Deductions are an integral feature of payrolls and vary widely between different companies. Companies have different policies and schemes that affect employee salaries. The HR Representative of a Company must be careful while processing employee data.
What is Payroll Deduction?
An employee is generally protected from unauthorised deductions. However, some salary deductions are made according to the law. These can reflect on an employee’s salary even if they work on a third-party payroll.
Different Conditions of Employee Payroll Deductions:
Outsourced employee payroll solutions work according to the data provided by the company. There are broadly two types of payroll deductions: statutory and voluntary. There are different bases under which a company can deduct the salary of an employee:
- There is a payroll deduction stated in the employee’s contract
- The employee is eligible for Statutory deduction according to the British Law
- The deduction is made with the consent of the employee
Some Mandatory Deductions:
Here are details of some popular mandatory payroll deductions:
- Tax: This is deducted directly from the income of an employee. The amount of tax depends on the amount of money one makes in a tax year. The income data of each employee is preserved by the employer. Employees should be aware of the standard earmarked threshold amount. Beyond this amount, their income is liable for taxation.
- National Insurance: This is a tax that has to be paid by an employee for some State benefits. This includes State Pension and Statutory Leaves. The payment towards National insurance will be reflected in an employee’s payslip.
Important Voluntary Deductions:
Below, you will find more facts about important voluntary deductions:
- Life Insurance Premiums: Many employers come with benefits, including health insurance and life insurance. The premiums of these insurance plans are adjusted with the salary. The employee should be briefed about such deductions by the employer.
- Retirement Plans: Employers are required by legal provisions to pay workplace pensions. In addition, an employee may decide to enrol for a voluntary contribution towards their retirement. Employees should be aware of these schemes that dictate the volume of payroll deductions.
There are many other kinds of mandatory and voluntary deductions. The employee should communicate with the HR representative to get a better idea of the same. Market leading employee payroll solutions can help simplify this process. One can contact Northumbria Payroll Solutions for proper assistance. They have a team of professionals with wide experience in this field. They can help in designing and handling the payroll services of a business.