BENCHMARKING SURVEY REPORT 2023
Prepared by Meena Salhan MCIPPdip, policy and research officer, CIPP
cipp.org.uk
BENCHMARKING IS AN IMPORTANT PROCESS AND ALLOWS YOU TO COMPARE YOUR BUSINESS’S PERFORMANCE TO THAT OF OTHERS IN THE INDUSTRY, NOT ONLY GIVING A POINT OF COMPARISON, BUT PROVIDING DATA TO IDENTIFY AREAS IN WHICH YOU EXCEL OR WHERE IMPROVEMENT IS NEEDED.
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Foreword
Meena Salhan MCIPPdip Policy and research officer, CIPP
Thank you to all respondents for taking valuable time out to complete the CIPP’s Benchmarking Survey 2023 and providing their input. The Benchmarking Survey Report 2023 wouldn’t have been possible without your contributions. Benchmarking is an important process and allows you to compare your business’s performance to that of others in the industry, not only giving a point of comparison, but providing data to identify areas in which you excel or where improvement is needed. Benchmarking can improve productivity, increase efficiency and help gain a competitive edge and can be applied to any continuous development project. The report explores payroll teams, payroll frequencies, error rates, key performance indicators (KPIs), pensions and current trends so you can benchmark your company against existing industry standards. This may aid your decision making in the future and support you to identify where improvements and enhancements to processes can be made.
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Summary of key findings
● 96% operate monthly payrolls, proving to be the most common payroll frequency ● 11% of payroll teams are a standalone department, 38% are within the finance department and 47% were within the human resources (HR) department ● Correctness is promoted throughout the profession, with 77% operating at an accuracy level of 96–100% , and 20% achieving a 100% accuracy rate ● 61% of the payroll errors tracked occurred due to missed hours / overtime hours ● 38% use KPIs and 62% don’t ● 83% used payroll errors / accuracy rate as a KPI ● 66% had overpayments in the previous tax year (6 April 2022 – 5 April 2023), with 89% being recovered ● A promising 95% of the respondents made all statutory payments and submissions on time last tax year to HM Revenue and Customs (HMRC) ● 67% believe it’s desirable for potential candidates to have a CIPP payroll qualification ● 85% of the respondents process benefits, with the majority payrolling these ● 43% of the respondents process payroll giving deductions ● 44% have 91 – 100% of staff paying into a pension scheme through payroll ● 76% process pension deductions as salary sacrifice arrangements, this is a 7% uplift from last year figures, despite national minimum wage (NMW) / national living wage (NLW) increases ● 31% have 91 – 100% of staff use salary sacrifice for pension contributions ● A commendable 61% of respondents pay above the minimum contributions for automatic enrolment ● 21% offer saving or borrowing through payroll ● 13% offer earned wages access (EWA), an increase of 4% from last year ● 13% process expat payrolls.
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Introduction
2023 is the 15th year of the CIPP’s Benchmarking Survey .
The survey asked a variety of questions and was open to the whole payroll industry. This broadened scope has enabled the CIPP to produce a report that payroll professionals can use to benchmark payroll departments and services, as well as providing insight into how the rest of the industry is performing.
This report will explore:
● Payroll services ● Geographics and demographics ● Organisation details
● Processing and the payroll team ● Payroll frequency and payrolls ● Accuracy, timeliness and completeness ● KPIs ● Overpayments ● Submissions ● Value for money ● Benefits ● Saving for the future ● Global.
* Please note: bureau respondents may have selected multiple business sectors. * Percentages have been rounded to the nearest whole number for clarity and in some instances may not total 100%.
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Payroll services
In-house or outsourced? Like last year, the survey asked respondents if they mainly processed in-house payrolls or provided payroll as a service. The responses were:
Do you process mainly in-house payroll or mainly provide payroll as a service to clients?
20% Payroll service provider
80% In-house payroll
The audience was overwhelmingly from an in-house payroll ( 80% ) environment, similar to last year. However, there was an increase in the payroll services provider audience this year, rising from 13% to 20% .
