th Jul 2019 14:44

My first inclination would be to talk to the employee, find out why they want it weekly, and see if we could work with them to get it monthly but perhaps solving their issue some other way.

Otherwise, unsure how this might work legally/with strict RTI rules, but could you not just give them an "advance" each week during the month, with payroll then processed at the end of the month as a monthly payroll, net pay calculated, and the advances deducted from it?

Thanks (1)
avatar
to Maslins
17th Jul 2019 14:58

Well. This is the question.

Thanks (1)
to Maslins
17th Jul 2019 14:58

That in itself could be construed as weekly pay.

Thanks (1)
avatar
to lionofludesch
17th Jul 2019 15:05

And pay a higher fee for weekly payroll?
The question is. Must the monthly salary be paid monthly?
Or there can be advance payment or two?

Thanks (0)
to Martina Khan
17th Jul 2019 15:14

There can be an advance payment.

But not every week , which is what you seem to be implying.

Thanks (1)
avatar
to lionofludesch
17th Jul 2019 15:20

Are you sure about the advance payment? As my client's payroll accountants said NO advance payment either.

Thanks (0)
avatar
By JoF
to Martina Khan
17th Jul 2019 15:21

1 v 52.
1 = ok
52 = not ok.

Thanks (1)
to Martina Khan
17th Jul 2019 15:17

In the old days, it would have been quite easy to lend or advance payments to employees, deducting them from the month-end payment.

RTI pretty much put an end to that, because it is based on payments. The only exception, as far as I know, is where a genuine loan has been made in addition to normal pay and is documented as such.

Thanks (1)
avatar
By JoF
to Martina Khan
17th Jul 2019 15:20

''And pay a higher fee for weekly payroll?''
why not/ its extra work. If he doesnt want to then answer to staff member is - you get paid monthly , deal with it

''The question is. Must the monthly salary be paid monthly?'' Asked and answered

''Or there can be advance payment or two?''
I agree with Lion - could be deemed as wages. Then you have paid in advance of reporting. How would they deal with this in an inspection? (Rare, but possible. Indeed common in some sectors in one area of Manchester, albeit HMRC seem to focus on timing of payment rather than NMW issues! Just saying!)

Thanks (1)
avatar
to Martina Khan
17th Jul 2019 15:18

I think the question has been answered - a monthly salary / payroll is paid monthly, a weekly salary/ payroll is paid weekly

yes you can probably get away one or two advance payments per payroll year on a monthly set up

BUT no matter how you try to justify it, 52 weekly advances is a weekly payroll, not a monthly payroll!!

Thanks (1)
avatar
to Martina Khan
17th Jul 2019 15:21

In advance? No. In arrears? Why not?

Process the payroll, the money belongs to the employee at that point but the employee doesn't trust him/herself not to spend it, so leaves it with the employer to be handed over later, weekly.

Everyone's happy, you know it makes sense.

Thanks (1)
avatar
to Tax Dragon
17th Jul 2019 15:26

Sounds promising :)

Thanks (0)
17th Jul 2019 15:25

As an alternative to advances, process two months pay at the end of the month, and hold back half to pay each week subsequent (with employee approval). That way, RTI obligations have been met.

However, the employer will have double NI to pay, the employee will likely pay more tax than they would spread over two months and will almost certainly pay more NIC.

Thanks (1)
Share this content