BOARD VISIT REPORT SALARIES AND WAGES TUESDAY 13 TH JULY 2010

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1 Enc item no 12a BOARD VISIT REPORT SALARIES AND WAGES TUESDAY 13 TH JULY 2010 Visiting Team: David Watts, Executive Director Margaret Hamilton, Non Executive Director Alban Cassidy, Governor Mary Carruthers, Governor Accompanied by: Helen Patterson, Head of Financial Services. Apologies were received from Michael White. We met in Harton Wing reception and repaired to the Salaries and Wages Department, located on the ground floor of Harton Wing where we were introduced to Jeanette Donaldson, Pensions Officer and Karen Smith, Payroll Team Leader. Helen provided us with an agenda that she hoped would assist us to gain an insight into the complexities of this small but essential part of the business of the Trust. We were very quickly appraised of just how complex salaries and wages can be. We learned that under Helen in this Department is Jackie Larter, ESR Manager for Payroll, currently on annual leave, Karen as Team Leader and Jeanette as Pensions Officer. There are eight Payroll and Travel Expenses Officers, of which all but one is employed on a part time basis. There are two other financial streams that are also Helen s responsibility but are not part of the remit for this visit. As part of the Finance department, Helen reminded us that her line manager is Ros Sawyer, Deputy Director of Finance. Once we were clear about where Salaries and Wages fits within the organisation we learned that the department processes wages for approximately 2, 321 employees per month. The average overall net pay adds up to a total of 3,305, per month. A lot of money! In addition the department processes wages for approximately 64 employees of St Clares Hospice. Using a three month tracking period, we were told that there are 13 leavers per month and 32 starters. That would appear to mean about nineteen or twenty new starters, Jeanette clarified that this included bank staff and those on temporary contracts. There are many different types of contract that affect staff in a variety of ways, each one influencing staff entitlement to certain benefits and allowances. Helen said, and

2 this was heartily endorsed by Karen and Jeannette, that only the experience of the staff of salaries and wages provides for an accurate understanding and administration of the complexities of service contacts. The primary function of any payroll department is to pay employees accurately and on time. Contractual and Statutory obligation must also be paid, similarly in an accurate and timely manner. The Salaries and Wages section ensures that each employee receives the pay, allowances, benefits and expenses that are due, in accordance with their contract. Statutory obligations include National Insurance, Income Tax, attachment of earnings orders and student loans. There are other such obligations such as Statutory Sick Pay, Statutory Maternity Pay, as well as others. Helen stressed that good communication is essential both within the Trust and with other agencies such as the Pensions Agency, Courts, the Child Support Agency, the Council, banks and building societies. Helen further stressed the importance of staff completing and returning time sheets and expenses claims forms in a timely manner since delays could result in inaccurate payments, late payments and more work for wages staff to clarify the situation. Karen pointed out that not all errors were as a result of staff recording incorrect detail, variation sheets were also completed by Managers. Where staff claim hardship due to the incorrect or late payment, then arrangements can be made to issue an interim payment. Jeanette said that such payments are logged and that staff are not usually permitted to repeat this procedure. Karen also maintains a record of sickness absence which forms part of a sickness report that is presented each month to the Trust Board. Staff are not permitted to record unknown against their reason for sickness absence. The Electronic Staff Record (ESR) requires that a reason be recorded in all instances of absence. Jeanette also pointed out that sickness record forms are a two part document and that this may not be returned correctly by staff, thus having the potential to create delays in the system. Helen said that the ESR had gone live in June 2007 although the process of preparation had started in October Fortunately, there were no hiccups experienced in this Trust, although some trusts across the country had considerable difficulties. The introduction of ESR has provided for a standardised system across all Trusts so that information about every NHS employee is able to be accessed by other NHS organisations. This is helpful for staff transferring posts and also for other agencies to calculate an individual s entitlement, for example the Pensions Agency. The payroll section closes down on the Monday before payday. In the first instance they run dummy payslips which are verified by wages staff. Any transaction that appears to be out of the ordinary is checked. Helen explained that staff are very experienced in spotting anomalies and can usually put any thing right before the pay slips are produced and arrangements made to pay through respective banks. Since this is essentially a repetitive task that could become boring, staff are rotated on an annual basis. 2

