Are timesheets a legal requirement?
Timesheets track the amount of time an employee or contractor spends on a project.
An essential part of payroll work, they ensure you correctly compensate your workers.
They are also a critical part of project management, allowing you to get an accurate ‘at a glance’ view of how work is progressing – empowering you to cost accurately as well as spotting when a programs is at risk of exceeding budget.
At a granular level, timesheets track the time employees start and finish their day, often factoring in breaks and lunch.
Traditionally they were on paper, but technical innovation and cloud technologies allow them to be kept digitally – letting you harvest information, reduce error and improve efficiency.
What does the law say?
While there are several ways timesheets can be processed, the law is clear on one aspect.
If you do not keep full and complete records of your PAYE and payroll for all members of staff, HMRC may be required to estimate what you are required to pay – also charging you a penalty fee of anything up to £3k.
When it comes to what must be tracked, the list includes:
- What every employee is paid and what deductions you are required to make
- Any reports made to HMRC about the nature of your work
- Leave, sickness, and absence with start and end dates for each
- Any and all tax code notices
- Recordings of any expenses or benefits
- All Payroll Giving Scheme documentation, including contract and employee forms
These must be retained for three years from the current tax year.
Doing so permits HMRC to carry out retrospective checks on your work, ensuring all declarations are above board.
This can be a large amount of information to juggle, and the penalties for not getting it right first time can be significant.
What penalties are there?
Along with penalties for not keeping records, there are also new concerns about data security and hygiene brought about by the introduction of GDPR.
Failing to use proper security and only collecting – and holding – salient information from your staff can result in significant penalties.
If you are unfortunate enough to suffer a data breach, it can quickly result in multiple fines.
Your practice should also be fully compliant with UK Data Protection Rules, which require all information to be secure, accurate, and always up to date.
If your employee information is being used for purposes other than payroll, they must be informed, and you are required to comply with the following requests:
- Asking to see what information is being held about them and to correct inaccuracies
- Asking to delete personal data
- Requesting their data is not used for certain purposes
That doesn’t include the time and resource costs required in responding to HMRC reviews or information requests.
The additional effort can quickly increase, resulting in disruption and higher bills and fines that eclipse what it would have taken to keep sound reports in the first place.
How can we help?
Designed from the ground up to address issues faced by modern employers, our payroll software enables your work to remain accurate and secure without the expenditure of additional effort.
That includes an ability to generate payslips and a contractor portal facility to ensure all timesheets are completed accurately and in full to reduce friction.
The system is also built to enforce compliance with HMRC RTI submissions in addition to working with GDPR requirements – letting you change your approach to adhere to current regulations or adapt to ones that may change in the future.
Doing so ensures your business is not only automated, efficient, and secure but also fully in line with regulations no matter how they change in the future.
Get in touch
If you want to learn more about how to manage and draw value from your timesheets, the team at Practical Software are here to help.
With many years’ experience working across a range of sectors, we can help streamline and improve your timekeeping practice while keeping a controlled budget.
You can review our full list of platform functionality and modules from here.
Or, if you have specific questions that are bespoke to your business, please do not hesitate to get in touch directly and let our team know exactly what you need.