Praise for payroll: Celebrating National Payroll Week

Payroll professionals are the unsung heroes of so many businesses. Yet, they play a crucial role in ensuring that your company is compliant with tax and employment regulations—and that your cashflow is managed effectively. It’s worth remembering that employee pay accounts for between 15% and 30% of most businesses’ expenditure.

Your payroll team also has a vital role in increasing your employees’ productivity, loyalty, and engagement.

Are you sure that you’re giving sufficient attention to your payroll teams and that they’re fully supported to deliver as much value to your company as they should be?

National Payroll Week 2024, which will take place from 2 to 6 September, aims to recognise and celebrate the crucial role that payroll professionals play in any business, especially when it comes to ensuring employees are paid the right amount and at the right time.

National Payroll Week is organised by the Chartered Institute of Payroll Professionals (CIPP), the professional association for payroll and pension professionals in the UK. With nearly 10,000 members and over 15,000 professionals with CIPP-approved qualifications in the UK, the organisation aims to raise the profile of payroll professionals within organisations and ensure that business leaders value their skills and input.

How to create an effective payroll function

To ensure that your payroll operations are effective, it’s important that everyone within the department is aware of their responsibilities and is fully trained and supported. Do you know, for instance, who is specifically responsible for elements such as data entry, payroll calculations, overtime and bonus payments, tax requirements, and holiday and parental leave entitlements?

As technology evolves and the regulations around pay, tax, and pension contributions are frequently amended, it’s important to review and update roles, responsibilities, and job descriptions.

You must also ensure that your payroll teams undergo regular training and professional development. Again, the CIPP can help here with resources for Continuing Professional Development (CPD) so that your payroll teams constantly learn new skills and techniques, to grow in confidence and competence.

One mistake many employers make is compartmentalising their payroll functions. However, payroll touches many different aspects of your business and the working lives of your employees. This means you need to take a strategic, holistic approach.

One way to do this is to integrate it into your HR function. Syncing the two systems and their databases can eliminate repetitive data entry, reducing time, effort, and the possibility of errors. Personal details, attendance, salaries, shifts, overtime, holiday entitlement, pension arrangements, benefits, and parental leave are all in one place.

How technology can improve payroll

Digital payslips are replacing traditional paper payslips. According to the CIPP’s Payslip Statistics Survey Report 2023, 84% of those surveyed use a self-service platform to offer staff immediate access to payroll information.

Digital payroll technology can ensure that your staff’s pay and taxation are carried out more quickly, efficiently, and accurately. It also frees up payroll professionals’ time to have conversations with your teams. “The system does the manual, repetitive work so that I can have a chat with someone who’s worried about their maternity leave or who needs to get advice about salary sacrifice or their pension arrangements,” says one payroll professional.

Digital technology is essential for record keeping as it provides a detailed and accurate paper trail. Keeping accurate, timely data about your employees’ salary components and tax deductions will mean that you’re compliant and prepared for questions from HMRC and auditors.

Using cloud computing payroll technology rather than having all of the software “on premise” in your office can help reduce the costs of the tech and make your systems more agile.

This means that you can scale up quickly and easily as your business grows and seamlessly upgrade to the latest versions of your operating systems.

The cloud also makes it easier and more secure for your payroll teams to work from home or wherever else suits them.

“Sage allows us quick and easy payroll and accounting. This is very important to us as we are a small family business and we’re always rushing from one thing to another. Therefore we need a quick straight forward tool for accounts and payroll. Sage accounts has always helped us but I remember when we used old HMRC payroll and the switch to Sage payroll saved so much time and effort it was unbelievable! “

Michael Fyfe, Gordons Bodyshop Ltd

Increasingly, Artificial Intelligence (AI) will be used to answer simple payroll questions from employees via chatbots and virtual agents. It can also identify anomalies to flag up possible errors and even cases of fraud.

A quarter of all PAYE employees have been paid incorrectly at least once, according to new research from the Global Payroll Association (GPA). Its survey of 4,248 UK employees who are currently paid via PAYE found that where errors have happened, in 78% of cases the employee was paid too little, while in nearly a fifth (19%) they were overpaid.

Watch out for fraud in your payroll. According to the Global Payroll Association (GPA), payroll fraud costs companies an average of £40,000 every time it happens. Stealing via the payroll is counted as “asset misappropriation,” and, according to the GPA. At the same time, it accounts for just under one in 10 cases (9%) of asset misappropriation, no other type of asset misappropriation goes unnoticed for longer, with each fraud lasting an average of 18 months before it’s picked up.

Using your payroll to communicate with your teams

The CIPP Payslip Statistics Survey also reveals that 3-quarters of respondents don’t take advantage of payslips’ opportunity to communicate messages other than issues such as salary and tax to employees.

Providing your teams with more information about their pay has the potential to answer many of the questions they might otherwise have to ask your payroll people. It can also help them make more informed decisions. They’ll be in a better position to start thinking about pensions, parental leave, salary sacrifice, and other aspects of their remuneration.

The survey also found that half of those asked have no tools to help their employees understand their pay better. Only around a quarter (26%) have a self-service portal to enable their payroll professionals to communicate with employees.

With technology, payroll communications can keep your staff up to date with taxation issues, deductions, pension contributions, salary sacrifices, and other issues. Dashboards can present all of these elements of pay and tax in a way that is immediately and easily accessible to your staff.

Above all, your payroll communications should be regular, relevant, and respectful—and they should be 2-way.

“Sage has helped us to ensure that our payroll is fully-compliant with HMRC, providing us with peace of mind that we are paying employees legally, efficiently, and accurately. Furthermore, our employees have loved the Employees Benefits app, receiving monthly recognition and top-ups to spend on discounted gift cards of their choice. This has helped to improve motivation and morale across the workforce.”

Jack Taylor, Director, JT Design Brighton

Ensuring your payroll is compliant

To avoid the risk of fines and the expense and inconvenience of unpicking and correcting errors, you must ensure that your payroll is fully compliant. This isn’t a one-off, tick-box exercise. Payroll legislation changes regularly, and it’s vital for you to stay on top of any changes.

Tax liabilities and Statutory Sick Pay (SSP), as well as employee rights such as holiday entitlements and parental leave allowances, are all subject to change, and these changes impact how, when, and how much you pay your staff.

Final thoughts on payroll

For many companies, payroll performs an important but essentially basic, simple function. However, by investing in new technology and staff training and taking a strategic, holistic view, this often-overlooked department has the potential to add much more value to your business.

The best way to start on this exciting journey is to participate in this year’s National Payroll Week and celebrate the contributions that payroll professionals bring to the UK economy.

“Sage payroll makes life easier each month, submitting directly to HMRC the liabilities we owe and keeping staff notified of their wage, emailed wage slips and the ease of importing payroll data to our bank so everyone is paid on time. We are more focused to deal with customers while we know our financial needs are dealt with in the background. For me personally, the payroll is key, it gives me confidence that the date being submitted to HMRC is correct, the staff know what they’re getting paid and it is all done electronically so no one is missing out.”

Philip May, Finance Director, FLETCHERS HARDWARE LTD