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Payroll, Auto Enrolment and EU Settlement: Updates for Small Businesses

Posted by Warr Co in Business Accountancy, Latest Updates | 0 comments

Various changes have come into force this April in the employment arena, some of which could significantly impact small businesses.

Here, we cover the essentials.

Auto Enrolment Pension Schemes

Since April 2019, the minimum contributions for auto enrolment pension schemes have increased on both sides. Employers now need to contribute at least 3% (up from 2%) of an employee’s pre-tax salary, whilst employees themselves need to contribute at least 5% (up from 3%).

Settled Status

The EU Settlement Scheme came into full effect on 30th March 2019. If you or any of your employees who are EU, EEA or Swiss citizens, remember that you/they will need to apply for Settled Status in order to continue working and living in the UK after 30th June 2021. There’s no fee for applying (if you applied and paid during the test phase, you’ll now be refunded).

To be eligible for Settled Status, you need to have been living in the UK for at least 5 years – if not, you may instead be given Pre-Settled Status. Find out more about Settled Status here, and share the link with anyone in your business who will need to apply.


Since 6th April 2019, the legal right to a payslip has been extended to include all workers (rather than simply employees, a sub-category of workers). The government says that someone is classified as a worker if:

  • they have a contract or other arrangement to do work or services personally for a reward (your contract doesn’t have to be written)
  • their reward is for money or a benefit in kind, for example the promise of a contract or future work
  • they only have a limited right to send someone else to do the work (subcontract)
  • they have to turn up for work even if they don’t want to
  • their employer has to have work for them to do as long as the contract or arrangement lasts
  • they aren’t doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client

For employees whose wages vary depending on the number of hours they’ve worked, employers also now need to include the total number of hours worked on payslips. If you haven’t already worked with your payroll departments to make sure the correct process is in place, do so now.

National Living Wage and National Minimum Wage

Annual increases have just come into effect for the National Living Wage (for all those aged 25 or over), the National Minimum Wage (for those aged 24 or under), and the Apprentice rate (for those aged 19 or under, or aged over 19 and in the first year of their apprenticeship). The new rates are as follows.

National Living Wage

  • £8.21 per hour

National Minimum Wage

  • £7.70 per hour for those aged 21 to 24
  • £6.15 per hour for those aged 18 to 20
  • £4.35 per hour for those aged 16 to 17

Apprentice Rate

  • £3.90 per hour


Other impacts for larger organisations

Gender Pay Gap Reporting

Private organisations with 250+ employees were required to publish their gender pay gap figures on 4th April 2019. As this was the second year of reporting, the figures are expected to be more heavily scrutinised to see whether organisations have been successful in addressing any significant pay disparities highlighted last year.

CEO Pay Gap Reporting

This change came into effect at the start of the year, but it’s worth noting here. Private organisations with 250+ employees will be required to publish their executive pay gap yearly from 2020, thanks to new legislation. If this applies to you, you’ll want to be calculating the necessary figures throughout 2019 so that you can show the gap between the average employee’s pay and the total amount paid to the CEO.

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