Are you using the right compensation rate for your payroll?

If you are managing your own payroll you will know that from April 2011, the statutory rates such as Sick Pay (SSP), Maternity Pay (SMP) or Paternity Pay have all changed.

 The table below reflects the statutory payment rates for 2011/12, but what some employers are forgetting is that there is also a change to the additional amount that small employers get back – the so called small employers’ compensation rate.

Statutory payment Pay rate for 2011-12
SSP £81.60 per week
SMP Six weeks at 90% of the employee’s average weekly earnings followed by a further 33 weeks at £128.73 per week or 90% of average weekly earnings – whichever is lower.
OSPP One or two weeks’ at £128.73 per week or 90% of average weekly earnings – whichever is lower. If the employee opts to take two weeks’ leave, they must be taken together.
ASPP Paid during the mother or adopter’s SMP, Maternity Allowance (MA) or SAP pay period, if the mother or adopter has returned to work, at £128.73 per week or 90% of average weekly earnings – whichever is lower.
SAP 39 weeks at £128.73 per week or 90% of weekly earnings – whichever is lower.

 Small employer’s compensation rate

Some employers who are classed as small employers, ie those who have paid total gross Class 1 NICs below an annual threshold which for the 2011/12 is £45,000, can qualify for the small employer’s compensation rate. This allows small employers to recover 100% of the statutory pay paid to their employees, plus an additional percentage.

 For 2011/12 this rate has been reduced for small employers from 4% to 3%. This rate is based on the share of NICs paid and this reduction reflects the rise for 2011/12 in the NIC threshold from £110 to £136 per week.

If you do not qualify as a small employer then your rate remains at 92%.

 If you are anxious about statutory pay rates and compensation percentages then why not get a quote to outsource your payroll, then you can leave the ever-changing legislation to us! Bevan & Buckland payrolls can cost as little as £4.00 per payslip so why not give Tina and her team a call today on 01792 410117 or email tina.davies@bevanbuckland.co.uk for your free payroll quote.

 You can also get more advice by following @bevanbuckland on twitter or register for our email newsletter.

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