Future of Payroll Report 2022 The CIPP’s Future of Payroll Report has been made possible through the collaboration of a high number of payroll professionals within the United Kingdom, and the support of Datagraphic, Experian, JGA and Workday.
Compiled and edited by the CIPP’s policy and research team
THANK YOU TO OUR SPONSORS
CIPP FOREWORD
Hello all. I hope you’re keeping well.
It gives me great pleasure to introduce the CIPP’s fourth Future of Payroll Report . Research of this nature is essential in assessing what payroll professionals identify as current trends, but also, crucially, in understanding how they will develop in the future. This enables us to establish how things will progress going forward, allowing us to stay ahead of the curve. We’ll also be best placed to help with new developments in the industry while also guarding against any potential challenges.
Ken Pullar FCIPP Chief executive officer, CIPP
As always, the report is divided into four clear sections to reflect growing areas of interest in payroll.
They are as follows:
● the strategic value of payroll ● future of payments ● the importance of education ● technology.
Hopefully, they’re all topics of frequent discussion within your payroll teams and broader organisation. We had a brilliant response to the survey, which was posted online for a month, so I’d like to thank everyone who took part and fed into this important piece of research.
I hesitate to mention the pandemic, as it’s a period we’d like to forget, but it shone a light on the payroll profession and has changed how the department is perceived in many organisations. Working practices for payroll teams have shifted, as, traditionally, they had to be present in the workplace. Now, more companies are allowing payroll departments to work remotely or in hybrid arrangements. This has had a domino effect and impacted on areas such as access to information and data security. I’m really pleased to see payroll teams have been participating in strategic decision making. 64% of respondents confirmed they’ve been involved in decisions regarding the implementation of compliance strategies, while 56% have influenced choices relating to technology. This further demonstrates how the opinion of the department is shifting. The way in which people are paid is often an area of fascination. It seems that, although there’s still some reluctance to adopt pay on demand, this has lessened, when comparing the findings of this year’s results to those collected in the last survey. Could we see more companies adopting more modern, sophisticated ways of paying salaries, that are aligned with current ways of working? It’s evident that education is becoming more important within the industry. In fact, over half of respondents mentioned they’ve noticed an increase in job adverts listing a payroll qualification as a requirement. This is great news, as it shows there’s a clear path for progression and how payroll can be a career, and not just a job. The CIPP also encourages payroll professionals to secure their futures and demonstrate their knowledge by gaining an associated qualification. Technology is always a dominant topic of discussion in payroll circles, as it’s undeniable how much technology has changed the profession. The survey results indicate there’s an increased appetite for automation, with 65% stating they intend to automate more processes within the next year. I hope you enjoy reading this year’s report as much as I have. We’ll be kicking off 2022’s National Payroll Week with a roundtable event to discuss its findings and to explore the constantly shifting future of payroll in more detail. We’ve only just scratched the surface of what payroll has to offer, and I, for one, am excited to see what more is in store.
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Strategic value of payroll section sponsored by
STRATEGIC VALUE OF PAYROLL
Change in the payroll profession is constant, and payroll professionals have repeatedly shown how adaptable they are to the evolving circumstances around them. The pandemic radically changed what work looks like for most professionals, and payroll was no exception. Payroll teams had to assist in making many strategic decisions, which transformed payroll’s relationship with other departments, its involvement in strategy and the way payroll professionals work. One of the biggest developments in recent years has been the large-scale uptake in remote working or flexible / hybrid working models. For many companies, this was introduced as a necessity when lockdown measures stipulated that, if possible, everyone should work from home. However, it seems many companies have since adopted this permanently after realising the benefits that came with it.
71% of respondents said that flexible or remote working has been introduced to their teams since the pandemic. Only 19% confirmed they’re still in the office full time, and 66% currently have a hybrid working model.
Where does your payroll team mainly work now?
