Payroll legislation and laws in the UK – some of the key legal considerations

by Five Fantastic Lawyers™ on April 11, 2013

Guest post regarding payroll legislation and laws in the UK, US and some of the advantages to using online payroll systems.

In the UK there are many advantages of using online payslip software (advantages in respect of the United States are broadly similar and are outlined below) although the law underpinning this area is different in the UK to the US.

Generally, two of the most important areas relate to employment law and tax law.

Under employment law in the UK, “An employee has the right to be given by his employer, at or before the time at which any payment of wages or salary is made to him, a written itemised pay statement.” (Section 8, Employment Rights Act 1996).

There are a few important legal considerations regarding ‘itemised pay statements’. The pay slip must be in writing and must be given to the employee by the employer. For this purpose, it is acceptable to use online software but it’s essential that the employee actually has access to it – providing a login to a website may not be sufficient if the employee doesn’t have access to a computer, for instance. Consider what would happen if the access was made available via an intranet and the intranet was down before or on payday.

Generally, the provision of the statement must be given to the employee on or before the time of payment. Online tools in this area can assist, for example, by automating the printing function, further to which the payslips can be distributed to employees. One method of best practice would be to have the payslip made available online and printed at the same time.

The penalties in this area can be harsh so it’s best to ask an employment lawyer or HR adviser if unsure. The worst case scenario would be to end up in an employment tribunal for getting it wrong.

Where to find online payroll services?

Regardless of the country or State in which your business operates, one of the best places to start is to do a web search for the best online payroll services or solutions. Note, in particular, if they can meet the legal requirements of the area in which you do business; if you don’t choose the right provider, which doesn’t enable you to comply with the relevant laws, the penalties can be severe.

Advantages of online payroll software in the United States and UK

There are many advantages of choosing online payroll services instead of offline ones.

The following are some of the key advantages to using such online payroll tools in the United States (many of these also applicable elsewhere):-

–          Take care of some of your business’ key responsibilities such as:-

  • Deal with Employer & employee federal taxes on time (including the filing of forms quarterly)
  • Unemployment insurance
  • Provision for W-2s
  • Dealing with income tax (both at federal and state level)
  • Paying your employees on time (can be assisted with the automatic creation of paychecks with options for mailing or printing).

–          Automatic and accurate calculation – often much quicker than manual calculation

–          Automation of year end reporting and interim reporting, including analysis of employee costs and salaries

–          Archiving of historic reports

–          Stay organised and keep track of key pieces of information relating to your employees, tax rates and payments due, any withholdings etc.

–          Record time – this can be particularly useful if your company uses timesheets or tracks employee attendance in other ways. The best systems will allow for the automatic integration of this.

–          Keep track of employee benefits, including 401k retirement plans or health plans.

–          Allow and account for workers’ compensation insurance which is a legal requirement for all employers.

Steve Brown is a professional services blogger based in the United States, helping businesses to succeed through smart use of technology.

Five Fantastic Lawyers™
This post was written by a legal author invited to publish on Five Fantastic Lawyers because of the high value associated with their work. If you'd like to register your interest in publishing really high quality legal content here, please get in touch via our Contact page

Previous post:

Next post: