Chancellor, Jeremy Hunt’s 2023 Spring Budget earlier this year introduced some new measures that continue to impact payroll teams the length and breadth of the UK. Most notably, payroll departments are having to adjust to take account of his decisions to scrap the lifetime limit on pension savings, while at the same time delivering a 50 percent increase to the annual tax allowance.

One of the primary impacts of these changes and others like them through the rest of the year is that they are making payroll calculations more complex. This growing complexity is also leading to an increased workload for payroll teams, due to the need to process more data and make more calculations.

Given all this, how can organisations best ensure that their payroll teams are up-to-date with whatever changes are happening and ensure they are set up to be as agile and flexible as possible to deal with them?

People and technology working together

Compounding these challenges, payroll teams need to manage an employee base that is eager for information. Questions around tax codes or why certain individuals have not been paid for overtime, for example, arise all the time within organisations and payroll teams need to be ready to answer them quickly and efficiently. At the same time business leaders are likely to want to have reporting in place around the number of queries they have and what the main trends are.

To manage the requirements, organisations need a powerful operating model for payroll that is robust, resilient and flexible enough to be able to adapt to the demands of a fluid, ever-changing legislative environment. Implementing changes to a payroll system can be a daunting and protracted task. It requires user acceptance and rigorous testing, and the chosen systems need to be able to support and deliver this.

Technology is key, but it is important also that organisations have highly-trained and expert payroll teams in place and that those teams are well-drilled and prepared for the advent of the new tax year or indeed for whatever new legislation is likely to be coming up in the future. Change is a constant in payroll and, in line with that, payroll teams often start preparing as early as January for what is likely to happen in the next tax year. Readiness is crucial.

HR and payroll as one

In this context, adopting a strategic all-in-one approach to HR and payroll can be a game-changer, making a significant difference in ensuring that businesses have the agility to make adjustments to payroll and manage claims processes to HMRC quickly and efficiently, all wrapped with strong governance and controls that ‘one’ solution can bring.

If an organisation’s payroll engine is fed by separate HR, time and labour and recruitment systems, the data transfer and collation processes will require interface creating and maintenance, and almost certainly manual intervention, which introduces risk into any process. A single solution can remove the requirement for data transfer and manual interventions and, if the process is automated, it will be quicker and deliver fewer errors.

An evolving technology landscape

It is also important that every business adheres to the highest standards of data security and cyber-security, especially with large numbers of employees working in hybrid models. Being certified to ISO27001 enables businesses to ensure processes, procedures and IT systems are annually externally audited to make certain data is secure. Cyber Essentials certification is also key.

Technology is already bringing a raft of benefits to payroll teams today and we are seeing more and more new innovations coming on stream, from audit reporting to ensure the process is accurate, compliant and efficient, to AI being used to automate repetitive tasks like data entry and report generation or to generate test scripts, for example.

Building the right technological solution in light of this is key, but that is only one part of the puzzle. Organisations also need to put the right level of planning in place to make sure they have implemented the correct test scripts and that they have the right level of skilled resources to tackle any potential challenges as and when they emerge.

In that sense, it is about looking ahead, by seeing what new legislation is likely to be coming on stream and taking any necessary actions to get ready ahead of time.

That’s where businesses can also benefit from adopting a managed services approach. Outsourcing Human Capital Management (HCM) and payroll can allow HR professionals to focus on strategic activities and that can in turn help drive operational agility. But what it is important is that it is a single HCM and payroll system. This is the ideal platform for security, less risk and enhanced agility, which are all key for managing ongoing change at short notice.

In an era of dynamic legislative changes, payroll teams must equip themselves with agility and innovation to excel. Integrating HR and payroll systems, leveraging technology, and embracing managed services are the pillars of success, and by building a strong foundation, businesses can embrace the challenges of the future confidently when facing the above challenges.

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By Tammy Hibbert, BPO Manager, Symatrix.

 

 

 

 

Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.