15.48% At home full-time
18.83% In the office full-time
65.69% Hybrid working
This trend is expected to continue, with 74% of respondents foreseeing a permanent hybrid model in the future. We also appear to see a preference for this style of working in the media and hear this feedback regularly from members. An agile and flexible working environment is more common now than ever before, with some UK employers trialling a 4-day work week as part of a pilot programme launched by the 4 Day Week Global Foundation. The idea that more working hours equate to more productivity and output is being challenged, and these employers are willing to pay a full-time salary for less days at work. Payroll professionals would have to consider the knock-on effect on timetables if this was to be implemented, as Bacs submission deadlines and cut-off periods would need to be adjusted accordingly. The increase in remote working has had many implications. Recruitment, communication, digitisation and productivity are all factors affected by the increase in remote working. We must also consider the importance of data security as more data is being handled remotely, outside of the direct control of the employer. Payroll professionals manage a lot of sensitive information; effective training and adequate procedures must be in place to protect data protection. Education is key, so employers must still encourage practices like locking the screen when away from the desk, and not leaving sensitive information on a printer or in sight. 59% of respondents believe that the increase in flexible and remote working will result in increased productivity, whereas 8% think productivity will decrease. Although every team is different and there’s more room for research in this area, we can expect more employers to trial this, as the benefits become apparent. When asked why employers are making changes to working arrangements, the highest-ranking response was to increase staff retention, and the second was to offer a better work / life balance. This gives insight into the relationship between employees and employers in the current payroll job market. Recruitment seems to be difficult now with many vacancies available and limited numbers of qualified payroll professionals for these roles. This could be attributed to the fact that qualified, experienced payroll professionals are now being offered more flexibility and benefits, as employers compete to both attract and retain individuals with key payroll knowledge. Current changes and trends could soon become permanent if the need to compete for payroll talent continues. The pandemic appears to have influenced trends in other areas too. For example, some comments indicated that some businesses outsourced their payroll because of the pandemic whereas others disengaged with service providers and brought payroll in-house. Some mentioned how the payroll role was covered by other departments in periods of staff shortage, while other companies repatriated work, making offshore employees redundant. Other respondents commented their relationship with their employer had changed and that asking
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for more flexibility regarding where and when they work is now easier. Whatever the impact on different payroll teams, businesses have been forced to try new things. Increased experimentation and experience mean that decision makers will be better informed for the future. Many will have learned from their successes or mistakes. In any case, the payroll function’s versatility has most definitely been accentuated. Payroll’s strategic influence within an organisation largely depends on how the role of the payroll function is perceived. 55% of respondents from an in-house payroll team said payroll is perceived as a ‘back-office’ function in their organisation. This indicates that many payroll departments are yet to expand their strategic influence and aren’t valued in the same way as other departments. Of those who stated it’s still seen as a back-office function, 33% did say this is changing. As the perceptions surrounding the role change, so does the level of responsibility offered to payroll professionals. 32% of respondents from large organisations, who have 16 or more people in their payroll department, confirmed they have specific payroll representation at director or partner level. Although not a majority, 32% is significant and indicates that larger organisations put greater emphasis on the strategic involvement of the payroll department. Only 6% of respondents from smaller teams had the same representation in their company. 28% of all respondents have an independent payroll department, whereas 24% are under human resources (HR) and 42% sit within the finance department.
The payroll department is undoubtedly involved in other spheres of strategy. The following examples demonstrate how payroll’s value extends beyond administration:
● 64% of respondents said they’ve been involved in decisions on implementing compliance strategies
This highlights a recognition of the role of payroll professionals in keeping businesses on the right side of the law, protecting their organisation or clients from financial penalties, as well as damage to their reputation.
● 56% confirmed they’ve had an influence on decisions regarding technology
Technology shapes the way work is done and the variety of solutions on offer has a huge impact on efficiency and costs. For example, decisions about which payroll software to use, or which communication channels will work best for the team, all affect the organisation. 43% of respondents confirmed they were involved in leading system implementations.
When asked which areas will see increased involvement in the future, the following results were provided:
Audit and compliance
Leading system implementations
Supporting IT solutions
Mental and physical well-being
Financial well-being
Billing client fees
Setting service rates for clients
Company policy creation
Business strategy
Rewards / benefits packages
Marketing / branding / advertising
Client acquisition / retention
Customer service
Providing guidance, training and support to other departments or clients
Other (please specify)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
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If payroll teams start to take on new responsibilities, as indicated above, payroll professionals may find themselves needing to learn new skills and increase co-operation with other departments. The prediction of increased audit and compliance activity is particularly noticeable ( 75% ), which suggests that payroll professionals are experiencing an increasing need for legislative expertise. When it comes to providing payroll services in a bureau environment, this historically tends to be part of a broader service. It wasn’t uncommon for the payroll service to be a cost undertaken by the bureau for the sake of attracting and retaining clients rather than a profit generator. However, when asking bureau respondents about profits, the survey found that only 19% said they’re not making a profit. Even from those, 36% confirmed the loss is decreasing. 55% of those who are making a profit from payroll added that the profit is increasing. Based on these results, it would be fair to state that, as payroll continues to bring more profits to service providers, it will gain an even stronger voice within wider strategic discussions. The future will introduce more versatility to the role of payroll professionals. The question regarding how strongly respondents agree that payroll legislation is increasing in complexity resulted in strong agreement. It was made apparent during the pandemic that the sudden introduction of new legislation can instantly create a shift in the workload for payroll teams. The government’s announcement regarding the National Insurance primary threshold changes earlier this year was a prime example of how payroll legislation changes can be unpredictable and imminent.
