11 June 2024

Jaspal Randhawa, director of product – payroll and data at Ciphr, examines the role of payroll software in supporting new legislation

Before and after new payroll legislation takes effect, there are several steps that must be taken by various stakeholders. This article explores the process from start to finish.


Government consultation

Government consultation is a crucial step in shaping new legislation. Here’s how it typically unfolds:

  • issue identification: the need for change arises due to various factors, such as technological advancements, policy shifts or gaps in existing regulations. For payroll practitioners, this could mean addressing complexities related to reporting, compliance or data collection
  • consultation papers: government departments (such as HM Revenue and Customs in the UK) release consultation papers. These documents outline proposed changes, seek feedback from stakeholders (including payroll practitioners) and invite suggestions
  • stakeholder involvement: payroll practitioners, along with other interested parties, participate in the consultation process. They provide insights, raise concerns and propose solutions. This input helps refine the legislation.


Think tanks and industry bodies

Think tanks and industry bodies play a vital role in shaping policy. Here’s how they contribute:

  • research and analysis: think tanks conduct research, analyse data and propose evidence-based solutions. They explore the impact of potential changes on businesses, employees and the economy
  • policy recommendations: based on their findings, think tanks make policy recommendations. These can influence government decisions and guide the legislative process
  • collaboration with practitioners: think tanks engage with payroll practitioners to understand real-world challenges. They gather insights from practitioners’ experiences and incorporate them into their research.


Software suppliers’ involvement

Software suppliers are essential partners in implementing legislative changes. They contribute in the following ways:

  • awareness and preparation: software suppliers closely monitor consultations and proposed legislation. They anticipate upcoming changes and prepare their systems accordingly
  • software development: once legislation is finalised, software suppliers enhance their payroll software to accommodate the new requirements. This involves coding, testing and ensuring compliance
  • user training and support: software suppliers educate payroll practitioners on using the updated software. They provide training materials, webinars and customer support to facilitate a smooth transition.


Delivery of enhanced software

The final stage involves deploying the updated software as follows:

  • timelines: software updates align with legislative effective dates. For example, if new reporting obligations are set to begin in April 2025, software suppliers release the enhanced version well in advance
  • testing and validation: payroll practitioners will test the software to ensure accurate reporting, seamless integration and compliance. Any issues are addressed promptly
  • implementation: payroll teams transition to the new software. They adjust processes, input data and generate reports as per the updated requirements
  • ongoing support: software suppliers continue to provide support, address queries and release patches if needed.

Payroll practitioners should also take several proactive steps to prepare for legislative changes to their payroll software:


Stay informed

Regularly monitor government announcements, official websites and industry news for updates on payroll legislation. Being aware of upcoming changes is crucial.


Understand the changes

Study the details of legislative amendments. Know how they impact tax thresholds, allowances, minimum wage rates and other relevant aspects.


Update payroll software

Ensure your payroll software is up to date. If you’re using older systems, consider upgrading to modern software that automatically incorporates legislative changes.


Set alerts

Use alerts or reminders for common commencement dates. Most changes normally take effect in April but can vary, for example, a cut to National Insurance contributions (NICs) was announced in last year’s autumn statement from 12% to 10% starting from January 2024. So, who knows what will happen and when, should we have a change in government at the next general election!


Training and communication

Train your payroll team on the upcoming changes. Effective communication ensures everyone is aware of their responsibilities and can adapt to new requirements.


Collaborate with software providers

Engage regularly with your payroll software provider. Understand its update schedule and how it handles legislative changes. Seek guidance on how to implement updates smoothly.


The journey from government consultation to enhanced payroll software involves collaboration, adaptation and timely implementation. Payroll practitioners, think tanks and software suppliers collectively contribute to a smoother transition, ensuring compliance with new legislation. 


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