Payroll error?

merlinthehappypig

Hopefully this is the right board for this and someone can help.

I believe that my son's employers have made a serious error on his pay this month and, if his is wrong, so is everyone else's. Unfortunately, the employers say it's correct, so I wanted to post here before taking it further in case I'm missing something obvious. I last worked with payroll in 1988 so it's been a while! Apologies in advance for the lengthy post and all the figures.

His employers have just swapped everyone from weekly to monthly pay.

He was paid weeks 48 (2nd March) and 49 (9th March) as normal weekly wages as follows:

Week 48 - Gross pay £248.21 with Tax of £20.80 and NI of £13.14
Week 49 - Gross pay £226.13 with Tax of £16.40 and NI of £10.50

Yesterday he received a monthly salary for the first time. Presumably in order to somehow compensate for the 2 weeks he had already been paid in March this payslip read as follows:

Gross pay week 48 £248.21
Gross pay week 49 £226.13
Salary £1100.67
Shift premium £75.00

This makes a total gross pay of £1650.01 on which he paid tax of £186.20, NI of £126 and a student loan repayment of £36. They then deducted the net pay of £214.27 and £199.23 from weeks 48 and 49 respectively to leave a final net pay of £888.31. His tax code is 747L.

It was the student loan repayment which flagged it up initially as my son earns £14108 annually which isn't enough to pay it back.

To me he has quite clearly paid tax and NI twice on the week 48 and 49 wages, tax and NI at too high a rate on the March salary and a student loan repayment that shouldn't have been deducted had the employers not messed up. By my calculation he is £108.08 short in his net pay this month.

The employers have clearly tried to do some sort of transitional arrangement to ease the pain of moving from weekly to monthly pay, but haven't done it correctly in my opinion. They say it's correct and say the student loan repayment isn't their problem either, but it only happened as they have treated over 6 weeks pay as a month giving a false salary of £19800.

Can someone qualified check this and let me know if I'm right or simply going mad? If I am right what can we do if they don't admit a mistake? There are well over 100 employees affected by these new arrangements. I have checked the figures for a couple of his friends and they appear to be underpaid by around £70 as well.

The problem is that none of them know exactly what their pay is supposed to be for a month, having been used to weekly pay, so it didn't immediately jump out at them as it did for us with the student loan flagging up.

Thanks

chrismac1

My first thought is that it shows either a prat manager or naive payroll department. Why do this in week 49 when if they wait just 3 more weeks they have the whole tax year to resolve any problems which might crop up?

I once implemented this for over 400 people. There were transitional arrangements which were spelled out in writing to make it clear what adjustments were being made. In effect for the benefit of saving all that hassle of operating weekly pay we paid folk extra one-off money.

Funnily enough, once the unions found out everyone was getting a week's extra pay as a sweetener their knee-jerk objections melted away quickly. So something like this could have happened here.

Pennywise

Hard to say without knowing the details, but it looks as if he's been overpaid in the first place,i.e. gross too high, so inevitably, he'll have paid more tax, SL and NIC.

On an average of £200-£250 per week, it seems that his gross for March is about 6 weeks of pay. The £1100 for March seems to be around 4.3 weeks of his average weekly of £200-£250, so maybe weeks 48 and 49 have been duplicated.

As I say, if he's been paid more gross, then inevitable the deductions will be higher. You can't just look at the deductions in isolation. Look at the net take home!

System

What are the gross pay and tax to date on the new March payslip and is that the final one of this tax year?

chrisbur

There is one possible way that this could be correct. The two weekly wages may not be included in his payroll details, they may have just been worked out and then the net pay given as a sort of loan. These two weeks were then paid with the monthly salary to get them into the totals and the net pay figure deducted.
If this is the case then it will show up by checking the year to date figures from his payslip. There should be a gross to date tax to date and NI to date. These figures are gross tax and NI paid for the full year, so the question is do they include the figures for gross tax and NI that show on the two weekly payments.
To check this you need the last unaffected weekly payslip that is week 47. From this take the year to date figures and add the figures from the monthly payslip, if these totals equal the year to date totals then the weekly payments were just treated as a 'loan' if however you have to add in the figures from the weekly payments ie the 248.21 and 226.13 then to me this looks like an error.

Of couse it should have been explained but not all payroll depts. communicate well.

Regarding the student loan, as I understand it, if deductions are made from a higher than average wage that would not be due as a result of the yearly figure you are entitled to get the money back from the student loan company.

merlinthehappypig

Pennywise wrote: »

Hard to say without knowing the details, but it looks as if he's been overpaid in the first place,i.e. gross too high, so inevitably, he'll have paid more tax, SL and NIC.