A consultation paper published in July 2019 discussed the government’s intention to merge the three current enforcement bodies to form one single enforcement body. Those three bodies are:
● Her Majesty’s Revenue and Customs’ (HMRC’s) National Minimum Wage Enforcement ● The Gangmasters and Labour Abuse Authority ● The Employment Agency Standards Inspectorate.
The aim of this is to simplify the process for getting help and guidance for both employers and workers, and it’s been billed as a ‘one- stop shop’ for enforcement. Hoping for improved communication, clearer guidance and consistency in approach, 58% of respondents feel that the single enforcement body will positively impact the role of payroll professionals.
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FUTURE OF PAYMENTS
Experian foreword Experian is a new partner of the Future of Payroll Report , and its involvement comes at a time when rising living costs and inflation are set to significantly impact almost half the working population. We launched Work Report TM in November last year with the mission to facilitate access to fairer finance for all employees. Work Report simplifies the often time consuming and confusing credit application process by automating the sharing of payslip data – with an employee’s consent – with an organisation of their choice, streamlining income and employment verification in the UK. This is an important innovation, which also saves employers hours of time and resource handling and processing requests from employees to share their payroll data, for example, during a mortgage application. Our acquisition of cloud payslip provider, PayDashboard, allows us to further support employees, helping them to understand their pay and payslips, and to take greater control of their financial well- being.
Damon Anderson
Chief product officer - verification services, Experian
We believe that financial well-being begins at payday.
PayDashboard’s research revealed 62% of employees had felt confused about their payslip at one time, while one in ten struggle to understand their payslip every payday. Subsequently, many could be paying the wrong amount of tax or be completely unaware of the tax reliefs and allowances available to them. Responsible financial management and access to affordable credit will play an important role in helping employees cope with the squeeze on their incomes. It’s encouraging to see organisations considering pay on demand as one potential solution. While many of us see the advantages of earned wage access over short-term loans, many survey respondents are rightly concerned about the danger of this ‘quick fix’ becoming heavily relied upon each month and becoming unsustainable in the long term. This is before we consider the business implications on cashflow, and the time and resource implications on payroll teams to fulfil this service. We shouldn’t forget that earned wage access or salary advances can only plug a relatively small and short-term gap in an employee’s finances. Those seeking larger sums of money for life’s big events could require income verification from their employer for finance, loans or mortgages. While a recession may lead to fewer mortgage applications, increased affordability checks could impact human resource and payroll teams. At Experian, we believe supporting the financial livelihood of employees is no longer just a ‘nice-to-have’, but a necessary business objective with tangible benefits. In an era of 24/7, digital consumer engagement and payments, payroll teams and technologies need to be ready to adapt to the future of payroll and the evolving challenges it may bring.
Experian’s recent acquisitions and our strategic direction over the next few years will enable us to support access to fairer finance for a greater number of UK employees, while offering significant benefits to employers and payroll providers.
We’re proud and excited to be working with the CIPP on the Future of Payroll Report for the first time and bringing income and employment verification and payroll solutions to the UK market.
Future of payments section sponsored by
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There was once a time when payroll professionals would place cash in little brown envelopes to pay employees. Technological developments have completely changed how people are paid. This section of the report will examine what the future looks like for payroll payments, with a focus on three key areas:
● pay on demand ● cryptocurrency ● pay transparency.
