PIXIE PAYROLL Blog

A new bill was recently given Royal Assent which will change the way employers and employees work. Its official title is Employment Relations (Flexible Working) Act 2023 but is known more usually as the Flexible Working Bill and will come into force next year.

The Bill gives employees greater access to flexibility over where, when and how they work. It also asks employers to make decisions quicker and give reasons why a request might be declined.

Requesting flexible working

Currently, an employee has to be working for an employer for six months before they can make a request for flexible working. In the short term that won’t change as the new law isn’t explicit about this, but it is expected that secondary legislation next year will make it a ‘day one’ right to request flexible working. An employee can also only make one flexible working request in a year and that will increase to two.

Once the request has been made, employers now must make a decision on that request within two months, reduced from three. Should an employer want to decline a request, they must consult with the employee first and must give their reasons for declining.

Up to now, employees had to explain the effects on the employer if their request for flexible working was granted and suggest mitigations for those effects but this requirement has been removed in the new legislation.

Types of flexible working

There are a number of grounds for requesting flexible working including:

• Reducing working hours to work part-time
• Making a change to the start and finish time
• Flexitime – which means having flexibility to start and finish times as long as the set hours are worked over an agreed time i.e. a week or month
• Compressed hours – where more hours are worked on some days to lead to shorter hours or even a day off at another time
• Flexibility over location i.e. if some days of the week are done at home
• Job share

Why might flexible working be a good thing for everyone

As we have seen with the 4 Day Week campaign, new and innovative ways of working are becoming more popular as employees seek a better work/life balance and switch from a ‘live to work’ to a ‘work to live’ mentality.

Employers who offer options for flexible working or make it clear that they are open to a discussion about flexible working often find they are able to recruit more easily and have a more productive and happier workforce.

Flexible working that enables parents, carers or people with disabilities to work also means a workforce that is more diverse and fairer and will enable employers to recruit from a wider talent pool, which will be good for everyone.

It’s going to be a little while yet until the legislation comes into force but employers might want to start thinking about their flexible working policies now and how they might handle requests from employees. As always, if you need any advice regarding the payroll impact of any changes, just get in touch.

In our blog last month about pensions, we mentioned that people need 35 years of national insurance contributions before 2016 in order to qualify for the full state pension (and there are different calculations for those who have contributed fewer years or have contributed after 2016 – you can read more here).

It is possible to top up national insurance contributions and as some deadlines have recently changed, we thought it was worth devoting a whole blog to talking about that.

Gaps in the record

Many people who are planning for their retirement find they have gaps in their national insurance record. This might be because they lived and worked outside the UK, were unemployed but not claiming benefits or were employed but on low earnings or self-employed and only earning small profits.

These gaps may mean there are not enough qualifying years to receive the full state pension.

It is possible to fill the gaps by making additional voluntary payments to top up the account.

Checking the national insurance record

The first step in deciding whether a top up is required is to check the national insurance record which can be done by following this link https://www.gov.uk/check-national-insurance-record . This will show the total number of qualifying years and if there have been any years where there have not been enough contributions.

Checking eligibility

If there are gaps, then head to this link https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions to check on eligibility to pay additional NI contributions. Most people will pay Class 3 contributions while those who were self-employed will pay Class 2 – each class has a different weekly rate.

Looking back at the years

Individuals can usually only pay voluntary National Insurance contributions for the previous 6 tax years and the deadline is 5 April each year. So the deadline for topping up contributions for the 2020/21 tax year is 5 April 2027.

The transitional arrangements around the introduction of the New State Pension in April 2016 meant the years back to 2006 could be topped up and at the beginning of this year, HMRC had a deadline to top up gaps in years between then and 2017 of 5 April 2023. Just before that deadline was reached, it was extended to 31 July 2023 and it has recently been extended again to 5 April 2025.

That gives everyone more time to check their national insurance records and decide whether to top up their contributions. It also gives more time to afford and make those payments.

It also means that men born after 5 April 1951 and women born after 5 April 1953 who were also part of the transitional arrangements on the introduction of the New State Pension have until 5 April 2025 to make voluntary contributions if they are eligible.

This is quite a complicated subject and we have only summarised the situation in this blog so if anyone wants more information, they should look at the HMRC website, look at their personal tax account or possibly consult their financial advisor to see if topping up contributions would be worthwhile.

Many of us look forward to the time when work is done and life can be taken at a more leisurely pace and while some may have private or workplace pensions, receiving the state pension will be an important part of any financial planning for retirement.

