UK Payroll - Calculate pension contributions on pre-SMP earnings
Employer pension contributions for employees on SMP should be calculated on the employee's earnings before they went on leave, not on the reduced rate of 90%. Xero's calculation is currently on the latter with no option to overwrite. The correct calculation would be first choice, but the option to change figures would be helpful also
Sue Whitehouse
shared this idea
Hi everyone👋, thanks for the idea and support here. To be open and upfront we don’t have any plans in the near term to expand this functionality.
Right now, you can create an additional Employer Pensions pay item and add it to the employee's Pay Template. When the pay run is processed you'll be able to enter in the difference due, to ensure the total contributions equals the required value. If anything changes in this space, we’ll update you on this idea.
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James Synge
commented
Please could someone point me to UK law that says Employer contributions are based on more than the pay being received by the employee. In Gov.UK auto-enrolment regs it states "If you’re not getting paid, your employer still has to make pension contributions in the first 26 weeks of your leave (‘Ordinary Maternity Leave’). They have to carry on making contributions afterwards if it’s in your contract. Check your employer’s maternity policy." At present I am simply using what Xero calculates, and would welcome clarification.
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Rose Boston
commented
I think Xero are letting their customers down here as this issue can lead to employees making claims of compensation against their employer. Please could Xero take look at this again and if it can't be fixed at present then maybe just a warning alert when setting up maternity pay would be very useful.
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Natalie Allison
commented
If you have no intention to add this functionality then at the least you should add it to your help files for setting up maternity leave in Xero
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Louise Archer
commented
This needs to be the case for the first 39 weeks of maternity leave. Employer pension contribution remains a percentage of pre-leave salary not actual earnings. This really should be calculated as per UK law by Xero, not left for every business to know as it is quite an obscure piece of legislation.