The industry has seen a lot of discussion regarding pay on demand in recent years. Pay on demand provides employees with the option to access pay earned before their usual pay day. Systems which allow workers to see how much they’ve earned so far in a particular pay period are used in conjunction with the facility to request immediate payments. Some respondents had questions about the intricacies of the functionality. For example, if someone claimed money before it was checked, or before a new tax code or contractual change was implemented, could it open the door for overpayments? Overall, 20% of respondents saw pay on demand as an attractive benefit, while 46% did not. 5% of respondents are providing pay on demand services and another 5% of respondents are planning to introduce it. 44% of respondents are undecided about the future. One comment added that since pay on demand was introduced, it’s been extremely popular among employees. A question about whether respondents would consider introducing pay on demand was included in the CIPP’s Future of Payroll Survey in 2020, to which 65% answered no. This year, only 46% of respondents completely rejected the notion. 24% of respondents said that more employers should offer pay on demand. It would be fair to predict, therefore, that pay on demand will become more popular in the future. Of those who favoured the idea of pay on demand, 70% were from smaller payroll teams, with five or less people in their team. 73% of them were from in-house payroll teams, from a wide range of industries. One reason respondents gave for their support of pay on demand was that employees are given a financial ‘safety net’ for emergencies. If an unexpected expense arrives, access to pay they’ve already earned could be an alternative to interest-based pay day loans or using a credit card. An interesting comment was that younger workers who have grown up in an era of instant access through technology will tend to be attracted to employers who provide pay on demand. Another argument was that it is not only workers in financial difficulty that would be affected. Even workers who are less dependent on their pay could see it as a benefit to access pay before it’s due. One comment suggested that pay on demand could help with preventing incorrect payments by giving employees visibility of their pay in advance.
Reasons provided by those who didn’t see pay on demand as an attractive benefit were as follows, as it could:
● be a burden on employers’ administration and cash flow ● lead to financial difficulties for employees who already struggle with budgeting. Access to some pay may seem like it will reduce financial difficulties, but it has been argued this is more of a delay to the consequences, rather than a long-term solution. One respondent gave the example of when an early pay day in December has caused financial issues for employees ● affect workers who claim universal credit, as being paid on different dates could affect the monthly assessment of finances. Perhaps there are things organisations can do to ensure that pay on demand is introduced in the correct way. Could the answer be that this benefit is offered alongside financial advice and budgeting support? Perhaps a limit can be placed on some proportion of the net pay? 55% of respondents predicted that the future will see payroll professionals having more involvement in employee financial well- being. We could see increased overlap between the duties and roles of human resources (HR) and payroll if financial well-being begins to sit within the payroll department’s remit. Comments highlighted the role of payroll data in displaying trends in employee finances, as well as the role payroll advice can play in raising financial awareness among employees. Cryptocurrency refers to a digital financial system, which uses blockchain technology and cryptographic functions to create and manage digital assets, allowing people to own and conduct financial transactions with them. The technology is known for its decentralisation; that it isn’t reliant on third party financial institutions, banks or governments to uphold or maintain it. Earlier this year, Her Majesty’s Treasury (HM Treasury) announced plans to make Britain a global hub for cryptoasset technology and investment. Part of the plan is to bring cryptoassets within regulation so they can be used for payments in the UK. Cryptocurrencies can be highly volatile, but HM Treasury plans to introduce stable coins and link them to the value of fiat currency, such as British pounds. A majority of 62% of respondents felt unsure as to whether this will impact payroll, mostly commenting this is a subject they don’t know much about. 25% believe that it will affect payroll, while 14% said they don’t think the plans will lead to any change.
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HM Treasury has announced plans to make Britain a global hub for cryptoasset technology and investment. Part of the plan is to bring stable cryptoassets within regulation so that they can be used for payments in the UK. Do you think this will have a major impact on the payroll profession?
MAYBE 62.61% ?
YES 24.77%
NO 13.51%
Being paid in cryptoassets isn’t completely unheard of. The survey had one respondent who confirmed they’re already paying employees in cryptocurrency. Three respondents said they have plans to introduce cryptocurrency payments in the future. 58% of respondents stated they’re unsure about whether they’ll introduce such payments. If crypto payments do increase in popularity, it will affect payroll payments in many ways. Experts predict that the speed, security and transparency of transactions offered through cryptotransactions would make a significant improvement to what’s currently offered through bank transactions. It’s also expected that costs from transaction fees would be lower, with the removal of third parties, especially for international payments. One consideration is that the administration of pay as you earn (PAYE) would be more difficult than normal payments, as cryptoasset payments are classed as non-cash payments. Additional tasks would be required such as valuing the assets, calculating deductions and then recovering the deductions from the employee. As payment technologies develop, practices around the transparency of payments are also evolving. In 2017, legislation was introduced making gender pay gap reporting mandatory for employers with 250 or more employees. The survey found that alongside publishing gender pay gap information, 29% of respondents are also reporting on either ethnicity pay gap, disability pay gap or pay banding information. 24% of respondents said they plan to begin publishing data of this kind in the future. If legislation and practices go in this direction, it’s likely to be a payroll responsibility to collate and present this data. These trends again highlight the wealth of invaluable data that payroll professionals maintain and store. This data can provide important statistics that can inform organisations of trends within their workforce. Analysis of payroll data helps identify financial trends; for example, overtime records identify costs incurred by different departments or which departments are under/overstaffed. Many payroll professionals currently use payroll data to help financial analysts by filling journals and ledgers. If more organisations harness payroll data for other areas, such as financial well-being, it could add to the role of payroll professionals surrounding payments and pay information.
