01 November 2021

Samantha Johnson LLB(Hons) ChMCIPPdip, CIPP policy lead would like you to meet the panel created to discuss the topics impacting the payroll industry most


Sharing knowledge is at the heart of the payroll profession. No one delivers payroll in isolation – even the solo payroller makes use of their network, their training and representative body – the CIPP. Here at the CIPP, sharing knowledge is key to ensuring we deliver the best, most topical and informative updates to our members. As part of our passion for sharing knowledge, the CIPP is delighted to introduce the CIPP technical panel, which was created in 2019 and continues to meet regularly two years on.

 

What is the CIPP technical panel?

The panel consists of fourteen payroll professionals who have a passion for payroll and are experts in their field. They are representatives from professional bodies, private and public sector payroll and payroll software providers. The meetings are an opportunity to discuss and debate current topics that are, or will be, impacting the payroll industry.

 

What is discussed at the CIPP technical panel?

The last panel was held on 17 September 2021 and the panel discussed an array of topical payroll items:

 

Off-payroll working rules

The panel reflected that the time given to prepare for off-payroll working in the private sector meant that the implementation of the rules had a modest impact on the industry. This was reflected in a recent CIPP poll during National Payroll Week, which highlighted that approximately 20% of respondents had found the implementation of the rules challenging.

The conversation predominantly focused on Her Majesty’s Revenue and Customs’ (HMRC’s) check employment status for tax (CEST) tool and the problems it created.

Media reports shone a light on penalties faced by many government departments for incorrect usage of the CEST tool, and some of the panel were advocates for using alternatives to CEST which provided less variations in outcomes.

There were several concerns that arose due to the implementation of the off-payroll working rules. The use of umbrella companies, and a significant increase of fraud in these types of companies was cause for concern for many. In addition, the growing use of disguised remuneration schemes to avoid a drop in pay for contractors was becoming increasingly visible to some of our experts.

Finally, the panel discussed HMRC’s approach to enforcement and favoured a more joined-up approach than the one that currently exists, with a single point of ownership for these rules in HMRC being the preferred option.

 

Changes to National Insurance contributions

The panel discussed several changes to National Insurance contributions (NICs), including the NICs relief for employers hiring veterans that was introduced in 2021/22, but without a real time solution. There was concern that uptake had been low, and this was supported by a recent CIPP poll which showed that 0% of respondents were using the relief in the current tax year.

Inevitably, discussion progressed to the recently announced health and social care levy, and the panel agreed that the increase in NICs in the 2022/23 tax year would be relatively simple to administrate. The immediate concerns for payroll were focused around providing information to businesses to forecast the cost impact of this change for employers. Given the variability of pay that would be subject to NICs across many companies, this is a particularly challenging figure to estimate.

The interaction between net pay and Universal Credits (UC) was also highlighted. The reduction in net pay could result in those who are paid less benefitting from increased UC, hopefully protecting those individuals at the lower end of the pay scale.

The panel considered how employers would manage the cost increase. Firstly, how they would support employees to understand the impact to their pay. A few panel members were intending to distribute communications ahead of the April 2022 pay day.

Secondly, the panel discussed how employers could absorb the additional employment costs. The current labour shortages in the market were thought to make it unlikely to impact employee pay. More viable options included absorbing the cost through productivity improvements or passing the cost on to the consumer.

 

Pay on demand

The ability to access earned pay before pay day, otherwise known as pay on demand (PoD), is an emerging area in payroll, and employers often engage with these facilities to improve employee engagement and retention.

Those who are in support of PoD often reference it as an alternative to pay day loans, overdrafts or credit card interest rates. The panel recognised that a saving in interest was possible, alongside protection of credit rating when engaging in riskier lending.

There were some concerns about this concept, including the risk of stepping onto the ‘advances treadmill’ and perpetuating the cycle of debt. However, the panel recognised that some solutions offered restrictions that allowed employers to reduce the availability of advances that were taken consecutively, encouraging employees to take a break between draw downs.

It was also highlighted that the Financial Conduct Authority (FCA) recently conducted a review that resulted in ‘buy now pay later’ schemes becoming subject to regulation. The FCA has not taken the same measures with PoD but did state that a code of practice should be created. Looking to the future, some panel members considered whether an employee right to request a payment date could be a possible step forward in the profession.

 

Single enforcement body

The introduction of a new single enforcement body (SEB) was announced in June 2021, and amongst other things, will be responsible for enforcing national minimum wage, statutory sick pay and holiday pay. The details and timeline are yet to be confirmed but the panel were keen to understand how this project would progress.

There was agreement that resource would be key to any success of the SEB, given the breadth of topics it covered, and there was some hesitancy on whether it could meet the grand expectations that had been set. The panel will continue to debate this topic as more details are shared.

 

How can members get involved in the technical panel?

The CIPP is keen to hear questions and topics that members would like to see debated and discussed by the technical panel. If you have anything you would like to ask, please email the policy team, at [email protected] to get your issues on the agenda. 


 

Featured in the November 2021 issue of Professional in Payroll, Pensions and Reward. Correct at time of publication.