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 (16)
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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.
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
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...
You hit the nail on the head. I'm guessing the accountant increased fees to facilitate weekly payroll.
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?
There can be an advance payment.
But not every week , which is what you seem to be implying.
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.
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!!
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.
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.