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IMPORTANCE OF EDUCATION
JGA foreword Managing global workforce issues while adapting to future work demands is an area of priority for organisations. As a result, the future of payroll, at least in the short term, seems to be hellbent on transformation! From systems to processes and from flexible working to borderless workforces, the changes predicted to impact the future of payroll by 2025 have accelerated and are affecting everyone right now. During the pandemic, payroll professionals helped shift the value perception needle as they successfully navigated the complexities of Covid-19. They ensured employees were paid accurately, at a time when employee and employer tensions have never been higher. Millions of employees were put on furlough, and left suffering from financial or mental health anxieties, which placed payroll at the heart of the conversation. In response, strategic discussions emerged concerning pay-on- demand opportunities, flexible payment solutions, global payroll models and disruptive technologies that could improve processes and workplace well-being.
Nick Day ACIPP Managing director, JGA Recruitment Group
Anyone reading this will appreciate that payroll plays an integral role in all organisations. However, broader business leaders have also begun to recognise its importance. Businesses began to realise the impact payroll can have on achieving organisational objectives, particularly where enhancing the employee experience. Meanwhile, the great resignation (or, as I prefer to call it, the ‘great awakening’) has resulted in many people changing employers. It’s highlighted how employees now value work-life balance and well-being over financial rewards. This power shift has had a phenomenal impact on the world of work and has resulted in companies making changes to how they treat, attract, retain and reward employees. Add other disruptions, such as regulatory and technological changes and globalisation into the mix, and it’s apparent why organisations are reviewing their payroll strategies to keep pace with this change. The world of payroll technology began to adapt and evolve to meet employees’ and employers’ ever-changing demands and needs. Likewise, payroll responsibilities have started to change and evolve in response. Here at JGA Recruitment, in collaboration with the CIPP, we undertook a payroll research project which identified several new payroll career pathways now available to payroll professionals (over 60) in 2022. A significant increase in the traditional path from payroll clerk to payroll manager, which existed only a few years ago. Meanwhile, the great awakening forced employers to reassess how they invest in improving the overall employee experience. Ensuring employees are paid accurately, on-time and intuitively has become an essential ingredient in this equation. So, the payroll process has become more than a function focused purely on the process, because payroll can help make the employee experience a positive one. Expect the future of payroll to focus on solutions which improve employee engagement and well-being. Expect increased importance and investment in implementing employee self-service, interactive payslips and on-demand pay-based solutions. In 2022, businesses are demanding more data and insights from payroll departments to help them make informed decisions about their workforces. The level of detail found within payroll data has allowed payroll leaders to provide strategic insights that have helped business leaders to navigate, understand and address workplace or workforce challenges more effectively. For example, if we consider the great resignation, payroll data has helped to identify trends in employee behaviours, helping employers understand what’s important, so they can make changes that improve satisfaction scores, increase productivity and support talent acquisition and retention challenges. The overwhelming drive for businesses to transform payroll has also resulted in a significant increase in the adoption of cloud technology, artificial intelligence (AI) and automation, especially as employers seek to engage with their workforces. Technology advancements have reduced human errors and repetitive tasks, enhanced cyber security, reduced fraud detection and improved employee access and transparency. Automation and AI have provided payroll leaders with more time to focus on delivering value-added payroll strategic insights.
