Payroll now or pay a fine later – expert’s alert to businesses over living wage

BUSINESSES are being warned to check and update their payroll systems or risk a severe penalty.

The alert comes from Worcestershire IT and payroll specialist Susan Marlow, who says the majority of companies have yet to revise their systems despite the new national living wage coming into effect from April 1.

Mrs Marlow, finance director at Kidderminster-based IT and software provider Minster Micro Computers, says employers will have “nowhere to hide” when the changes come into effect due to stringent minimum wage checks by HM Revenue and Customs. Under the new rules, every employee aged 25 and over will be entitled to at least £7.20 per hour, a 50p per hour rise on the current rate.

She added: “Since the introduction of RTI legislation, there really is nowhere to hide for firms here in Worcestershire and with the new pay rules only a matter of weeks away, it’s vital they take steps to update their systems. Some businesses have complained the national living wage will put an additional burden on them but the law is here to stay. All the information that HMRC needs, including wages, dates of birth and National Insurance numbers, it already has. Even employers who are fully aware of the change and have budgeted for it have to take extra care to ensure their payroll system is updated and ready to pay the new rate from April 1.”

Businesses failing to pay the increased rate could face a fine of £20,000 per worker – a message Mrs Marlow is pushing following a Department for Business, Innovation and Skills study that found 55 per cent of employers had yet to update their payroll accordingly.