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Demographics
Which areas payroll teams operate from
1%
Isle of Man Isle of Wight London Midlands
0%
18%
22%
9%
Northeast England Northwest England Northern Ireland Outside of the UK Remote Republic of Ireland Scotland Southeast England Southwest England Wales
18%
1% 1%
5%
3%
4%
19%
15%
3%
The majority of the respondents operated from London, Midlands, Northwest England, Southwest England and Southeast England.
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Organisation details
Which sector is your organisation most closely aligned to?
Which sector is your organisation most closely aligned to? 68% were from the private sector, 16% were from the public sector and the same applied for non- profit / charity organisations ( 16% ).
16% Non-profit /charity
16% Public sector
Indication of the client base industry / sector, if responding as a bureau Client bases were commonly from retail ( 14% ). Manufacturing came in at 13% and education at 12% . 9% were based in accountancy or charity / voluntary. 8% were from financial services and legal, 6% from engineering, insurance and property, 5% from care facilities, catering, childcare, construction, consultancy, entertainment / hospitality, healthcare, housing / landlords, IT and leisure. Some of the sectors stated for ‘Other’ were: ● Social housing and extra care ● Nuclear ● Data storage ● Seismic survey on land and sea ● Conservation ● Salmon farming and food production ● Facilities management, central heating services ● Software developer for the fintech industry ● Motorcar racing (formula one) ● Museums ● Vertically integrated business, manufacturing, distributing and retailing our own products and selling to wholesale partners
68% Private sector
● Veterinary services ● Software developers ● Independent school with charitable status ● House builders.
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Please indicate your industry / sector, and if responding as a bureau, please tick all that apply to your client base
The following sectors received no responses: Mining / Quarrying, Ministry of defence, Payroll / HR software provider, Payroll / HR bureau and software provider, Railways, Security, Tools and equipment hire
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Processing and the payroll team
Team members
As of 6 April 2022, how many employees, or the full-time equivalent, did you have in your payroll team?
82% have 1–50 employees in the payroll team
3%
6%
5%
have 51–100 employees in the payroll team
have over 200 employees in the payroll team
have 101–200 employees in the payroll team
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How many pay as you earn (PAYE) accounts does your team process? Majority of the survey respondents ( 76% ) process between 1 and 50 PAYE accounts.
What percentage of those employees are (circa to the nearest %)
73.5% Females
How many PAYE accounts does your team process?
76%
1 –50
4%
51 –100
4%
101 –250
5%
251 –500
2%
501 –1,000
6%
1,001 –5,000
25.5% Males
1% Non-binary
1%
Over 5,000
3%
Other
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Percentages have been rounded to the nearest whole number for clarity and in some instances may not total 100%
Payroll frequency
The frequency of payroll(s) operated and the total number of employees / pensioners you / your team pay
96% MONTHLY
25% WEEKLY
16% FORTNIGHTLY
A SUBSTANTIAL 96%
16% FOUR-WEEKLY
7% OTHER
OPERATE MONTHLY PAYROLLS
A substantial 96% operate monthly payrolls, which isn’t surprising as last year, monthly paid payrolls were also the most common, with 92% of employers operating this frequency.
Weekly paid is low in comparison to monthly paid, however its popularity has increased from 18% to 25% from last year. Fortnightly and four-weekly payrolls are joint, with 16% operating this frequency.
Some of the respondents that selected ‘Other’, operated the below payrolls: ● Bi-monthly ● Annually ● Daily ‘immediate’ payrolls.
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Payrolls For in-house respondents, 79% processed payrolls completely in-house and 21% were partially outsourced.
Where does the team sit? Which department does payroll sit within?
11% were a standalone department, 38% were within the finance department, 47% were within the human resources (HR) department, and 4% stated ‘Other’. Those that stated ‘Other’ commented: ● Combination of HR and finance – both teams work closely on monthly payroll ● Pension administration sits with finance.
Are your payrolls processed completely in-house or partially in house?
21% Partially outsourced
79% Processed completely in-house
38% Within the finance department
11% Standalone department
For payroll service providers, 12% were partially outsourced to them, 69% were completely outsourced to them and 19% were a mixture of both.
