Payroll Unit 1

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Questions and Answers

What is the primary basis of income for most salespersons?

Basic salary only

Commission on sales (correct)

Hourly wage

Bonuses and incentives

Which of the following is NOT considered a component of gross wage or salary?

Basic salary

Commissions

Perquisites

Vacation days (correct)

In the example provided, what is the commission earned by the salesperson who sells $90,000 worth of goods at a 6% commission rate?

$5,400 (correct)

$2,500

$10,500

$7,900

What do perquisites refer to in the context of employee compensation?

Additional allowances Signup and view all the answers

What is the main purpose of a probationary period according to the industrial court?

To assess the suitability of the worker and job Signup and view all the answers

What defines a salary in the context of employee remuneration?

Earnings paid periodically such as weekly or monthly Signup and view all the answers

Which component is NOT part of an employee's gross wage or salary?

Professional development Signup and view all the answers

What payment rate is commonly associated with overtime work at 'time and a half'?

$30.00 if the normal wage is $20.00 per hour Signup and view all the answers

What aspect of payroll is essential for maintaining compliance with local laws?

Confidentiality of payroll information Signup and view all the answers

What is the consequence of payroll errors for a business?

Legal ramifications and potential fines Signup and view all the answers

Which of the following best describes the term 'wages'?

Earnings calculated on an hourly or piecework basis Signup and view all the answers

What must payroll employees do to uphold payroll ethics?

Keep up with regulatory and technology changes Signup and view all the answers

Why is it essential to correct payroll errors promptly?

To maintain employee trust and company reputation Signup and view all the answers

What does LIFO stand for in the context of workforce reduction?

Last In, First Out Signup and view all the answers

Which of the following is NOT a consideration under ATBE when deciding on retrenchment?

Length of service Signup and view all the answers

Under which condition can severance benefits be withheld from a worker?

If the worker refuses suitable employment without a valid reason Signup and view all the answers

What is a requirement for the employment of young children according to the Children Act 2012?

No person under 16 years shall be admitted to employment Signup and view all the answers

Which age group is exempt from the restrictions of the Children Act 2012?

Persons aged 14 years and above in approved training programs Signup and view all the answers

What must employers maintain according to their obligations under the Children Act 2012?

A register of all persons under the age of 18 years employed Signup and view all the answers

What authority do inspectors have under the Children Act 2012?

To require information about wages and terms of service for persons under 18 Signup and view all the answers

What should employers do if a child is employed under the age of 16 years?

Ensure they are working only in family-controlled undertakings Signup and view all the answers

How does the chargeable income affect tax payment?

Higher chargeable income results in greater tax payments. Signup and view all the answers

After maternity leave, what is the employer's obligation regarding salary payment for the first 6 weeks of extended leave for medical reasons?

Half pay Signup and view all the answers

What is a consequence for employers who do not deduct taxes under the PAYE system?

They may face fines for failure to remit taxes. Signup and view all the answers

How are National Insurance contributions structured between employer and employee?

The employer pays two-thirds and the employee one-third. Signup and view all the answers

What is the maximum period for which a working mother can extend her maternity leave for medical reasons?

12 weeks Signup and view all the answers

What benefits may be available under the National Insurance scheme?

Sickness, injury, maternity benefits, and pension plans. Signup and view all the answers

Which of the following is NOT a statutory deduction that must be taken from an employee's salary?

Social Security Signup and view all the answers

For how long can a working mother postpone her return to work for non-medical reasons after giving birth?

4 weeks Signup and view all the answers

What is the weekly deduction for employed persons earning more than $10.00?

$8.25. Signup and view all the answers

What type of deductions are classified as non-statutory?

Contributions made by mutual agreement between employer and employee. Signup and view all the answers

What is the first step in calculating an employee's chargeable income under the PAYE system?

Subtract allowances from gross salary Signup and view all the answers

What is a group health and pension plan designed for?

To insure the employees of a firm collectively. Signup and view all the answers

Once an employee has worked for how many continuous months with the same company are they eligible for maternity leave pay?

12 months Signup and view all the answers

What is the deduction amount for individuals earning less than $469.99 per month?

$4.80. Signup and view all the answers

What is the term used for compulsory deductions from an employee's salary according to the laws of the country?

Statutory Deductions Signup and view all the answers

Which of the following is an example of an allowance that may be deducted from gross salary?