There have been quite a lot of changes to the pension age recently and many people are unsure about their pension age, so we have summarised the key facts in this month’s blog post. A new state pension scheme was introduced in 2016 which is currently used as the deadline to calculate National Insurance payments and for the purposes of this blog, we are assuming people have either retired after that date or have not yet reached retirement age.

Individuals can check their retirement age here.

History of the state pension

The state pension was first introduced in January 1909 and paid 5 Shillings a week to very poor people aged 70 or more. Soon, the age of eligibility was reduced to 65 for men and 60 for women although since 2010, the age for women has been gradually harmonising with the age for men so that in 2018 the age for both was 65.

Today’s pension age

The pension age today is 66 years for both men and women and the full state pension is £203.85 per week. This is based on having paid National Insurance for the maximum of 35 years up to 2016 although the calculations can be quite complex and adjusted to take into account the years after 2016; the state pension is paid proportionally if the full 35 years hasn’t been reached.

Getting your state pension

The state pension isn’t paid automatically but has to be claimed for. This is a relatively straightforward process; about 4 months before your 66^th birthday, a letter will be sent giving information about the pension and will include an ‘invitation code’ which can be used in the online application.

Assuming the claim has been made, the first payment is made within 5 weeks of reaching State Pension age and then there’ll be a full payment every 4 weeks after that.

If a 66 year old is still in employment and has no plans to retire, claiming the state pension can be deferred and this will mean payments later when the pension is eventually claimed will be higher.

Other income after retirement

Many pensioners will have other pension pots, especially as those who have been auto-enrolled in workplace schemes reach retirement age. But there is also no reason why pensioners can’t remain in the workforce. Employers cannot force employees to retire and receiving a salary and pension at the same time is allowed. The only difference is that once the state pension is being claimed, national insurance payments do not need to be made although of course all income will still be subject to taxation.

The future of the state pension

The state pension age is expected to rise to 67 in 2028 and there will be a review in the next parliament as to whether the age needs to rise to 68.

Whilst here at Pixie Payroll we are not experts at pension planning for individuals, we can help employers deal with the changes to payroll due to an employee reaching pension age whether they are retiring or staying in work for a while. Just get in touch if you need any help.

Cricket has always been big in our family and so as the summer sport season gets underway, Pixie Payroll has just renewed our sponsorship of Mullion Cricket Club.

It got us thinking more about how both businesses and individuals can make a real contribution to their local community, especially through volunteering.

Triple benefits of volunteering

Volunteering offers more benefits than simply the giving of time. The community project or charity that the volunteers work with will gain access to skills and experience they otherwise wouldn’t be able to, which could help boost awareness and growth.

The volunteers themselves will also be able to learn new skills and get a mental health boost from the pride and satisfaction of making a difference. Finally, the volunteers’ employers will build a positive reputation & brand, and improve employee engagement. 

Giving time off for volunteering

An increasing trend at the moment is sometimes called employer-supported volunteering (ESV) and is when employees are granted paid time off from work each year to volunteer at a charity or local community project. Examples of ESV are the employee volunteering to be a marshal at a fundraising event, helping out at a foodbank or even becoming a school governor or charity trustee.

The amount of paid time off is decided by the employer but could be around 2-3 days each year in addition to the annual leave allowance.

Things to consider when developing an ESV policy

If you’re thinking about introducing an ESV policy in your business, the first step should be to speak to your employees about it and see what they think. Reassure them that taking the time off is optional and that no one needs to feel obligated to volunteer.

Think about how you’ll record volunteering leave and how your employees can share their experiences of volunteering. If other staff members hear about how great taking the volunteer leave is, they will be much more likely to take up the opportunity too.  

Some employees might be really keen to volunteer but don’t have a place in mind so the employer could help them find somewhere – this might be a charity that the employer already has a relationship with or an organisation that can help the employee develop some specific skills.

Spreading the word

At a time where recruitment can still be tricky, including volunteering leave in a job’s list of benefits could help to attract the best candidates. It helps potential employees see that the company’s values align with their own and even gives them the flexibility to continue with an existing commitment such as being a mentor.

And don’t be afraid to share the success of the ESV policy through your communication channels – it’s great content! 

We’ll be spending quite a bit of the next few months listening to the sound of leather on willow (weather permitting!) and we would encourage other employers to think about how sponsorship or volunteering can benefit their business and employees.