On an average of £200-£250 per week, it seems that his gross for March is about 6 weeks of pay. The £1100 for March seems to be around 4.3 weeks of his average weekly of £200-£250, so maybe weeks 48 and 49 have been duplicated.

As I say, if he's been paid more gross, then inevitable the deductions will be higher. You can't just look at the deductions in isolation. Look at the net take home!

As part of the transitional arrangements he was paid weeks 48 and 49 on 2nd and 9th March. He has then been paid his new March salary of £1100.67 plus £75 shift allowance plus weeks 48 and 49 again (says that on the payslip). So he was taxed on week 48 and 49 pay, taxed again on week 48 and 49 plus the salary in March. In an attempt to even things out the company have deducted his previously paid net pay for weeks 48 and 49, but that doesn't work properly.

His net take home for March was £888.31 after all the faffing about. According to several payslip calculators this should have been £996.39 on a salary of £1175.67.

I can try to post the payslips if that helps.

merlinthehappypig

chrisbur wrote: »

There is one possible way that this could be correct. The two weekly wages may not be included in his payroll details, they may have just been worked out and then the net pay given as a sort of loan. These two weeks were then paid with the monthly salary to get them into the totals and the net pay figure deducted.
If this is the case then it will show up by checking the year to date figures from his payslip. There should be a gross to date tax to date and NI to date. These figures are gross tax and NI paid for the full year, so the question is do they include the figures for gross tax and NI that show on the two weekly payments.
To check this you need the last unaffected weekly payslip that is week 47. From this take the year to date figures and add the figures from the monthly payslip, if these totals equal the year to date totals then the weekly payments were just treated as a 'loan' if however you have to add in the figures from the weekly payments ie the 248.21 and 226.13 then to me this looks like an error.

Of couse it should have been explained but not all payroll depts. communicate well.

Regarding the student loan, as I understand it, if deductions are made from a higher than average wage that would not be due as a result of the yearly figure you are entitled to get the money back from the student loan company.

Cheers. You are right, that's something I should have checked, though a loan didn't occur to me and wasn't mentioned to the employees. There is still a £108 or so shortfall in this month's net pay, though, which is more or less two lots of NI and tax on week 48/49 plus the student loan repayment.

I can't access the payslips at present as they are online and password protected. I've texted my son and will check and post the figures when I can.

Thanks everyone for your help so far.

chrisbur

merlinthehappypig wrote: »

Cheers. You are right, that's something I should have checked, though a loan didn't occur to me and wasn't mentioned to the employees. There is still a £108 or so shortfall in this month's net pay, though, which is more or less two lots of NI and tax on week 48/49 plus the student loan repayment.

I can't access the payslips at present as they are online and password protected. I've texted my son and will check and post the figures when I can.

Thanks everyone for your help so far.

From what you say I am not convinced, I think it may be error.

Can you post details from week 47 48 and 49 and then the monthly payslip. All we need is the gross and tax for each payslip and the gross to date and tax to date for each payslip.

patanne

Is it possible that they have not changed the employment status to monthly from weekly & therefore all the additional pay has been entered as week 52 rather than month 12. This would not effect the tax payable but would have a significant effect on the NI payments due. Why on earth they would do it now rather than waiting for the next tax year I find very difficult to understand.

merlinthehappypig

chrisbur wrote: »

From what you say I am not convinced, I think it may be error.

Can you post details from week 47 48 and 49 and then the monthly payslip. All we need is the gross and tax for each payslip and the gross to date and tax to date for each payslip.

I can't access the payslips without my son's password and he is off at work at present. I'll get the details when he returns around 5pm and post them.

I don't think there is any doubt that there is an error, but I'm still not certain where, or what, it is. Bottom line is that his net pay for the 6 week or so period is around £108 down. £36 of that is student loan, but the rest?

Hopefully it will become clearer with the running totals from week 47, but don't hold your breath.

I agree that the timing is awful. If there is an error, and it seems likely, then they have around 100 staff affected and are unlikely to be able to sort it out this tax year. Why they couldn't implement this from the new tax year is beyond me.

Doubly awkward for my son as he is just about to give notice!

patanne

Please don't forget to ask your son to check if his payslip says week 52 or month 12. If they have put it all in week 52 it comes to more than adding week 50, 51 & 52 together.
This could also explain why he is having student loan deducted