11 June 2024

So much happens behind closed doors in the payroll industry, from government consultations which impact payroll policy to professionals working in the background of organisations to ensure systems run smoothly and efficiently. Jerome Smail, freelance journalist, looks at the unseen work carried out by the payroll function through the eyes of the experts


This issue, Jerome spoke to:

Justine Riccomini MSc FFTA AIPA Chartered MCIPD ChFCIPP, head of tax (employment and devolved taxes), the Institute of Chartered Accountants of Scotland

Samantha O’Sullivan ChMCIPPdip, the CIPP’s policy and advisory lead

Karen Thomson MSc ChFCIPPdip FHEA, UK payroll director, AAB Group

Neil Tonks ChMCIPPdip, Chartered member of the CIPP.

 

How can payroll professionals get a seat at the table, allowing them to feed into the overall success and stability of the organisation for future strategic plans?

Justine Riccomini: Payroll is, and always will be, a key component of any business. The payroll director needs to be able to have regular interactions with the finance and human resources (HR) directors, and while they do feed into those functions, those functions also feed into payroll. So, ideally, all three of these directors will be at the table when board meetings and other strategy events take place.

Payroll directors need to ensure their work is seen to be of vital importance to the success or failure of the business. There’s knowledge in payroll which is not necessarily known, or understood, by finance and HR. Payroll should be allowed to communicate its own messages as appropriate so that nothing gets missed.

Samantha O’Sullivan: Strategic input from the payroll team can have a positive financial impact on the organisation. For example, following a fiscal statement, payroll should arrange a meeting with board / decision makers / key stakeholders to discuss what this means for their organisation. Knowledge of freezes to rates and thresholds, like those we saw implemented for 2023/24 and continued into the current tax year, mean employers can plan ahead when looking at things like their company car costs and other strategies.

Fiscal statements are the only crystal ball we have in payroll, although we know our customers – the people we pay – think we have one for every eventuality! In the last two years I’ve been working in the policy and research team, announcements made in the autumn statement (held in November for 2022 and 2023) have provided insight to allow payroll professionals to plan for the tax year ahead. The best example to give here is the new rates for national minimum wage (NMW), which are announced approximately four months ahead of implementation.

Karen Thomson: If I had a pound for every time someone had asked how to get a seat with those that make the strategic decisions, I’d be a very rich lady now.

You need to understand what the business’s strategic goals are, then look at how you can support them. Build up a track record of performance which demonstrates how you’re supporting the overall strategy. If appropriate, perhaps introduce a payroll strategy that aligns with the business strategy, and provide results, key performance indicators and so on. Volunteer to get involved – ask to observe a meeting to aid your career development. Consider a voluntary non-executive position on a board – perhaps a charity you have an interest in.

You will need a strategic mind to fully understand the business, where it sits or fits in the market space, who the competitors are, the strengths and possible areas of improvement and what you and your payroll team can do to support any changes.

If there are social events, or business networking, volunteer – you need to be seen to be asked. Demonstrate leadership skills with personal ambition and speak up!

Neil Tonks: Payroll is often seen as a transactional process and therefore not strategic. We all know that’s far from the truth, but we need to get the decision makers to come to the same conclusion.

Data is the key to this. Payroll has a wealth of data which can feed into the strategy of the organisation. For example, payroll can evaluate the financial impact of upcoming legislative changes, be it an increase to the NMW or yet another change to the calculation of holiday pay.

Taking another example, pay equality is becoming a hot topic, not just gender-based but also where other protected characteristics are concerned. Organisations are increasingly wishing to monitor this to an extent that exceeds their legal obligations. Payroll has the data which can be used to analyse pay and benefits against criteria such as these. We need to be proactive in making others aware that we can do far more than produce payslips 12 times a year!

 

How can payroll professionals get involved and help shape and influence changes in legislation?

JR: Payroll professionals should liaise with their professional body’s policy team (hopefully, this is the CIPP) to communicate any thoughts on how legislation could be better configured. Or to point out any anomalies that the legislation throws up such as payroll processes, forms, real time information anomalies and items that work out to be incorrect if the legislation is followed. The CIPP’s policy team is always listening and will liaise with HM Revenue and Customs on these matters on your behalf.

SO: The policy and research team is a benefit for members of the CIPP. One of the main roles we play is to respond to open consultations and calls for evidence exploring payroll-related government policies and legislation. Just take a read of our ‘On your behalf’ page each issue to keep an eye on what we’ve been up to on – you’ve guessed it – your behalf!

A couple of ways we’ll obtain your thoughts on shaping and influencing change is through surveys and think tanks. Our marketing and events team will email you with any invites, so please ensure your email preferences allow for marketing and event updates by logging into your MyCIPP area of the website.

