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Staff Payment Practicalities

Updated 25/11/13

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Recruiting and retaining staff can be a complex matter. Here we look at the fundamentals of pay and 'employee benefits'.

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Salary Scales and Comparisons

Many voluntary organisations use scales linked to local authority, civil service or specific groups like academic or nursing grades. The main problems are equating rather different jobs to particular points or grades on the scales and getting hold of the complete pay rate information on a reliable basis. Many of the scales are published and subscription services may be available - alternatively your organisation may have to become a member of the negotiating body (rates for small organisations arent always prohibitive).

NJC (local authority) scales can be found at

The Local Government (NJC) Job Evaluation Scheme has been adapted for use in the voluntary sector by the resource for groups in London, Personnel Employment Advice and Conciliation Service (PEACe). This links in with NJC pay scales. Just Job Evaluation the PEACe approach comes as a CDrom at £99, and includes a training module and practice exercises

There are also some sector salary surveys:

  1. ACEVO publishes regular surveys of Chief Executive pay, which is available to members - see Information - professional organisations page.

  2. Croner Solutions does regular (annual) surveys in many sectors, including charities (in association with CF Appointments). 2003 results are based on data from 270 charities of all shapes and sizes, covering 7,800 different jobs. Reliable, but not easy to get to grips with. Charity survey costs (at 2003) £305. Phone 01785 813566, email: enquiries@croner-reward.co.uk

  3. NCVO carries out an annual sector salary survey through Xpert HR Solutions (previously Remuneration Economics). Results published in September, and participating organisations get a discount (e.g. small organisations got the 2002 version for £65 as opposed to £290). Some professional consultants have been puzzled by past findings which are roughly 40% lower than their experience and other surveys say.

Other sources of salary comparators are organisations similar to yourselves (although they could be cagey if there is competition for staff!) or for admin work try temp agencies and other commercial firms who have similar jobs to yours.

Pension Issues

Update March 2012: Stakeholder pensions are now old hat, and new requirements for occupational pensions have a staged introduction (based on number of employees) from October 2012. The following needs amendment.

Employers should check the government's pensions info page for more - also see Gov.Uk employee pension page.

Both the HM Revenue and Customs site and that from The Pensions Regulator (was Occupational Pensions Regulatory Authority) are generally clear and helpful.

See Pension Provider page for pension schemes of particular interest to the voluntary sector.

For employees, PensionSorter is worth checking. Pensions Advisory Service (TPAS) is a grant aided voluntary organisation giving free help and advice to members of the public who have a problem concerning either a company or personal pension scheme. TPAS will also assist with general enquiries on State Pension Schemes; helpline for employees on 0845 601 2923.

Also check ethical investment issues at UKSIF (or see the VolResource Ethical Investment page).

Sector Trends

Levels of staff turnover are something managers and management committees worry about. In some areas, high turnover can be a good thing, as moving between organisations is the only way to gain breadth and depth of experience, with long service being an indication of low self-esteem or drive. (We have come across this in many small community-based groups.)

Surveys etc

(Material to be updated.)

Expenses

Payment of expenses can be more of an issue than salaries. The tax implications are often not understood, by employee or employer. See PAYE section below.

Car Mileage rates: HM Revenue and Customs sets out rates which they regard as not being taxable. Compare these with the NJC scale rates (see Payscales above. And don't forget that there is a bicycle tax free mileage rate (of 20p in 2002), and cycles and cycle safety equipment made available to employees for commuting dont attract tax charges.

Subsistence allowances. Again NJC publishes some rates (havent checked if they are on the usual websites). Voluntary organisations may prefer to reimburse actual costs, within limits.

Other issues. There are many oddities, but some we have come across include:
- phone calls from home/own mobile. Do you recognise a rental element? If so, you will probably have to declare this with the year-end tax return.
- do staff incurring regular expenses (site visits?) need a float? Make sure record keeping is adequate on both sides. If you are going to pay expenses out of petty cash, can you 'trap' any problematic ones or compile adequate info. for Inland Revenue purposes? If you are going to pay by cheque, can you turn these around quickly enough so that staff dont suffer and/or complain?

 

Income Tax, Payroll issues (PAYE/NIC etc.)

Once you know what you are looking for, get more details from the HM Revenue and Customs web site.

Voluntary groups are viewed in exactly the same way as any other employer. The only thing you need to make sure any adviser checks is the Small Employer criteria for Statutory Maternity Pay and Statutory Sick Pay, which means you can reduce NI contributions if you qualify. The Contributions Agency, which deals with National Insurance, became part of the Inland Revenue in 1999 (and is now called the National Insurance Contributions Office), so start at the web site given above.

The Employers Helpline is on 0345 143 143 for general tax and NIC enquiries. The Inland Revenue are now publishing their main guides and forms on CD-ROM annually, but seemingly only available at the start of the tax year. Get this through the Employers Orderline on 0845 7646 646 (you need your employers reference for this) - your computer needs Windows 95/98 and a minimum screen resolution of 800x600.

Specific Issues

It is worth trying to be extra rigorous in recording employee expenses - it is rare that voluntary orgs pay more than actual costs, but inspectors often want proof. Check out if you need a 'dispensation' so you don't have to report all these details on the annual return, and also check that car mileage rates are within their scales. Download the current version of the Inland Revenue booklet on Expenses and Benefits (480) from this page but expect it to be around 100 pages.

Calling senior staff or your management committee/trustees 'Directors' can also lead to confusion, as there are special rules about people who are actually company directors.

Payroll Resources

Many local sector support organisations (CVS), community accountancy projects, DSC and some other sector trainers provide basic training on operating the payroll - check training provider page for contacts.

There are a number of commercial training courses, which can be more in depth: