The Payroll module reporting function has been amended to introduce two new exports to assist with National Minimum Wage and National Living Wage (NMW/NLW) checking.
The two versions of the export available are the 'NMW/NLW for tax year 2019' and the 'NMW/NLW for past periods'.
The 'NMW/NLW for tax year 2019' export completes the calculation based on the payments/hours in the current pay period/payroll at the time it is run. Any rotas in the current pay period which are not submitted to payroll at the point of running the report, will not be included in the calculation.
The 'NMW/NLW for past periods' export completes the calculation based on the payments/hours in a previous period. The required period can be selected when running this report. This report can be used for audit purposes but could also be used during the next pay period, for any payrolls which are closed prior to the end of the pay period and would not, therefore, have all of the hours worked in the system at the time of closing.
Reason for the Change
The new exports have been developed to provide guidance on employees who may be at risk of non-compliance with NMW/NLW legislation based on your configured payment types. If your payment types are not configured, the exports will include all payments in the calculation of NMW/NLW.
All customers with the payroll module.
Access to the NMW/NLW Exports will require access to view exports. This can be assigned to employees with bespoke access or through access templates and is simply the permission named ‘exports’ within the payroll module. Please note that enabling this permission will provide the user with access to all exports sitting within your payroll module.
Should you require any guidance on assigning access, please speak with your HR Administrator.
The exports use all payment types in the calculation by default. In order for the calculation to be completed based on the guidelines set by HMRC, some configuration is required within the portal.
See - https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/514897/BIS-16-144-nmw-calculating-the-national-minimum-wage.pdf
Please review the payment types in the portal by running the payment types export:
- Payroll Module > Reports > Exports > Payment Types > Run Export
Column J ‘Exclude From Minimum Wage’ is set to ‘FALSE’ which means that the payment type is included in the NMW/NLW Exports.
Please highlight the payment types that you wish to be excluded from the NMW/NLW Exports and send to your Payroll Specialist within the Bureau via email, using Payroll@Fourth.com
Your Payroll Specialist will then configure your portal to exclude these payment types from the calculation used when running the exports.
The NMW/NLW Exports use contracted hours held within the employee’s employment details page to calculate the actual hourly rate for salaried employees by default. Therefore, you must ensure that the salaried employees contracted hours are accurate and any updates are made within this page also. To enable the contracted hours option you will need to enable the global setting:
- HR > Administration > Global Settings > Edit Default Employee Settings > Display Contracted Hours > choose Mandatory which will force Managers to update this option.
To update employees contracted hours:
- HR > Employees > Employees List > select/search the employee > Employee Info > Employment Details > See Contracted Hours > update with hours the employees works > Save
The exports can be found in Payroll > Reports > Exports> NMW/NLW for tax year 2019/NMW/NLW for past periods
Fig.1 - Exports
In order to run the exports a company and pay basis should be specified.
- Company - Only a single company can be selected
- Location - A specific location or all locations applicable to the company can be selected
- Division - A specific location or all locations applicable to the company can be selected
- Pay Basis - Only a single pay basis can be selected
- Pay Run (Past periods report only) - Only a single pay period can be selected
- Show all employees – when ticked all employees will show on the report including those who it is suggested do not require any top up. This will then allow the user to review all employees and make a decision as to whether they are compliant with NMW/NLW
- Use Rota hours for salaried employees - when ticked, the report will use the hours recorded on the rota within the pay period for salaried employees rather than the contracted hours. If any employee is not included on the rota, the report will default to using the contracted hours in the employee details page.
You will then have the option to run the export or reset the selection criteria.
Calculations and Column Definition
The exports cover different employee types, however the calculations for each are specific. National Minimum/Living Wage is calculated based on the number of hours worked.
What the Export Doesn’t Include.
- Employees paid an annual salary and contracted to work shifts
- Pro-ration – where employee’s salary or rate, employees age, apprentice status or national minimum/living wage changes. Employers should review both employee circumstances and NMW/NLW legislation to manually check if the employee has been paid at least NMW/NLW rate within that pay period. This will be automatically calculated going forward.
If any technical issues are encountered with the new export, please raise a Technical Case with our Support Team regarding the issue. To do so, either escalate to the member of your business who is responsible for raising cases with Fourth or raise a Technical Case in the Customer Community.
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