On 4 February 2020, the Department of Social Security made an adjustment to the Social Security contribution rates that they had previously announced for the basis year 2020 affecting employees born before 1962, with a weekly rate greater than €360.46. Please see the new rates below (source: cfr.gov.mt):
The SSC rates on Indigo were updated shortly after the notice was released.
SSC rates cannot be compensated in subsequent payrolls due to the way they are submitted electronically to the IRD. That is why we have a step-by-step process to help you adjust the SSC rates for those employees affected in your January payrolls.
As your January 2020 payrolls would have been calculated using the previously published and incorrect rates, employers must adjust their calculations for the 2020 payroll(s) that have already been reported and settled in their FS5 (monthly payment advice) covering January 2020. The department has stated that those who have already paid the January 2020 FS5 (monthly payment advice) may adjust and increase the payment in February's FS5 without penalties.
More information can be found here.
How can I identify the impacted employees?
We created a one-time utility in Indigo (linked in the next section) for you to use which will extract a list of all employees impacted from your system into a spreadsheet. This spreadsheet will be saved to your normal Download folder of your computer. It will list any of the employees whose payroll calculations needs to be recalculated.
This Indigo utility will gather employees affected by the SSC rate change. The spreadsheet will gather information on the impacted employees, including the company code and company name to which they belong, the payroll code of which their pay calculations were affected, and their respective employee codes
How do I modify the payroll(s) calculations?
The first step of this process is to generate the spreadsheet list of impacted employees. Click the button below to run the Indigo utility:
The Excel spreadsheet produced by the utility will list all employees in your system who are impacted by the Class 1 SSC rate change. Please keep this handy as you follow the instructions below.
The instructions below will guide you as to how to modify the payroll calculations of the impacted employees.
Please follow this procedure for each of the impacted payrolls in your system:
- Issue a Payroll report for the effected payrolls. This will be used for later comparison.
- Issue an FS5 for the January (these will be used for comparison).
- Unfinalise the first payroll which was affected.
- Using the downloaded spreadsheet to identify the impacted employees, go to each of these employees and recalculate their payroll. This process will utilise the corrected rates and you should notice that the SSC amount has now changed.
- Once all affected employees have been recalculated, finalise the payroll and reissue the Payroll report and the FS5 report.
- Compare the new Payroll reports and FS5 with the original reports to identify the differences both in the Social Security Contribution (SSC) and the NET pay.
- If you have multiple payrolls which have been effected, repeat steps 3 to 6 for the other payrolls.
The difference in net pay for the effected employees can be compensated through an adjustment in a future payroll for each of the effected employees. The FS5 for January must be reprinted and resent with the difference of Value.