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How to manage flexible working without losing control

All employees have the legal right to request flexible working via a ‘statutory application’.

Flexible working is a way of working that predominantly suits an employee’s needs, so having flexible start and finish times to meet childcare demands, or working from home to avoid a long commute in are some of the ways in which requests must be considered. Flexible working regulations are now over three years old and requests in your organisation should not just cover parents and carers.

Flexible working regulations give everyone with at least 26 weeks service the right to request flexible working. Organisations need to carefully assess the potential impact of flexible working requests - from job shares to annualised hours; the risk of over or underpayment of payroll; to incorrect inclusion in auto-enrolment schemes post change.

Neil Lagden, Head of FMP Payroll Services (formerly Bond Payroll services), outlines the importance of capturing detailed and accurate employee working hours to minimise the payroll overhead and avoid the risk of expensive mistakes.

1

Keep an accurate record of employee working hours

What additional pressure will it place on your payroll function to manage an employee base who job share, work compressed hours/flexitime/annualised hours, or any other non-standard working patterns?

Payroll are used to dealing with employees coming back from maternity leave or long-term sickness absence and requesting flexible working. They have processes in place to manage these changes. However, flexible working practices adds more than a degree of complexity. Add in zero hours contracts and volunteers and you have a complex payroll on your hands.

When everyone worked a standard working week, a simple glance down the payroll run could reveal an error. Now with businesses adopting multiple flexible working patterns it becomes far harder to spot those mistakes. Even if the number of hours worked is standard, the use of compressed hours, for example, makes time off and holidays far more complicated to calculate.

A key requirement for any payroll team, whether in house or outsourced, is to make sure that employee working hours are accurately recorded – and recorded by the hour, rather than by the day. As long as the information is accurately recorded the payroll team can be confident the right employee is being paid the right amount at the right time. Using a time and attendance system can help in larger organisations, and if it is integrated with the payroll system, even better.

2

Have detailed information on payslips

If accurate working hours are being recorded, you can customise the information included on the payslip to reflect each individual’s working activity. This makes it much easier for employees to understand each payment and minimises the time spent by payroll fielding employee questions.

Staff might be confused by the figure paid in their payslip and the deductions made. Providing a complete overview of the hours/days worked, including location (if applicable) makes it far easier for employees to understand the impact of a new flexible working model on overall take home pay.

This is particularly important for any organisation currently – or soon to be – making auto-enrolment submissions. Flexible working may increase the number of individuals hovering around the £10,000 annual threshold (2017-2018). If the information provided to payroll is inaccurate there’s a risk of an individual being incorrectly assessed and pension contributions automatically deducted from their salary.

For any low earner this could cause huge financial discomfort – and require time consuming unpicking by payroll to rectify the problem. Accurate tracking of employee payments is critical to identify eligible employees, calculate the correct payment and send the file to the pension provider.

3

Use a system that's fit for purpose

With every business opting for different flexible working practices and employees continually evolving their flexible working requirements, the commonality between payroll departments is reducing.

Each payroll operation will be different and will demand different business rules – a process that can be time consuming to set up. Once in place, the payroll process should run seamlessly, assuming the quality of information remains high. Failure to introduce the right mechanisms for capturing employee activity by the hour will put huge pressure on payroll to manage and verify employee payment. Automating potentially labour-intensive processes, such as auto-enrolment, can save administration time and costs associated with flexible work patterns.

Further information

The information in this how-to guide has been provided by FMP Payroll Services (formerly Bond Payroll services), NCVO Trusted Suppliers.

NCVO helps voluntary organisations cut costs and become more effective by negotiating discounts and preferential arrangements for its members on a wide range of products and services. Find out more about NCVO membership.

FMP Payroll Services
offers a range of payroll solutions to support your organisation through a completely/partly outsourced payroll service.
 

The Essex Coalition of Disabled People (ecdp) work with FMP to help their clients manage their personal budgets as part of the personalisation agenda. 

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Page last edited Jul 05, 2017 History

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