The team represented our members and the wider industry in the House of Lords and the House of Commons last year, which was a huge achievement for such a newly formed policy and research team. This goes to show how much influence we do have on key policymakers at parliamentary level. And we really want to keep it up, so please do have your say if we invite you to complete a survey or join a think tank. Equally, if you feel something needs to change, please do reach out and share your thoughts at [email protected].

KT: This question is easy for me to answer; support the CIPP’s policy team. The team attends so many government forums and wades through copious amounts of consultation documents. It needs your help to get the feel of what’s going on in the real world from the ground roots.

In addition, the profession often reacts to something via a survey or call for evidence comment, but why not look at what you do in your payroll environment? Look at the legislation you must deliver on and what you would like to change, remove or perhaps even add to, then let the policy team know about it. Wherever possible, provide statistics or evidence – without data breaching, of course – to support your request for the CIPP to take up the cause. Payroll professionals can also respond directly to consultation documents or calls for evidence if they choose.

NT: The best way to be heard is to get involved with the CIPP. The policy and research team runs surveys and think tank events which provide payroll professionals the opportunity to help shape the Institute’s official response to consultations regarding changes to legislation. As a Chartered body, the CIPP’s views carry far more weight with government than the views of individual citizens.

 

Which trends do you think could form the discussion points of the future?

JR: There are currently trends in artificial intelligence (AI), payrolling of benefits, new software advances and changes in government policy, all of which could influence the way payroll is executed and managed in future. There are also a lot of worrying aspects of data security, with scammers and miscreants working on ways to hack, infiltrate and corrupt or steal data. Nothing ever stays still!

SO: A number of things the policy and research team is working on now that are sure to form discussion points are:

  • setting the 2025 NMW rates
  • automatic enrolment being introduced to workers from the age of 18
  • the lifetime provider model for workplace pensions (having a pot for life, with it transferring from one employer to another)
  • additional data being reported through real time information returns – for example, workplace postcodes for freeport and investment zone tax site employees, and data relating to workers’ hours
  • the mandation of payrolling benefits from April 2026.

KT: Robotic process automation (RPA), definitely. I think there’s still a lot of uncertainty in this space, with worries over people and jobs being replaced. But, in reality, the volume of input and knowledge now required for a standard payroll can be immense. Why would you want to be keying things in or manually calculating when the system can do it, freeing up time to allow you to talk to your employees, your clients or allowing time to go and sit at that board table?

AI is also a hot topic and I see that being used for things like employee helplines or client helplines, and so on.

NT: There’s currently a trend in government towards making short notice changes or announcing changes in advance but not providing the details until it’s close to the time when they come into effect. This makes it hard for payroll professionals and the companies that support them – such as payroll software suppliers – to implement change in a thorough and well-planned manner. We need to take every opportunity to impress on the government that if they want changes to happen smoothly, we need time to properly plan and implement them.

 

What are the key skills and behaviours a professional should develop to underpin the department’s activities with compliance and assurance?

JR: Curiosity. An investigative mind questions norms, points out exceptions and asks questions, leaving no stone unturned.

On the theme of data security, it’s vital to be constantly vigilant against organised fraud on payrolls and ensuring you know who your clients are – it’s much harder to extricate oneself from a bad situation than it is to undertake proper due diligence at the outset.

Not every payroll client is a good client or is asking you to do payroll for the right reasons. Payroll professionals should ensure they keep on top of developments in this as well as in technical areas.

SO: Remain compliant by staying on top of the ever-changing complex legislation / regulations which govern payroll processing. You can do this by reading your weekly News Online newsletter or this very publication, and by attending one of our BeConnected events before the start of the tax year. All these things come as part of your membership benefits, so please make sure you’re making the most of them!

KT: There are so many skills and behaviours needed, such as:

  • technical and legislative knowledge
  • critical thinking, to be able to evaluate what’s in place and what could be done to improve
  • project management skills – for example, if needing to introduce new modules, or a new system altogether
  • problem solving and the ability to analyse data, which also requires attention to detail
  • being process driven, to ensure robust procedures, whether that be around processing or, for example, disaster recovery plans
  • communication – payroll is often interacting with all stakeholders, both external and internal
  • flexibility
  • having an enquiring mind.

NT: Those responsible for monitoring compliance must understand the requirements they’re monitoring compliance against. That seems like stating the obvious, but I’ve come across several payroll managers over the years who were oblivious of their legal obligations in various ways.

So, training and continuing professional development are important to ensure up-to-date knowledge. Communication and analytical skills are also vital because you need to audit what’s happening on the ground rather than simply checking the adequacy of the documented processes. Most non-compliance stems from staff ignoring (or simply not knowing) the compliant documented process.

It’s something of a balancing act because employees tend to see any compliance activity as a ‘big brother’ exercise trying to catch them out, and you need to be able to convince them that you’re actually monitoring the process and the way it’s implemented. 


 

This article featured in the July - August 2024 issue of Professional.