Back pay

In the last few years, NJC annual pay increases have not been agreed and announced until well into the financial year. For example, the announcements were received in November 2023 for 2023-2024, and in October 2024 for 2024-2025. These payments should be backdated to April of the corresponding year.

What steps need to be taken?

• Identify the Correct Pay Scale: Review the old and new pay rates to determine the difference in salary between the two periods.
• Determine the Back Pay Period: Calculate the number of months or weeks during which employees were paid the lower rate, and then calculate the back pay for that period based on the difference between the old and new pay rates.
• Include Other Benefits (if applicable): Ensure that any other associated benefits (e.g., pension contributions, overtime, etc.) are adjusted in line with the new pay rate and accounted for in the back pay calculation.

• Inform Staff in Writing: Notify employees or staff members about the pay rise and the back pay calculation. This should include details such as:
  • The new pay rate.
  • The effective date of the pay rise.
  • The period for which back pay is being provided.
  • How the back pay will be paid (e.g., as a lump sum or included in the next salary payment).
• Provide a Breakdown: Offer a detailed breakdown showing how the back pay has been calculated, so employees can understand how the amount has been derived.

• Coordinate with Payroll Services: If the parish council uses external payroll services or an internal payroll system, work with the payroll department to ensure that the back pay is processed correctly.
• Update Pay Records: Make sure the new pay rates are reflected in the payroll system going forward. If back pay is being paid in a lump sum, ensure the amount is included in the next pay cycle, along with the necessary tax adjustments.

• Ensure Correct Deductions: Back pay is typically subject to income tax and National Insurance contributions. Make sure that these deductions are correctly calculated and withheld.
• Adjust Tax Code (if needed): If the back pay is a large sum, it may push the employee into a higher tax bracket for that period. Ensure that tax codes are adjusted appropriately, or that any overpayment of tax is accounted for later.

Back pay for employees who have left employment since 1 April 2024.

If an ex-employee requests it, employers should pay any monies due to that employee from 1 April 2024 to the employee's last day of employment.