4% Other
As a service provider, are the payrolls you process partially or completely outsourced to you?
12% Partially outsourced to service provider
47% Within the human resources department
69% Processed completely in-house
19% Mixture of both
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Accuracy, timeliness and completeness What’s the agreed level of accuracy for the payroll(s) of your employees / your clients? Accuracy is a key factor when processing payroll and it’s promising to see this was collectively 98–99% for 44% of the audience and 13% for 96–97%. Amazingly, 20% of respondents report achieving a level of 100% accuracy.
AMAZINGLY, 20% OF RESPONDENTS REPORT ACHIEVING A LEVEL OF 100% ACCURACY.
25% who voted for ‘Other’ stated: ● There were no service level agreements (SLAs) or agreed accuracy levels ● This isn’t measured ● No KPIs used.
Those also expressed that even though there was no agreed level, 95 – 100% is always the target.
44%
25%
20%
13%
3% 0% 0%
0% 1%
Below 88%
88% – 89%
90% – 91%
92% – 93%
94% – 95%
96% – 97%
98% – 99%
100%
Other
Percentage of all payrolls accurately processed
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Percentages have been rounded to the nearest whole number for clarity and in some instances may not total 100%
Payroll errors Number of errors identified in the previous tax year (6 April 2022 – 5 April 2023) In the survey we asked respondents to report the number of payroll errors that occurred before payslips were issued versus payslips once issued, the results can be viewed below.
80%
76%
67%
67%
60%
62%
58%
54%
53%
50%
50%
43%
33%
20%
0
1 – 10
11 – 30
31 – 50
51 – 70
71 – 90
Over 90
After payslip/s were issued
Before payslip/s were issued
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Percentages have been rounded to the nearest whole number for clarity and in some instances may not total 100%
Types of errors occurred in the previous tax year (6 April 2022 – 5 April 2023)
Incorrect data on time and attendance records / timesheets
61%
47%
38%
Missed hours / overtime hour
Incorrect leave date
37%
31%
31%
Incorrect starter information
Miscalculating pay
Incorrect deductions
31%
23%
15%
Missed compensation pay
System / technical error
Missed deadlines
Often, where incorrect information is received or entered, it’s incomplete or the first handler gives inaccurate data. Those that stated ‘other’, commented: ● Errors were mainly system issues ● Errors due to other departments (i.e. HR, managers) ● Late notification of leavers and late information supplied.
11%
11%
Missed on variance checks
Other
10%
6%
Incomplete records
None
2%
2%
General Data Protection Regulations (GDPR) breach
Misclassifying employees
2%
0%
Personal data divulged to an unauthorised source
Payslip sent to incorrect employee
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Key performance indicators (KPIs)
What type of KPIs are used?
Do you / your clients(s) use key performance indicators (KPIs)?
33% Error resolution cycle time
55% Compliance
38% Yes
62% No
83% Payroll errors / accuracy rate
21% Overtime
43% Payroll processing time / productivity
21% Total payroll cost / expenses
What type of KPIs are used? Compliance came in at 55% , 33% used error resolution cycle time, 21% used overtime, 83% used payroll errors / accuracy rate, 43% used payroll processing time / productivity, 21% used total payroll cost / expenses, 5% used total turnover costs. 10% selected ‘Other’ and used: ● Headcount, manual payments, non-cash payments, award payments ● Overpayments ● Starters vs leavers, payments outside of payroll cycle, worker numbers.
10% Other (please specify)
5% Total turnover costs
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Percentages have been rounded to the nearest whole number for clarity and in some instances may not total 100%
Overpayments 66% have overpayments in the previous tax year (6 April 2022 – 5 April 2023). 32% shared the gross value of these overpayments were between £1,001 – £5,000, 13% £5,001 – £10,000 and 22% were between £10,001 – £50,000. Regarding the number of overpayments, 75% said that 1 – 10 were made in the previous tax year and 16% made 11 – 30 overpayments, whereas 6% made over 90 overpayments. This can be dependent on the size of the PAYE being processed. Regarding recovering these overpayments (included those that have been recovered or written off), 89% have been recovered, 65% are currently being recovered, 65% have been written off and 17% don’t track the information.