3 Payroll also offers other services to staff such as advice to all employees on all pay enquiries, including Income Tax, National Insurance and statutory payments. The Trust also offers Salary Sacrifice Schemes including Child Care Vouchers, currently worth 243 per month on which the Trust is not required to pay tax or NI. There are 37 staff taking advantage of this scheme. There is also a family car scheme which had 79 staff taking part on 1 st April 2009 and a home computers scheme, although the latter is not to be continued by the Government. We noted that the Trust makes savings with regard to staff on these schemes since no NI or Income tax is payable. Under Give as You Earn (GAYE) staff can arrange to make deductions to a charity of their choice and also save with a Credit Union. Agenda for Change has resulted in the input of data into the ESR becoming simpler. Another improvement is the interface with the Pensions Agency. ESR is updated daily to take account of starters and leavers although all other details are entered on a monthly basis. There are still a couple of staff who have not yet been assimilated onto A4C but reviews are outstanding. Service Developments include a Payroll Managers meeting that costs the Trust 120 a year to participate in. These meetings, three per year, include payroll managers from all NHS organisations locally and it has recently been extended to include Yorkshire. A Regular Users Group also contributes to the knowledge of wages staff and this meeting is used to discuss system related topics. There are also pension meetings, a pension road show and a Pension Committee. This committee currently comprises Jeanette as Pensions Officer, Julie Bell (Personnel), Karen as Team Leader and Jackie Larter as ESR Manager for Payroll. Other service developments include an Applications Desktop Integrator (web ADI) and an Electronic Data Interchange(EDI). The ADI provides for time sheet data to be input onto Excel spreadsheets which can then be uploaded directly into ESR. This function has speeded up payroll production. The EDI provides for data to be received electronically from HMRC (Revenue and Customs) which, in turn, can be uploaded in to ESR. This process saves paper, postage and manual input by payroll officers. Helen told us that the Department works closely with the National Fraud initiative and the Trust s Fraud officer. The Trust takes part in the annual fraud exercise and that the capture of fraud data is simplified through ESR. Jeanette explained that data cleansing was very important in this regard. The final part of the presentation into the work of salaries and wages was about pensions and recent changes. We decided to break at this point and were offered welcome refreshments. We resumed, refreshed and revived, with Jeanette explaining changes that are about to be implemented with regard to pensions. We were told that the Trust is not 3

4 permitted to advise staff with regard to their pension choice, we can only provide information. PENSIONS There are two pension schemes, one dating back to 1995 and a second scheme that was agreed in October Eligible new staff participate in the new scheme but existing staff are offered a choice between both schemes. Implementation is taking place in two stages, the first being for all staff over fifty years of age. A series of road shows has been planned and staff are to be issued with an information pack in September of this year. There are 800 staff at this Trust involved in the first phase. The road shows will involve staff from Salaries and wages. The pack includes a NHS Pension Guide, a pension statement and a DVD fronted by Albin Hall, a television presenter who specialises in individual budget management. The Trust has not yet come to a decision with regard to the safest way to distribute the packs, since strict controls are required by the Pensions Agency. Data records of all staff must be up to date and data cleansing is vital. Monitoring is through the use of the coloured flag system and Jeanette was pleased to inform us that the Trust has achieved green flag status. Packs must be issued to managers within two weeks and staff have further two weeks to receive the packs. Staff then have four months to make a decision with regard to their own circumstances. Since extremely sensitive information is included in each pack, there must be a secure system of storage and distribution. Every member of staff will be required to sign to indicate receipt of the pack. Any packs that the Trust in not able to deliver and receive a signature for,within the specified time of one month, must be returned to the Pensions Agency who will assume responsibility for the delivery. We will maintain a record of all signatures received. Jeanette commented that she was relieved that we are a small trust! Jeanette gave a brief summary of the main features of the scheme. We were told that normal pensionable age is sixty and that the minimum pension age for voluntary early retirement is fifty five, although this is fifty for members with special class status. The new ages are sixty five and fifty five respectively whilst special class status does not apply. Other changes have to do with the reckonable wage and pension entitlement which is to change from 1/80 to 1/60 th with variations to the qualifying periods. The booklet sets out benefits and retirement options. It is very clearly set out and offers good explanations of the changes and options. Jeannette hopes that the road shows and the pack information will prove to be sufficient for staff to reach their own conclusions. If any queries are directed to staff with Salaries and Wages, they are not permitted to give an opinion about the best option. They can only try to offer explanations. It was noted that no extra funds had been provided to take account of the extra work involved. 4

5 We thanked Helen, Karen and Jeannette for the time they had taken to give the visiting team such an interesting, informative and stimulating tour of Salaries and Wages. We concluded that, although South Tyneside NHS Foundation Trust strives in all circumstances to provide the highest standard of clinical care and to become a provider and employer of choice, the payment of wages and expenses to staff must be ranked equally with achieving clinical standards. If there were a flag system for this very small but elite group of staff, we are certain the Trust would achieve green flag status! David Watts, Executive Director, Margaret Hamilton, Non Executive Director, Mary Carruthers, Governor. Alban Cassidy, Governor. 5