Big challenges ahead
25 November 2018
This article was featured in the December 2018 / January 2019 issue of the magazine.
As 2018 draws to a close, Clare Temprell, payroll managed services manager at Cascade HR, shares key challenges facing the payroll profession over the next twelve months
Legislation, legislation, legislation – Not a year goes by when the legislative landscape stands still, so admittedly it is perhaps no surprise that this challenge tops the list. There are many significant developments on the horizon which have the potential to pose a payroll headache.
By April 2019, the UK will be operating under three different tax regimes, when Wales is granted the position to adjust its tax bands as Scotland did previously. The next rise of minimum automatic enrolment (AE) contributions will also fall within this same time bracket.
Then there are the changes to post graduate student loan repayments, with slight deduction nuances for England and Wales. However, assuming an employee has a plan 1 undergraduate loan as well as their postgraduate equivalent, payroll will have to calculate 9% of earnings above the plan 1 threshold (£18,330 in 2018/19) and 6% of earnings above the postgraduate loan threshold (£21,000).
Trust in technology – Good technology alleviates many of these otherwise admin-intensive calculations and in theory reduces the likelihood of misjudgement or error. Payroll professionals must however conduct due diligence to ensure that any trust in technology – and the technology vendor – is well-placed. Absolute peace of mind surrounding the accuracy and depth of legislative updates within the system, should be sought.
The same can be said if switching to a managed service provider. Their credentials, track record and industry foresight – legislative or otherwise – must be triple-checked.
Keeping up the knowledge bank – However an individual chooses to manage their payroll, and whatever their reliance on an external system or provider, the industry’s professionals cannot afford for their knowledge to become obsolete. Payroll teams will be consulted for advice, by human resources (HR), business leaders and the workforce in general, so their insight must be up-to-date.
...many significant developments on the horizon...
Finding a single point of advice to gather this insight, even when it comes to legislative updates alone, is often extremely tough, not least because guidance is often ‘grey’ and decisions frequently stall. Clarity surrounding the latest real time information was promised by HM Revenue & Customs by the end of July for example, but it didn’t come to fruition within that timescale. Payroll professionals must therefore take a proactive stance towards their development, or risk getting left behind.
A talent shortage – Linked to this perhaps, is an apparent shortage of experienced payroll professionals – certainly those looking for new positions. Payroll – like many wider business departments – must therefore work hard to attract fresh talent, especially given the variety of roles now sought within a savvy payroll and HR team. The new payroll apprenticeship framework should go some way to addressing this – considerations simply need to be made as to how those apprentices can be built into the wider team.
The hangover of recent developments – Because the employment landscape is evolving faster than ever before, it often takes some time before the implications of industry developments are seen at the ‘coal face’.
The legal obligation to state the number of hours that hourly-paid employees have worked, for example, will soon come into force as a result of the Taylor Review, and more changes will undoubtedly follow in time.
Acknowledging the needs and wants of the modern workforce, diverse reward packages are also increasingly being offered to staff. At present, it is optional whether benefits in kind are reported and taxed through payroll, but this will inevitably become compulsory at some point too.
Policing of these changes is far from straightforward, but as The Pensions Regulator’s spot checks on AE show, compliance will be investigated.
The rise of automation – In summer 2018, the chief economist at the Bank of England warned that ‘large swathes’ of Britain’s workforce face the threat of unemployment as robots take over human jobs. This, understandably, instilled the latest bout of fear within the UK’s working population.
However, as an employee of a technology company, automation is a frequently discussed topic for far more positive reasons. Yes, it can streamline processes by executing simpler tasks that currently overwhelm employees’ working days. And the capabilities of ‘robots’ are advancing at such a pace that who knows what the next ten years will look like. But automation also exists to make life simpler and businesses more productive – not necessarily to eliminate roles. If tech can help payroll teams accurately compute gender pay gap calculations for example, this frees up time for the profession to work on more value-adding elements, such as next-step analysis, modelling, and engagement with HR colleagues.
The demand for now – Younger employees are particularly renowned for their demand for immediacy, with the quick and easy consumption of rich information expected, across multiple devices, as standard. Traditionally, payroll has been slow to innovate, perhaps because the profession is constantly shackled with the burden of keeping abreast with legislative updates. But amidst efforts to attract younger people into the world of payroll, there must be a commitment to investing in technology that is fit-for-purpose, contains the depth of information that will satisfy wider business requirements, and is simple and enjoyable to use.