How Does Payroll Work for Legal Secretaries and Support Staff

At Towerstone Accountants we provide specialist accountancy services for solicitors and law firms operating under SRA regulation. This article has been written to explain How does payroll work for legal secretaries and support staff in clear practical terms so you understand how the rules apply in day to day practice. Our aim is to help you stay compliant protect client money and make informed financial decisions.

Payroll is one of those areas that looks simple on the surface but causes real problems when it is misunderstood or poorly managed. For law firms, payroll is not just about paying people on time. It sits at the crossroads of employment law, tax compliance, pensions, and regulatory expectations. When it goes wrong, the consequences can include penalties, unhappy staff, and unnecessary scrutiny from regulators.

As an accountant who works closely with solicitors and law firms across England and Wales, I see payroll issues arise far more often with support staff than with fee earners. Legal secretaries, paralegals, receptionists, and administrative staff are usually employed under standard PAYE arrangements, yet small errors can quickly snowball into bigger problems.

In this article, I will explain clearly how payroll works for legal secretaries and support staff in the UK. I will cover how employees are paid, how tax and National Insurance are deducted, pension obligations, statutory payments, common mistakes, and how law firms can run payroll smoothly and compliantly. Everything here is grounded in real world UK practice and day to day experience rather than theory.

The basic employment position for support staff

Unlike partners or LLP members, legal secretaries and support staff are employees of the firm. This applies whether the firm is structured as a sole practice, partnership, LLP, or limited company.

As employees, support staff are paid through the PAYE system operated by HM Revenue and Customs.

This means the firm is responsible for:

• Calculating gross pay

• Deducting income tax and National Insurance

• Paying employer National Insurance

• Submitting payroll reports to HMRC

• Paying net wages to employees

• Making pension contributions where required

Payroll is therefore a legal obligation, not just an administrative task.

How legal secretaries and support staff are usually paid

Most legal secretaries and support staff are paid in one of the following ways:

• A fixed monthly salary

• An hourly rate paid weekly or monthly

• A salary with overtime

• A salary with occasional bonuses

The most common arrangement in law firms is a fixed monthly salary paid on the same date each month. This provides predictability for both the employee and the firm.

Regardless of how pay is structured, all earnings must be processed through payroll. There is no flexibility to pay staff “outside payroll” without triggering serious compliance issues.

Setting up payroll correctly from the start

When a law firm hires a new member of support staff, payroll should be set up correctly before the first payment is made.

This involves:

• Obtaining a starter declaration or P45

• Confirming the correct tax code

• Agreeing salary or hourly rate in writing

• Confirming pay frequency

• Setting up pension auto enrolment assessment

• Recording employment start date accurately

Failing to do this properly often leads to incorrect tax deductions which can take months to unwind.

From a practical perspective, I always advise firms to treat payroll setup as part of onboarding rather than an afterthought.

Income tax deductions under PAYE

Income tax for employees is deducted at source through PAYE.

Each employee is assigned a tax code by HMRC which determines how much tax free allowance they receive and how tax is calculated.

Payroll software uses the tax code to calculate:

• How much income tax to deduct each pay period

• Whether higher or additional rate tax applies

• Any adjustments for underpayments or benefits

The firm deducts this tax from the employee’s gross pay and pays it to HMRC on their behalf.

Employees do not need to submit a tax return unless they have other income or specific circumstances.

National Insurance contributions explained

National Insurance is split into two parts for employees.

Employees pay:

• Class 1 employee National Insurance, deducted from their wages

Employers pay:

• Class 1 employer National Insurance, paid in addition to wages

This is a cost to the firm and should be factored into staffing budgets.

National Insurance thresholds and rates change periodically so payroll systems must be kept up to date. Errors here are common where firms try to run payroll manually or rely on outdated software.

Payslips and employee transparency

By law, employees must receive a payslip on or before payday.

A payslip must show:

• Gross pay

• Income tax deducted

• National Insurance deducted

• Pension contributions

• Net pay

• Pay period covered

Providing clear payslips is not just a legal requirement. It helps staff understand their pay and reduces questions and disputes.

In my experience, many payroll issues escalate simply because staff do not understand what has been deducted and why.

Real Time Information submissions

Every time payroll is run, the firm must submit a Full Payment Submission to HMRC under the Real Time Information system.

This submission tells HMRC:

• Who has been paid

• How much they have been paid

• What tax and National Insurance has been deducted

RTI submissions must be made on or before the date employees are paid.

Late or missed submissions can result in penalties even if tax is paid on time. This is an area where automation and proper systems make a significant difference.