75%
How many UK overpayments (%) were made in the previous tax year (6 April 2022 – 5 April 2023)?
16%
6%
1.5% 1.5% 0%
1 – 10
11 – 30
31 – 50
51 – 70
71 – 90
Over 90
Number of UK overpayments
What is the total gross value (£) of all these UK overpayments?
Did you have any overpayments in the previous tax year (6 April 20233 – 5 April 2023)
32%
22%
34% No
13%
9.5%
66% Yes
8%
8%
3%
3%
1.5%
1 – 100
101 – 500
501 – 1,000 1,001 – 5,000
5,001 – 10,000
10,001 – 50,000
50,001 – 100,000
100,001 - 500,000
Over 500,00
Number of UK overpayments
* Please note: bureau respondents may have selected multiple business sectors.
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Percentages have been rounded to the nearest whole number for clarity and in some instances may not total 100%
Submissions It’s promising to see that 95% of the respondents made all statutory submissions on time to HMRC last year.
95% Yes
5% No
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Summary of average annual salaries for roles specified
Salaries In this section, salaries have been illustrated as an annual average for the following roles involved in payroll activities within the organisation. Within this section, salaries have been broken down by region. * Respondents were asked to provide the average annual salary (to the nearest whole pound) for the following roles (where applicable) involved in payroll activities within the organisation.
REMOTE Entry level: £21,272
SCOTLAND Entry level: £34,000
Middle management: £37,873 Senior management: £50,589
Middle management: £62,000 Senior management: £60,000
NORTH EAST ENGLAND Apprentice level: £13,650 Entry level: £26,217 Middle management: £40,563 Senior management: £53,190
NORTHERN IRELAND Entry level: £27,552
Middle management: £35,194 Senior management: £95,000
NORTH WEST ENGLAND Apprentice level: £10,000 Entry level: £25,870 Middle management: £38,944 Senior management: £53,625 Executive: £92,500
MIDLANDS Apprentice level: £15,931 Entry level: £26,623 Middle management: £55,252 Senior management: £50,984 Executive: £62,277
WALES Entry level: £21,450
LONDON Apprentice level: £29,900 Entry level: £28,718 Middle management: £48,600 Senior management: £58,181 Executive: £120,000
Middle management: £32,240 Senior management: £50,000 Executive: £86,000
Entry level: Administrators / practitioners / assistants / liaison officers/ clerks / advisors / graduates Middle management: Team leaders / supervisors / consultants / specialists (SMEs) / vice principals Senior management: Managers / heads of function or department / associate directors / directors Executive: Board / company directors / CEO
SOUTH WEST ENGLAND Apprentice level: £19,788 Entry level: £32,552 Middle management: £47,001 Senior management: £61,688 Executive: £150,000
SOUTH EAST ENGLAND Apprentice level: £15,000 Entry level: £29,355 Middle management: £61,700 Senior management: £59,100 Executive: £139,450
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APPRENTICES AVERAGE ANNUAL SALARY HAS FALLEN FROM £19,000 LAST YEAR TO £16,665 THIS YEAR. Entry level payroll professionals now average over £27,700 per year. This is an increase of over £2,200 from last year’s average. With an average salary of almost £47,921, middle management have seen a significant rise. Senior management level has fallen slightly short from last year, dipping from an annual average of £57,000 to £56,137. The executive level average annual salary remains high, with an annual average of £106,245, whereas last year the average remuneration was just over £100,000.
Summary of average annual salaries for roles specified
£106,245
£56,137
£47,921
£27,714
£16,665
Apprentice level
Entry level
Middle management level
Senior management level
Executive level
Amounts rounded to the nearest whole pound
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Value for money
67% believe it’s desirable for potential candidates to have a CIPP payroll qualification, whereas 5% feel it’s essential when seeking employees. 28% feel it isn’t important.
