If you’ve ever dealt with Employers’ Liability Insurance or had to submit documentation as an employer, you’ve likely encountered the term Employment Reference Number (ERN), also known as the Employer PAYE reference. Many employers and business owners often ask, “What exactly is this number, how do I find it, and why is it needed?”
What is an ERN?
The ERN is a unique identifier assigned to every employer who registers with HMRC (Her Majesty’s Revenue and Customs) in the UK to pay their employees through the PAYE (Pay As You Earn) system. It’s essentially a reference number used to track tax contributions for businesses and ensure employees’ taxes are properly handled.
Since April 2012, the ERN has become mandatory for insurers when issuing new Employers’ Liability Insurance policies or renewing existing ones. This policy ensures that if an employee ever makes a claim against your insurance, your insurer can quickly identify when the claimant was employed by you and what insurance coverage was in place at the time.
Why Do You Need an ERN?
If you’re a business that employs staff, having an ERN is crucial for both taxation purposes and insurance requirements. The ERN helps insurers establish critical details when processing claims related to employers’ liability, such as:
• Verifying whether the employee making the claim was employed by you at the time of the incident.
• Identifying the insurance policy active at the time of the loss.
Without an ERN, your insurer might face delays in handling claims, which could complicate things for both you and the employee seeking compensation.
What does an Employment Reference Number look like?
The ERN follows a specific format: it typically starts with three digits, followed by a slash (/), and then a mixture of numbers and letters. For instance, it could look like this: 123/A12345. It’s important to note that the ERN can be a maximum of 10 characters in length.
Common Misunderstanding: ERN vs HMRC Accounts Office Reference
One common source of confusion is mistaking the ERN for HMRC’s Accounts Office Reference Number, which is used by employers when making payments to HMRC. Both numbers are often listed together on official documents, and they may begin with the same three digits, representing the tax office you fall under. However, they serve distinct purposes. The ERN identifies you as an employer for insurance and taxation purposes, whereas the Accounts Office Reference is used specifically for payment processing with HMRC.
Where to Find Your ERN
If you’re unsure where to find your ERN, it is typically listed on important payroll-related documents. You can check:
• P45s or P60s of employees.
• The PAYE documentation or communications from HMRC.
• The summary page of your payroll software if you’re running payroll internally.
In summary, the ERN plays a pivotal role in managing tax contributions and Employers’ Liability Insurance. Ensuring you have this number readily available will not only help with your compliance but will also make it easier to process claims and communicate with insurers.
Having trouble locating your ERN? It might be time to contact your payroll provider or HMRC directly for guidance.