Paying HMRC and managing deadlines

After payroll is run, the firm must pay HMRC the amounts deducted plus employer National Insurance.

This usually includes:

• Income tax deducted from employees

• Employee National Insurance

• Employer National Insurance

• Student loan deductions if applicable

Payments are usually due monthly, although some very small employers may qualify for quarterly payment arrangements.

Missing deadlines leads to interest and penalties. Good payroll processes include clear reminders and cash flow planning to avoid this.

Pension auto enrolment duties

Law firms, like all employers, have duties under pension auto enrolment legislation.

This means the firm must:

• Assess employees for eligibility

• Automatically enrol eligible staff into a pension scheme

• Make employer pension contributions

• Deduct employee contributions

• Submit pension reports

• Re assess staff regularly

Legal secretaries and support staff often fall squarely within auto enrolment criteria.

Opt outs must be handled correctly and documented properly. Employers cannot encourage staff to opt out.

Pension compliance is an area where mistakes are common and penalties can be significant. Accountants and payroll specialists often play a key role in ensuring this runs smoothly.

Overtime, bonuses, and additional payments

Support staff may receive additional payments such as:

• Overtime

• Performance bonuses

• One off incentives

• Back pay

All of these payments are subject to PAYE and National Insurance.

They must be processed through payroll in the period they are paid. There is no special tax treatment simply because a payment is irregular.

From a practical perspective, firms should plan these payments carefully so staff understand the tax impact and payroll teams can process them accurately.

Statutory payments and leave

Payroll for support staff often includes statutory payments and leave entitlements.

These can include:

• Statutory sick pay

• Statutory maternity pay

• Statutory paternity pay

• Statutory adoption pay

Payroll systems calculate these amounts based on qualifying earnings and statutory rules.

Firms must also ensure holiday pay is calculated correctly, particularly for staff with variable hours.

Errors in statutory payments can lead to underpayment of staff or clawback demands from HMRC so this is an area where accuracy matters.

Handling leavers and final pay

When a member of support staff leaves, payroll does not simply stop.

The firm must:

• Calculate final pay correctly

• Include any outstanding holiday pay

• Deduct tax and National Insurance as normal

• Issue a P45 promptly

• Update HMRC via RTI

Delays or errors here often cause frustration for former employees and can reflect poorly on the firm.

Good leaver processes are part of good payroll governance.

Common payroll mistakes I see in law firms

Over the years, I see the same payroll mistakes crop up repeatedly in legal practices.

These include:

• Paying staff before payroll is set up properly

• Using incorrect tax codes

• Forgetting employer National Insurance costs

• Missing RTI submission deadlines

• Poor pension auto enrolment compliance

• Incorrect holiday pay calculations

• Paying bonuses outside payroll

• Failing to keep payroll records organised

Most of these issues arise from underestimating the complexity of payroll rather than intentional non compliance.

Using payroll software and outsourcing

Many law firms use payroll software or outsource payroll to accountants or specialists.

Both approaches can work well if managed properly.

Software helps with:

• Automated calculations

• RTI submissions

• Payslip generation

• Pension integration

Outsourcing helps by:

• Reducing administrative burden

• Ensuring compliance

• Providing expert oversight

• Freeing up internal resources

What matters most is not who runs payroll but that it is accurate, timely, and well controlled.

Payroll records and compliance

Employers must keep payroll records for several years. These include:

• Pay records

• Deductions

• RTI submissions

• Pension records

• Employment contracts

These records may be reviewed by HMRC or other bodies. Poor record keeping can turn a minor issue into a serious one.

From a regulatory mindset, good records demonstrate professionalism and control.

Final thoughts

Payroll for legal secretaries and support staff is not complicated in principle but it does require care, consistency, and proper systems.

Staff rely on being paid correctly and on time. Regulators expect compliance. The firm’s reputation depends on getting the basics right.

In my experience, law firms that invest in good payroll processes rarely think about payroll again because it just works. Those that treat it as an afterthought often spend far more time and money fixing avoidable problems.

If there is one takeaway, it is this. Payroll is not just about wages. It is about trust, compliance, and professionalism. When it is handled properly, it supports the smooth running of the firm and allows everyone to focus on what they do best.

You may also find our guidance on How can accountants help with law firm payroll and partner drawings and How can an accountant help with law firm budgeting and forecasting useful when reviewing related SRA and accounting obligations. For a broader overview of solicitor accounting and compliance topics you can visit our solicitors accounts rules hub which brings all related guidance together.