A digital delivery
27 November 2017
This article was featured in the December 2017/January 2018 issue of the magazine.
Employers are increasingly turning to electronic payslips in a bid to cut costs and meet the needs of their workforce, says Kavitha Sivasubramaniam, freelance writer and editor
Over the years, payslips have developed from simple, handwritten notes on pay packets to printed and posted documents, with the natural evolution then being to the production of the same document in an electronic format. Since what was perhaps an obvious progression from paper to online, payslips have been refined, both in terms of how they look and are presented.
But payroll and human resources (HR) departments are still responsible for producing a vast amount of printed material in many organisations, despite document management systems and HR software helping to vastly reduce their paper trails. And although the adoption of electronic payslips continues to rise, it is still up to individual employers to decide whether to provide printed or electronic payslips as long as they are given to staff before, or on, their payday.
Arguably, therefore, there is no better time than now for organisations to replace their paper payslips with electronic ones, if they haven’t already done so.
But before moving towards a digital delivery, employers of all sizes must first consider the business case for e-payslips without neglecting to look at the wants and needs of their workforce.
Growing in popularity
For many employees demanding a modern approach to their employment arrangements, nothing can rival the benefit of 24/7, instant access to their pay data. After all, allowing them to access their information when they want and from where they want allows them to feel in control of their finances.
“Without a doubt, e-payslips delivered via a mobile app are the most popular format today. We are all so used to using apps today for our banking, utilities and information, that our mobile phone has become our go-to tool for communication,” says Eric Darling, business development manager for e-services at Opus Trust Marketing Limited, which specialises in producing and distributing fast, secure communications.
Laura Hughes, marketing manager at PayDashboard, agrees that most employees seem to prefer a format they can access online rather than paper, particularly since the capacity to misplace a paper payslip is hugely inconvenient. “Everyone goes on their phone for instant access and one thing that is really important is having an easy-to-use system. Most phones are intuitive and it’s essential that the system is easy to understand and access, without an onerous user manual.”
Digitally delivered payslips are also popular among offsite staff, who can access their data at the same time as those who are office-based. “E-payslips themselves have seen a revolution too, with many historical systems offering the service through the intranet only,” explains Darling. “In today’s app-friendly world, and with more than 90% of adults in work in possession of a smartphone, the ability to include remote workers in the e-payslips revolution is now possible.”
...employers of all sizes must first consider the business case...
Benefits beyond the budget
So while the reasons for the popularity of e-payslips among workers is clear, what’s in it for employers?
The main driver for many organisations that are considering the implementation of e-payslips is cost, since offering staff a payslip to view online is significantly cheaper than printing and posting them – particularly for larger businesses with sizeable workforces. Potential savings made through e-payslips can range from 75–90%, so there is a strong business case for them.
“The cost saving is substantial,” says Daniel Stachowiak, managing director of MyDocSafe.com, which provides secure solutions for companies dealing with sensitive documents. “Not many employers think of payroll as a substantial cost, but 90% is still 90%. That’s a win in anyone’s eyes.”
Although there is no denying that savings on print and post can be significant, employers should consider the other benefits e-payslips offer, according to Darling. “Notifying employees by email gives the employer an opportunity to engage with remote staff periodically,” he says. “Company news can be circulated within a document that the recipient wants to read.”
Stachowiak agrees that there are numerous advantages to using e-payslips in addition to the financial benefit, including a reduction in carbon footprint by not printing the documents. “If an employer is worried about its green credentials, there’s a strong argument for e-payslips around the reduction in waste,” he says.
Security is also a key benefit of e-payslips since unique log-ins are required to view information, compared to a paper payslip which can easily be misplaced or accidentally picked up by the wrong person.
The reduced administrative burden should not be underestimated either. After all, payroll professionals will no longer have to spend their time preparing and sending out individual payslips. In addition, if staff can access and print historical pay information this should, in theory, lead to fewer payroll requests from employees.
And, of course, employers need to cater to those entering the workforce and their needs and preferences, as well as taking into consideration the needs of their existing staff who may feel more comfortable with an online offering. “When you look at the demographic of the newer workers, particularly graduates and school leavers, they are very digitally switched on and many of them have never seen a paper payslip; it’s alien to them,” explains Hughes.
But while meeting the needs of a workforce could be a key reason to introduce electronic documents, it could also be a barrier.
One of the potential hurdles to overcome for employers introducing e-payslips is definitely the attitude towards digital among staff, especially if an organisation has a digitally adverse workforce, says Hughes. “But don’t assume they are not going to want digital payslips,” she warns. “There should be less assuming what employees want and more asking them what they want because employers may be surprised.”
