Hi,
I have been running payroll for a client since November 2021. When the Company took on their first employee, the salary was given to me, via email and verbally as a set amount after tax & NI. The company has now come back and said they made a mistake and meant before tax and NI, not after. At the time we expressed that we felt the salary was quite high for a new employee, but if they felt it was an appropriate wage for the employee, based on their qualitfications and experience we would of course, produce the payslips as instructed.
The company would now like me to resubmit all RTI's from November to date, amending the Net pay, to gross, for them to reclaim the overpayments from the employee. My main question is, can they do this? I know they can amend the salary from March onwards, with the employees consent, but I am struggling to find an answer as to whether they can go back to the start of employment and reduce the salary. I have been informed that no payslips have ever been given to the employee, nor a contract of employment.
Any advice would be greatly appreciated.
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Replies (18)
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1 Employer is obliged to provide a written statement of terms and conditions of employment from day 1. A contract exists whether or not it is writing, but if it is not in writing.
2 Employer is obliged to provide payslips. Presumably you’ve been producing them as part of payroll processing?
3 Employer can reduce salary going forwards but retrospective is a no-no. Failures to do 1 and 2 severely limit scope for employer to claim that employee was overpaid by accident.
I am, broadly, with Paul on 3 - but the question is whether this was an error that both parties should have ideally realised, as opposed to a retrospective change to a contract.
Thank you, this is something we are really trying to figure out. When the original salary was discussed, the wording used by the client was 'after tax & NI' rather than using either gross or net. If they had of said £... net, I'd have asked if they meant gross and explained the difference, but as we had already had a meeting in the office to discuss taking on an employee and the liabilities that come with this, the email sent was just a follow up of what we had discussed in person, as we do not action without written confirmation.
Thank you for your reply. This is what we thought.
Payslips have been sent monthly to the employer for distribution to employees.
We will advise that the employer needs to discuss a salary change going forwards, and put something in writing with the employees agreement.
Sounds like they are a fairly duff employer all round.
Yes, corrections can be made.
Stupid idea to agree a net salary to an employee (rather than, say, a spouse). How do you know what their tax affairs are..
The question, really, is would you manage to recover the overpayment?
Do you put a plan in place to, say, recover it over 12 months etc.
Is the employee on Universal Credit?
My feeling was that IF the employer goes ahead with amending the salary, a payment plan would be the best option, agreed in writing with the employee. This could be deducted from the salary at an agreed rate over a period of time.
As far as I know, the employee is not in receipt of any benefits as his salary rakes him above the eligibility levels.
Decent software that allows you to email the payslips is so important these days too. I don't have any staff on any of my payrolls that doesn't have an email address. As sonn as the payroll is agreed, i press a button and off they go.
Unfortunately I am still waiting on the Employees email address, despite asking, so the payslips have been going directly to the employer.
Sort of agree but would go further and say email is really yesterday's news and should ideally be replaced by an online portal that the employee logs in to get their payslips. Emails are vulnerable to hackers and not all employees want their payslip just there in their inbox.
Some employers also don't like the "buzz" round the office when everyone gets their payslip email at the same time (although accept not much difference to the old days when someone went round dishing out the paper payslips).
On the original question it is a matter of clarifying the contractual salary. Step 1 is to agree the overpayment and step 2 to deal with any reclaim. I'd recommend an open and honest discussion with the employee and as above, time to repay arrangement. Depending on the amount involved though the employer could write it off and make large with the employee about it being the employers fault and so on. the employee will then hopefully have a very favourable attitude.
Ah yes salary payslips. I remember those. Last one I received was for May 2020, I am still employed as salary goes into bank. Been working remotely since first lockdown, maybe my payslips are in my desk drawer per the pre pandemic delivery method. I did eventually get 2020/21 P60 as needed for my tax return but payslips are a distant memory.
All employees have a statutory right to receive a written itemised Pay Statement (usually referred to as a Payslip) either before or at the time of payment of wages or salary. Employers are legally required to provide the statement and this must contain specific information outlined within the Employment Rights Act 1996.
The payslip can be physical or electronic and may be delivered via a wide range of channels, but failure to provide & deliver them at all leaves the employer open to tribunals and/or penalties.
Since 6 April 2019, workers whose pay varies depending on the number of hours worked should receive a payslip that shows the relevant hours and rates ... and from 6 April 2023 the payslip must additionally show the HCL amount deducted.
Yup, how right you are Hugo, and that is what I would tell a client.
But while the money keeps going into the bank I think I'll just keep quiet and stick with the current job.
Suggest to client it considers if there is a homologation argument re the contract.
What, if anything, has employer agreed with employee?
Only take instruction from your client in writing .
Stop working for stupid clients. That may be most of them so you may have to pursue this as an end goal rather than action today.
Work out stonking fee to correct issue and get written acceptance from client re same.
Luckily, we only ever work from written requests, even if a client calls we always ask them to send us a quick email to confirm what they would like us to do.
Luckily, we only ever work from written requests, even if a client calls we always ask them to send us a quick email to confirm what they would like us to do.
Agreed, I think tightening up procedures with regards to payroll, and really should be in writing.
And which employer tells an accountant the after tax payment, and not gross? It seems like a strange organisation to work for. Dear I say it, an overbearing owner?
If I was the employee, I would go sick
And get a second job that somehow I can cope with despite being sick