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One significant post-pandemic change realisation has been that payroll professionals can remotely process an accurate and efficient payroll operation. The result is an awareness that talent pools now exist across all global areas. Recruiting remote workforces across global borders has resulted in many payroll departments evolving from UK-only operations to multi-regional, international functions overnight. If this hasn’t yet happened to your payroll operation, it’s only a matter of time before it does. Payroll leaders have learned how to design and implement new global payroll operating models to accommodate new multi-regional recruited workforces. They’ve discovered how to manage unknown global compliance risks and still deliver a seamless payroll experience. Subsequently, organisations are turning to technology to help them provide a seamless international payroll service because they recognise, if executed poorly, it can lead to costly compliance failures and impact that significant employee experience. The payroll landscape has accelerated rapidly. Changes predicted in 2020 that many thought would impact the industry in the next five- ten years have affected us in just 24 months. Predicted workforce changes that may have involved remote working or faster payments have accelerated due to employee demands and technological disruptions. Employees are asking for pay in real time; they demand transparency and they want payments made in different currencies or through new platforms. Meanwhile, pay transparency has become a priority for business leaders keen to improve or showcase pay equality across gender, disability and diversity pay gaps. All the above is causing organisations to invest heavily in payroll technologies and tools that can help them attract, engage and retain top talent. Disruption in payroll is here to stay, as companies continue to invest in technology that improves the critical employee experience. It’s good news for payroll leaders keen to develop strategic expertise and value within an organisation. These disruptive payroll technologies provide payroll leaders with more access to consolidated, real-time payroll data, helping organisations to make better strategic decisions.
The profile of payroll has never been higher.
Importance of education section sponsored by
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The Office for National Statistics (ONS) has stated that the first quarter of this year had the lowest unemployment rate in 50 years, and it is the first time since records began that there are more job vacancies than unemployed people. With more employers competing for their vacancies to be filled, it naturally becomes more difficult to recruit and retain qualified and skilled professionals. The responses to the survey would suggest that this national struggle is reflected within the payroll profession. For example, as previously mentioned, the most popular reason respondents gave when asked why working arrangements are being changed was staff retention. The second most popular reason was to give employees a better work / life balance - which it could be argued is an extension of the desire to retain them. This shows that employers desperately want to retain qualified and experienced staff and are willing to make significant changes to their business for this. In this context, now could be the perfect time for more employers to start considering investment in education and training for less experienced staff. Alternatively, they could hire apprentices. The role of the CIPP’s education and training resources is now even more vital to the industry than ever before. This could be why CIPP membership figures are growing rapidly. When asked what aids career progression the most, education was the second most popular response following experience. 18% of respondents chose qualifications as the highest-ranking factor. It’s clear that the value of education is recognised. 60% of respondents said they have a team member who has completed the CIPP Foundation Degree in Payroll Management. Another 10% said they work with someone who is currently enrolled or who will be starting soon. In addition to the Degree, training courses are also popular among payroll professionals. Only 17% of respondents confirmed they didn’t have a team member who has completed a payroll training course. 59% confirmed attendance at a payroll update course and 37% had a team member who has attended courses on statutory payments or expenses and benefits.
Have you, or any members of your team, completed any of the following payroll training courses?
None of the above
Statutory payments
Termination payments
Expenses and benefits
Holiday pay and leave
International payroll
National minimum wage
Off payroll working
Automatic enrolment and pensions for payroll
Overpayments recovery
Introduction to payroll
Payroll update courses
Other (please specify)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
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It’s not only graduates and training delegates that bear testimony to the importance of education. Consistent accuracy / quality of work and knowledge of payroll legislation will always be necessities for any payroll team member. Qualifications evidence the skills and knowledge of payroll professionals. 54% of respondents said they’ve seen an increase in job adverts that list a payroll qualification as a job requirement. A recent government consultation suggested that professional indemnity insurance (PII) could be used to raise standards of tax advice. 54% of respondents said education is a more viable alternative to PII for the purposes of raising standards within the industry. 55% said that payroll qualifications should become mandatory for those starting a career in payroll. 32% disagreed, and both opinions were backed by some interesting comments. Those in favour of mandatory qualifications stressed the importance of accuracy and the increasing complexity of the role. Those who disagreed thought this may increase the costs of running payroll and make recruitment more difficult. Since April 2017, employers with a pay bill exceeding £3 million must pay 0.5% of their pay bill as an apprenticeship levy. Funds are put aside and can be accessed to train staff through apprenticeship courses and end-point assessments with an approved training provider. The government introduced the scheme to upskill the workforce and encourage hiring. Although only a small percentage of employers are eligible to pay, the scheme has resulted in hundreds of thousands of apprentices being employed*. However, even with the introduction of the Level 3 Payroll Apprenticeships, only 9% of respondents have seen a recent increase in payroll apprentices. Could apprenticeships be the solution for employers who are struggling to fill payroll vacancies? Education plays an important role in the relationship between employers and employees. 30% of respondents had an employer with a specific training budget for the payroll team. Of those who have an allocated budget, 86% felt their employer was doing enough to facilitate their education. 29% of all respondents felt their employer wasn’t doing enough to facilitate their education. Feelings like this can lead to loss of talent and a lack of trust in the employee-employer relationship. Employers should focus on providing employees with as much support as possible for career development, so they know they’re valued.
