Any auditors here please?

[Houseplantmad]

A member of staff has been underpaid for the past four years in a public service role. They are part time and were given the wrong pro-rata salary from the outset and full-time equivalent salary was not outlined in agreement letter at the time, just the pro-rata salary. Payslips and P60s since have only shown part time gross salary, not full time equivalent so employee assumed all was okay given salary being received was in line with the (incorrect unknown to them) pro-rata salary quoted.
Organisation recognises mistake now but says they will make increased forward payments over next three years to make up difference (total amount is c.£25k) as they say auditors will not allow them to make what HMRC recommends, which is EYA (Earlier Years adjustment) payments for the four years. This seems unlikely as HMRC say the reissued P14 will provide the paper trail needed for auditors. Is this reasonable and enough evidence to satisfy the auditors and explain the payments please? Employee is being pressured to take payment over three years but is very reluctant to.

I'm not an auditor but I can understand an auditor not allowing a prior year adjustment going back 4 years. However that doesn't then mean they have to spread it forward 3 years! They've admitted they owe the money therefore they should pay her what they owe her now (I would think) and it should just go through their accounts in the current year.

Regardless of what their auditors or HMRC say about their accounting procedures, they owe her the money don't they and they need to pay it to her asap. What if she left tomorrow? They'd have to pay it all then so what's the difference?

That’s tosh. Not an auditor, though qualified accountant , although not for public organisations, and have had responsibility for payroll.
The expense hit can be current year, in the organisation’s own accounts , while the P14 is for the employee.
There is no need for the employee to accept deferred payment , i would escalate up the chain or talk to the union.

@Quickchangeartiste
@bellissimiaow
Thanks both, that’s really helpful.

In actual fact, the back pay is a liability, so the auditors should be insisting it's reflected in the accounts as such (assuming it's material). Sounds more like a fudge by the manager to avoid the auditors noticing the mistake and therefore the manager's managers not being aware of the manager's mistake. Lots of people wrongly try to blame auditors for their own mistakes!