Personal allowance Signup and view all the answers

Study Notes

Payroll Ethics

Payroll is a complex process that necessitates adherence to ethical guidelines to ensure timely and accurate employee compensation and legal compliance.
Payroll confidentiality is crucial for all communications between employers, employees, and external agencies like tax authorities and the National Insurance Board.
Prompt error correction is vital for maintaining payroll integrity.
Proper training and continuous professional development are essential for payroll staff to maintain competency in payroll processing and adapt to regulatory and technological changes.

Salaries and Wages

Salaries and wages are monetary compensation employees receive for their work, aligning with job specifications.
Salary: paid periodically (weekly, bi-weekly, monthly, biannually, or annually) typically for administrative or clerical roles.
Wages: paid based on piecework or hourly rates.
Components of Gross Wages/Salary:
- Basic Salary/Wage: The standard compensation for regular hours or production based on the employment contract.
- Overtime: Additional payment earned for exceeding regular working hours, calculated as a premium (often 1.5x or 2x the regular rate).
- Commissions: Performance-based compensation, common for sales roles, calculated as a percentage of sales volume.
- Perquisites: Additional benefits beyond basic salary, overtime, and commissions, such as travel, housing, entertainment, and meal allowances. These can be monetary payments or benefits with monetary value.

Probationary Period

A probationary period is a time of assessment by both the employer and employee to evaluate the suitability of the job and the worker.
It involves guidance, training, supervision, and opportunities for improvement.
It should be managed in accordance with good industrial relations principles.

Retrenchment and Severance

LIFO (Last In, First Out): In retrenchment situations, workers with the shortest tenure are typically let go first within their respective categories.
ATBE (Ability, Training, Behavioral, and Experience): Additional factors such as work performance, attendance, qualifications, and past performance appraisals are taken into consideration when retrenching employees.
Severance Benefit Withholding: Benefits may be withheld if an employee unreasonably refuses a comparable or suitable employment offer with no break in service after being retrenched.

Employment of Young Persons

Children's Act 2012: Regulates the employment of young persons under 16 years old. Only familial undertakings (parents, siblings, or descendants) are permitted to employ individuals under 16.
The Act doesn't apply to students in educational or training institutions.
Employers must keep a register of all employees under 18, including their name, address, and date of birth.
Employer Obligations:
- No employment of individuals under 16 years old.
- Maintain a register of employees under 18.
- Provide the register for inspection to Labour Inspectors.
- Cooperate with Inspectors to provide information on wages and working conditions for employees under 18.
- Allow Inspectors to review records and pay sheets relating to employees under 18.

Maternity Leave

Employers must grant pregnant employees a period of leave for maternity purposes.
Leave applies even in cases of premature birth, stillbirth, or infant death during the leave period, once the pregnancy exceeds 26 weeks.
Paid Time Off for Prenatal Care: Employees must be provided with reasonable paid time off for prenatal appointments.
Payment During Maternity Leave: Employees are entitled to full pay once employed with the same company for twelve continuous months before the leave,
Return to Work: Employees are guaranteed to return to their positions after leave under terms no less favorable than before.
Extending Maternity Leave:
- Medical Reasons: Employers must approve medical-related leave extensions up to 12 weeks. The first six weeks receive half-pay, and the remaining six weeks are unpaid.
- Non-Medical Reasons: Employees can postpone their return to work for non-medical reasons for up to four weeks. This period is unpaid.

Statutory Deductions

Statutory Deductions: Mandatory deductions from employees' salaries, remitted to government authorities, and failure to do so carries penalties and fines.
Trinidad & Tobago Statutory Deductions:
- Income Tax (PAYE): A system of withholding income tax from earnings above a certain threshold. Taxable income is calculated by deducting allowances (personal, health, children, insurance, spouse, etc.) from gross salary. The employer deducts and remits the income tax to the Board of Inland Revenue.
- National Insurance: A system of contributions paid by both employers and employees. The contributions are based on salary, with both parties contributing to the scheme. Benefits may cover sickness, injury, maternity, and pensions.
- Health Surcharge: A mandatory payment for all employees to help finance public health services in Trinidad & Tobago. The contribution is based on the employee's salary.

Non-Statutory Deductions

Non-Statutory Deductions: Deductions made with the agreement of both the employer and employee, including:
- Group Health and Pension Plans: Group insurance policies that provide healthcare and retirement benefits to employees. Employees typically contribute through a monthly deduction.
- Personal Insurance Payments: Deductions for various personal insurance plans.
- Trade Union Dues: Payments to labor unions made by members.

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Description

This quiz covers essential aspects of payroll ethics, including confidentiality, error correction, and the importance of ongoing training for payroll staff. Additionally, it addresses salaries and wages, distinguishing between different types of employee compensation. Test your knowledge on maintaining compliance and understanding employee remuneration.