*https://www.gov.uk/government/news/key-facts-you-should-know-about-the-apprenticeship-levy
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TECHNOLOGY
Workday foreword At Workday, we’re delighted to continue to partner with the CIPP, for this year’s Future of Payroll Report . Seeing the results from this research is a highlight every year, as it provides valuable insight into the trends shaping our environment. Although it goes without saying, we should take a moment to honour the fact that nobody could have imagined the amount of relentless change and the added complexities payroll professionals have had to face over the past few years. Payroll has been on the front lines navigating rapid changes to support the business and workforce. Payroll was, and is, at the centre of it all, keeping the business running and people paid. As we emerge from the challenges of the past few years, the role of the payroll professional continues to evolve from that of practitioner to one of a more dynamic business partner with finance and the business overall. The payroll function is central to solving emerging challenges, such as worker expectations and work styles. This is in addition to adapting to new norms, organisations more proactively supporting financial wellness and worker well-being and data fuelling real-time decisions around new operating models, growth and expansion.
David Hudson Vice president - payroll product management, Workday
What strikes me in this year’s report is the increasing importance of technology in the role of the payroll professional – from delivering opportunities for more automation and digitisation to new ways of communicating with and supporting the workforce – technology is helping guide the evolving role of payroll professionals to navigate change and further support the business. Payroll’s role is now evolving and influencing organisational change. Payroll is at the forefront of supporting new ways of working and flexible work arrangements enabling remote, hybrid and cross-border employment. And payroll teams are now ready to support the business with real time data that powers scenario planning and forecasting. As we navigate to the next phase of this journey, the partnership between payroll and the rest of business has never been more important than it is today. Innovations, such as machine learning and artificial intelligence help make this change possible, as they shift effort from humans to machines, and give control and time back to payroll professionals. Payroll teams can leverage these types of payroll innovations to spend less time on processing payroll and lower- value activities, and more time on becoming a trusted partner and advisor to the business. When you’re able to take advantage of payroll innovation to drive efficiencies and adaptability, to navigate evolving regulations with confidence, to lead with payroll insights as a partner to the business and to deliver engaging employee enablement - you can truly evolve from payroll practitioner to becoming a dynamic business partner for the organisation.
Payroll is at the heart of the organisation. And more than ever, your role helps to empower, not only the organisation, but also your workforce, to adapt and thrive in this changing world of work.
This report underscores the value of the payroll profession. We hope you find it as useful and encouraging as we do, and as always, we’re looking forward to hearing your thoughts and feedback.
Technology section sponsored by
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Technological advances are continuous, and the role of payroll professionals is constantly evolving for this reason. The functionality of software and the introduction of new ways of working shape what the payroll profession looks like.
Information Technology (IT) has made it possible for all payroll processes to be completed without paper. Only 8% of respondents had departments that weren’t actively working to remove paper from their department. 38% of respondents said their respective departments are fully online and paperless, while a further 54% said they’re working towards that goal.
Is your department or organisation working towards becoming fully online and paperless?
