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Christmas payrolls: Employers warned to be careful or they could make their employees worse off

Employers who try and help employees by paying Christmas salaries early could affect those on universal credit by up to 55%, warns Robert Salter.

A nice gesture that could go wrong

In the run-up to Christmas, it is common for employers to pay December salaries earlier than normal but if they get the dates wrong on the electronic submissions they make to HM Revenue & Customs, it could severely impact those Universal Credit.

Employers may pay the salary for the month ended 31 December on say, 17 December rather than the (traditional) last working day of the month, because of office closures and/or to assist employees from a cashflow perspective which is a nice gesture, but it could go wrong.

Full Payment Submission and impact on Universal Credit

Such seasonal payroll arrangements are well-established and perfectly legitimate, but it is important for payroll providers to get the electronic payroll submission, known as a Full Payment Submission (FPS), to correctly record the period that the pay relates too.

If, for example, using the above dates, the FPS said the earnings were purely for the period ended 17 December rather than the correct date of 31 December, this could impact the Universal Credit entitlement of those employees who are in receipt of this benefit.

It is an easy mistake for employers and their payroll teams to make but it could have a really painful impact on those employees and their families who are in receipt of Universal Credit to top up their pay.

In broad terms, reporting the wrong pay period and thereby artificially inflating the perceived wages of an employee, could reduce their Universal Credit support from the Government by as much as 55%.  Not exactly the type of Christmas present that anybody would want this time of year.

Would you like to know more?

If you would like to discuss the above, please get in touch with your usual Blick Rothenberg contact or Robert Salter using the details on this page.

For press enquiries please contact David Barzilay.

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