01 March 2021

Simon Parsons MSc FCIPPdip MBCS, director of Payments, Benefits & Compliance Strategies at SD Worx UK, looks at how changes have contributed to payroll’s increased visibility

Business leaders have traditionally seen payroll as a back-office function, but keeping workers paid through these tough times has been complicated – and it’s not something that happens by magic.
With the abundance of uncertainty, employers need to take control of their payroll and HR (human resources) processes now more than ever. Research (http://bit.ly/3rUalzN) from SD Worx shows that 46.5% of British businesses believe their organisation will look radically different after the pandemic crisis; and part of upcoming structural change will likely focus on ironing out payroll issues.

Payroll in business
The payroll industry has brought itself front and centre, in many ways. For instance, payroll has played a big part in the co-ordination of the furlough scheme, which has been especially tricky when accommodating shifts and irregular work hours.

With payroll rapidly swinging from invisibility to visibility, we are now leaning on payroll workers too heavily. Payroll professionals are now moving into roles that are not strictly in their remit. For example, finance and payroll teams tend to work under the same umbrella, which makes it difficult for others to distinguish between their roles and responsibilities when seeking finance-related advice.

With this growing issue of job specification, businesses need to clearly delineate roles and responsibilities for teams to avoid confusion down the line. Providing pension and taxation advice is not part of the payroll job description, but it’s something that payroll professionals are now expected to deal in.

...choosing to invest in cloud payroll software or working with a third-party advisor...

Remote working for payroll
Professionals in payroll now need to also tackle remote working. Short-term solutions with home-office or agile set-ups raise issues around privacy and security, especially when it comes to payroll.

The research also found that 69.9% of British businesses manage payroll fully or mostly in-house, yet ironically now most of that in-house-work will be done ‘out of the office’. Bringing in this element of uncertainty and strange working locations or situations, with hazards like connection to public networks outside of a VPN (virtual private network), means payroll professionals need to keep on their toes when juggling cybersecurity alongside their day-to-day role. For instance, National Insurance numbers flashing up on screen in a coffee shop with people behind you can be dangerous. The IT function needs to work closely with payroll teams and train them in best practice to ensure security issues are minimised.

For some businesses, the solution to improving payroll infrastructure lies both in the cloud and in outsourcing. Companies are choosing to invest in cloud payroll software or working with a third-party advisor to reduce the administrative burden on personnel, standardise processes, enable risk management, prevent legal issues, and enable internal employees to focus more on core activities or strategic issues. In terms of physical security, having documents saved in a secure cloud location rather than on a device like a USB stick adds another layer of protection as well.

By outsourcing payroll, organisations safeguard business continuity in case their in-house team needs to take annual or sick leave. We tend to forget about payroll when money appears in our bank accounts every month, but once that does not happen on time the moral contract and trust between an employer and employee will suffer.

Fraud challenges
The punishment for committing fraud against HM Revenue & Customs (HMRC) is severe, but leveraging technology for payroll can help safeguard your business from fraud claims. The difficulty when calculating payroll is that you need to focus on compliance, adhere to rules around initiatives like the job retention scheme, and follow over twenty different updates of guidance from HMRC. The right technology can help manage these various tasks simultaneously.

Fraud is now a very real occurrence with dangerous consequences for businesses if it is committed deliberately or accidentally. Businesses need to invest in software which can check and verify payroll information, crunch the numbers, and flag any issues to nip fraud dangers in the bud.

Major change on the horizon
Historically, payroll has been perceived to be something that ticks over and never alters, but now we’re seeing sweeping changes within the industry. Major change is on the horizon as the arm of law is set to come down hard, remedying problems such as the estimated £3.6 billion blackhole in furlough payments which have been claimed fraudulently or incorrectly.
Our research found 41% of European companies state that payroll will be ‘very important’ going forward, and that figure is likely to climb upwards. So, it’s time to jump on the bandwagon and take a long, hard look at improving payroll technology for 2021 and beyond.


Featured in the February 2021 issue of Professional in Payroll, Pensions and Reward. Correct at time of publication.