37.80% Already paperless
54.07% Working towards paperless
8.13% No
Such changes are being recognised at a government level too. The Queen’s speech earlier this year introduced the Electronic Trade Documents Bill which equates the value of electronic trade documents with paper ones. In April, we saw the roll out of digital fit notes that employees can now attain from healthcare professionals and give to their employer as proof of their sickness. Chatbots are an interesting development, which remove some of the administrative burden from simple payroll queries. They use artificial intelligence (AI) to mimic conversation, trying to understand what the questioner asks and responding accordingly. They work using resource libraries, and learned responses, much like the concept of ‘virtual assistants’ on mobile phones. When asked if respondents use a chatbot in their organisation, 12% said yes, and 24% confirmed they will be introducing it in the future. Findings from the Future of Payroll Survey 2020 were different. At the time, only 2% confirmed they used chatbots. The increased acceptance of AI and technology highlights how the profession is adapting and accepting processes that can create efficiencies, freeing up time for more complex tasks. In the first section of the report, the effects of the increase in remote working and flexible working were discussed. 69% of respondents predicted a further increase in process digitisation due to the increase in remote working. 65% said that in the next 12 months they have plans in place to automate more processes. As automation increases, the role of the payroll professional will also evolve. The tasks that AI adopts will tend to be the more repetitive, administrative tasks, which means payroll professionals will have more time to take their work in different directions. As extra time is created, it will allow payroll professionals to focus on the more challenging tasks and long-term plans for their departments and careers. 63% of respondents support this claim by saying they’ve seen an increase in different duties in the department as manual aspects of payroll become automated. The role of technology extends beyond the scope of payroll administration. Since remote working has increased, communication channels have become more reliant on technology. Communication between team members is one of the most important requirements for a smooth and efficient payroll team. When asked about the effects of increased home working, 31% of respondents said communication will improve, but 31% said communication will be made worse. Although the effect of communication seems to be a divisive issue, the thing to note is that, as the mediums of communication change, managers and employers need to be aware of the sentiments within their respective teams and respond accordingly. As the payroll industry shifts towards a virtual workspace, the management of technology and security are becoming increasingly important. Numerous respondents indicated that the disruption to payroll processes caused by IT issues has increased in recent years. Technical issues aren’t the only threat we must be mindful of when approaching systems; security is an extremely important consideration whenever technology is changing around us. Technological devices facilitate the storage of, and access to, a wealth of data.
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One of the Bills introduced in the Queen’s speech 2022 was the Data Reform Bill, which set out the plans to overhaul data protection legislation. The Information Commissioner’s Office will be modernised to make decision-making more robust, and a focus on outcomes will replace the previous ‘tick box’ approach. As this legislation changes, payroll professionals must not let any relaxations in compliance requirements change the perceived importance of data protection. The government has highlighted that the same standards should be upheld, and any change will only be in the way these standards are met. When exploring areas of risk to be considered to prevent security breaches, respondents indicated better IT infrastructure, followed by more training for staff and two-factor authentication would all be highly beneficial. The answers highlight the responsibility of learning about IT and shows that security isn’t just down to the IT department, but rather all payroll professionals, who need to be educated on the risks caused by breaches.
Technology has also aided change in one other area of the payroll profession. Recruitment processes have evolved in recent years. 36% of respondents said recruitment has been made easier of late.
How has technology made recruitment easier?
81.06% Access to wider talent pool
41.89% Digital right to work checks
70.27% Easier interview process
2.70% Other (please specify)
36.49% Competence tests
When asked how recruitment has been simplified, there were varied answers. But the most popular responses related to the ease of the interview process, allowing access to more candidates from across the country and a wider talent pool. Whatever the case, the role of technology is linked to all aspects of the profession, and the direction, scope and limitations of what payroll can do are all ultimately guided by technology.
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CONCLUSION
This report has focused on the trends and direction of the payroll profession, and there are many conclusions to be made.
Payroll’s influence is getting stronger, and more business owners are recognising the value of payroll professionals and the importance of providing an efficient payroll service. Remote working is here to stay, and many payroll departments have encountered a period of rapid change, bringing with it new experiences. New payment methods are becoming more popular, and the way payments are made will continue to change. Pay on demand and cryptopayments are not widespread in practice now, but the idea and willingness to try them is increasing. Furthermore, employers are likely to increase reporting and begin to start publishing more information about pay gaps and banding. Education is now one of the pathways towards developing a career in payroll, and many payroll professionals are interested in receiving qualifications, to help them in their roles. As legislation increases in complexity, and vacancies for skilled payroll professionals increase, it’s likely that even more employers will invest in the education of their payroll teams. Technology is one of the main drivers of the profession, broadening the horizons of the industry through innovation. It played a crucial role in the promotion of the profession through the pandemic and is opening many doors and opportunities for payroll teams. Technological advances assist with reducing the time payroll professionals must spend on transactional tasks. Recruitment, and arguably communication, have benefitted from the new working models available thanks to technological versatility. The report sought to represent the payroll profession in its entirety. Respondents included bureau and in-house staff from a range of industries. They ranged from payroll professionals working alone, to those working in large teams consisting of more than 20 people. The findings have highlighted the continually changing nature of the profession. Strategic value, payments, education and technology are all topics that are currently in the profession’s spotlight. While we can predict a lot about the future of payroll based on this report, there’ll always be unpredictable changes that transcend expectations. Two years from now, who knows what the topics of discussion may be in the Future of Payroll Survey 2024?
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