Overview: Staff costs are one of the most important costs of Councils. The law around staff is quite complex as it effect employment law, taxation and pensions. This is an important area of testing.
3. We want to ensure that salary payment made can be agreed to Council approvals. This may be evidenced to the Contract of Employment, letters issued to staff, Council Minutes etc. An obvious problem is where Minutes aren’t clear or changes to staff pay have not been properly dcoumented. If someone of being paid SCP 12 for 13 hours a week, we need to see formal document(s) confirming that this was agreed by Council.
5. Changes to staff terms and conditions must always be confirmed in writing to member of staff concerned. We should expect the Council to retain a copy of documents confirming any changes. In particular any changes in the Clerks terms and conditions MUST be evidenced by a signed document (normally by the Chair of the Council).
7. Any taxable expenses should be paid under PAYE. This includes bonuses, overtime, or mileage above the HMRC approved rate.
8.if the Council operates Payroll software we can say “Yes” here. If the Council is using a spreadsheet to calculate tax then we need to check this is detail. This is not a common problem.
9. This always confuses. But its quite simple. If you are in a scheme like NEST then you pay income tax on your Gross Earnings. If you are in a Superannuation scheme you pay tax on your Taxable Pay, after deduction of your contribution to the pension. If someone is in the Local Government Pension Scheme you should see this by the fact that their “Taxable Pay ” is lower than their “Gross Pay”. For NEST “gross pay” and “taxable pay” should be the same. We commonly see small bookkeepers who do payroll for councils treating them like they are in NEST when they are in LGPS. The Peoples Pension is also set up as Net Pay arrangement, like the LGPS. The basic rule here is to check whether Taxable Pay is the same as Gross pay. If it is AND the employee is in the superannuation scheme or the Peoples Pension then there is a problem.
10&11 We want to see regular payments to both HMRC and to the pension provider.
12. This can be in any appropriate form, even just as detailed transactions recorded in the cashbook. We would expect to see the name of the Councillor recorded and the individual amounts.
13. When Members Allowances are set the Council must ‘have regard’ to a report of a Parish Remuneration Committee, which is a body set up by the District or Unitary Council. Councils do not have to follow the recommendations of the report but they should at least consider what it says. We would want to see reference to this in the Council Minutes when allowances are being set.
16. Councils have to publish details of allowances paid. This should list the Councillors to whom it was paid and how much each of them was paid. We would expect to see this on the Councils website.
17. Councillors Allowances should be paid through payroll. Note that if the ‘allowance’ is just used as an expense budget, to pay for costs, or award small grants, this is not strictly speaking an ‘allowance’ at all and is not taxable. Income tax applies when a Councillor receives a payment directly which is not a direct reimbursement of expenses that they have incurred.
18. As with any organisation there is a temptation to pay people ‘cash in hand’ as a sub-contractor to avoid costs such as employers N.I. and pensions. This is common with caretakers, groundsman etc. We should query this where we see people being paid regularly, particularly if the person concerned is being paid by an hourly rate rather than for a specific task. The checklist gives a link to the HMRC employment status checker and Council should use this where there is any doubt. Note: we don’t need to check and verify the status, we want Councils to do this and assure us that they have done it.