Today record numbers of individuals are in work in the UK. After years of employee fear of redundancy, organisations now have to face up to the need to develop far more effective employee retention strategies.  Caring about the employee is suddenly back on the agenda – and that has an impact on attitudes towards payroll.

Payroll is a business critical function. Poor payroll processes can result in:

·       Late payment of employees

·       Use of incorrect tax codes

·       Missed overtime payments

·       Failure to reflect long term absence

·       Poor staff morale /  increased staff turnover

Increasingly, payroll information is also required for essential regulatory demands such as pension auto-enrolment. And in any service industry, payroll information supports the effective management of what is the biggest asset and the biggest cost base: staff.

There is far more to payroll processing than hitting a button once a week or month.

Payroll is complex and getting ever more complex as a result of new legislation such as RTI and auto-enrolment. A Payroll Services provider should have the skills to manage payroll efficiently and offer economies of scale on core payroll functions, including making sure employees are on the correct NI number, ensuring bonuses and overtime are paid and managing employee changes in tax code etc.

There are also elements outside that standard payroll function that require input from the Service provider, such as checking inputs and understand the company’s policy regarding payments, including PILON (payment in lieu of notice), expenses or compromise agreements.

However, recent developments around auto-enrolment and RTI also mean that businesses are coming to rely upon the Payroll Services provider to manage information that has historically fallen within HR’s remit.

So where does the responsibility for auto-enrolment lie? The majority of the information required is held within the payroll system; while payroll staff can also help to support the calculation and administration of auto-enrolment payments. However, they should not be solely responsible for the entire auto-enrolment strategy. The core of auto-enrolment is an HR function; it is about instructing, educating and communicating with staff in the right way and at the right time.

Payroll is still, in essence, a process for calculating employee payments rather than storing employee data and providing headcount reports and personnel information.

A payroll provider is not responsible for bridging the gaps in a company’s HR skill set – blurring the lines between HR and payroll could be a recipe for disaster. 

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