Stachowiak points out that when it comes to e-payslips, the losers are those still attached to legacy systems. “If you don’t have a computer or internet you are discriminated against because you can’t access your information. It’s often a generational issue that can’t be solved overnight, but there are ways around it,” he says. “You could use parallel systems for a while or allow your system to cater to a small minority by allowing them the option to print their payslips.”
Stachowiak also believes that data privacy is also a significant concern, particularly with the imminent introduction of the General Data Protection Regulation (GDPR) in May 2018. “A digital payslip can create security issues if you’re not careful. It can introduce data leaks and potential liabilities, that’s why the way it’s introduced is very important. Ideally you should transfer the information into the hands of the employee directly.”
...functionality to allow individuals to look for payslips which include certain transactions...
Selecting the right partner
Before introducing e-payslips, employers should remember that payslips are very personal for a lot of employees. Whether they choose to receive them at a work or a private address, individuals have a sense of ownership when it comes to their pay data, says Hughes.
Employers wanting to find a suitable provider of e-payslips should first look at themselves as a business and identify the key aspects of the payslip that are important to them, for example, do they want their own branding or logo?
“They need to put together a wish list and then go out and look at the providers in the market,” advises Hughes. She suggests they ask the supplier to show what it can do for their organisation and why they should be selected. They should also ask if they are GDPR compliant and where the data is stored, she adds.
“Some have a two-step authentication process, which is an added security step for those who are really security conscious,” she says. “This means there’s a really good audit trail. You can’t tell who’s looked at a paper payslip, but you can see this with e-payslips.”
Darling advises employers to select a supplier with “experience and vision”. “Payslips, in any format, are business-critical documents and must be accurate and delivered on time. The cheapest solution will not always offer the buyer a long-term partnership, so look at the supplier’s research and development roadmap and how committed they are at staying at the cutting edge of the market,” he says.
Additionally, employers may be concerned about changes required to internal systems that enable data to be output in the required format for e-payslips. “Some providers will require data in specific formats which may be costly for the client. We would always advise selecting a supplier with expertise in data handling and with experience in both print and e-output,” Darling adds.
Employers need to bear in mind the costs of launching a new system and associated set-up fees, as well as any training that may be necessary for employees. However, any e-payslip system costs incurred at the outset are likely to be offset over time through the efficiency savings.
“At the beginning you have set-up costs. You also have to decide on the format of the payslips, how to distribute them, who owns payslips and who bears the cost. Then it’s about finding the right partner. Afterwards it’s just the click of a button,” says Stachowiak.
Capital costs vary and tend to be tailor-made, but the good news is that the returns are tailor-made too, according to Darling. In addition, some products are unlikely to require any capital expenditure at all, providing savings from day one. “Careful section of your e-payslips supplier should enable you to realise a very short return on investment on capital spend and an immediate, significant reduction in operating costs,” he explains.
...savings made through e-payslips can range from 75–90%, so there is a strong business case...
A digital future
So what can we expect payslips to look like in the future, and will the move towards e-payslips continue?
“There is no turning back from the digitisation of our lives so they will only increase in popularity,” says Stachowiak. “Because of the cost savings there are very few downsides and as payslips are a legal obligation there is no way round it.”
He believes that in the future employees will accumulate payslips from various employers which will be delivered to a single digital wallet. Each payslip will be held in separate folders, but the individual will carry only one wallet with them throughout their working life.
“Data retention is another important point for the future,” adds Stachowiak. “Employers still have a legal obligation to keep data for a certain length of time, which will remain whether they use paper or electronic payslips. They need to be able to manage the system, which in itself is a burden.”
And just because payslips have evolved already, it doesn’t mean they won’t continue to do so in the future. Hughes believes that payslips will follow in the direction of online banking, with pay data no longer being produced in a flat pdf format but updated in real time and held on a portal. They could also become more data driven and provide search functionality to allow individuals to look for payslips which include certain transactions, such as expense claims.
People will generally have more choice around how they want to receive their payslips in a digital format, she says. “Payslips haven’t done this yet but they are going this way,” Hughes adds. “Everything is moving online and I think they’ll be a shift towards presenting payslip information as real data.”
According to Darling, the obvious benefits to the employer will mean that most organisations will be motivated to implement a new solution. “We have found that enterprise clients with historical systems are looking to upgrade to a solution capable of reaching every staff member. Recipients love the process too,” he explains. “Most paydays we just want to know the money has been paid, but to have an app that allows instant access to older documents and the ability to print and email is a real advantage when we are applying for a new bank account or mortgage.”
Darling describes having your P60 certificates and P11D returns in the same place as the “icing on the cake”. “The future is mobile, and the future of e-payslips is the mobile app,” Darling concludes.
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*content correct at time of publishing