5% Yes - essential
67% Yes - desirable
28% No - unimportant
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Benefits
Does your organisation process benefits for employees / clients?
Are expenses paid through payroll?
15% NO
31% YES
69% NO
85% YES
85% process benefits and 15% don’t
31% pay expenses through payroll and 69% don’t
Do you allow employees to buy / sell annual leave?
Do clients allow employees to buy / sell annual leave?
27% NO
58% YES
42% NO
73% YES
58% allow employees to buy / sell annual leave, and 42% don’t
For the bureau setting, 73% of clients don’t allow this and 27% do
From the results, it seems that buying / selling annual leave is more likely where the payroll is not outsourced.
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Most respondents payroll benefits and this may be due to the new rules implemented by HMRC on 6 April 2023.
What benefits do you provide to employees / clients and how are they reported to HMRC?
42%
Company car, van, bike or other vehicles for private use
63%
71%
Devices (e.g. phone, computer) available for personal use
29%
63%
Dental care
38%
70%
Death-in-service benefit
30%
68%
Payrolling
Gym membership
32%
P11D
61%
Healthcare
41%
64%
Health check up
36%
68%
Lifestyle benefits, vouchers and discounts
32%
18%
The following were included on the survey but received 0% ● Car allowance ● Childcare vouchers ● Cycle-to-work scheme ● Employee counselling services ● Life assurance ● Onsite childcare ● Pension ● Professional fees and subscriptions ● Share options ● Subsidised or free meals. ● Flexi time ● Flexi time ● Income protection
Living accommodation
91%
11%
Loans (over £10,000)
89%
50% 50%
Private medical insurance
100%
Training fees
0%
57%
Travel insurance
43%
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Percentages have been rounded to the nearest whole number for clarity and in some instances may not total 100%
Saving for the future
Do you process payroll giving deductions? (charitable donations)
As life expectancy rises within the UK, saving for the future is on top of the checklist for employees.
With the potential for the state pension age to rise and as the cost of living continues to soar, this can have a domino effect on citizens staying in full-time work and many may have to wait longer for pensioner benefits.
43% Yes
Pensions and savings are more important than ever and with many changes on the horizon, this is a topic employers and organisations will be largely involved in.
7% No – but plan to implement
43% of the respondents process payroll giving deductions, similarly, last year 45.5% processed these. 50% don’t process payroll giving deductions, however 7% intend or plan to implement in the future.
The CIPP is committed to raising awareness of payroll giving and the positive impacts it can have on employees and a business.
50% No
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Percentages have been rounded to the nearest whole number for clarity and in some instances may not total 100%
Pensions
A promising 44% have 91 – 100% of staff paying into a pension scheme through payroll and 36% stated 71 – 90% pay into a pension scheme through payroll. This is on average a collective 80% which equates with responses from 2021 and 2022.
What % of employees pay into a pension scheme through payroll?
44%
36%
10%
5%
2%
2%
1%
1 – 10
11 – 30
31 – 50
51 – 70
71 – 90
91 – 100
Other
Those that stated ‘Other’, commented: ● Employer contribution only and employee contributions are additional voluntary contributions (AVC) ● None contribute.
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Percentages have been rounded to the nearest whole number for clarity and in some instances may not total 100%
How do you process pension deductions?
This is a 7% uplift from last year’s figures, despite NMW / NLW increases
45% Relief at source (RAS)
38% Net pay arrangements
76% Salary sacrifice arrangement
What % of staff use salary sacrifice for pension contributions?
31%
Percentage of staff that use salary sacrifice for pension contributions: ● 34% have between 1 – 50 percent of staff ● 54% have 51 – 100 percent of staff ● 12% stated ‘Other’, and added comments: ❍ This option has reduced as the government has increased NMW and NLW ❍ Don’t operate a salary sacrifice pension scheme.
20%
14%
12%
9%
8%
6%
1 – 10
11 – 30
31 – 50
51 – 70
71 – 90
91 – 100
Other
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Percentages have been rounded to the nearest whole number for clarity and in some instances may not total 100%
Do you pay above the minimum contributions for automatic enrolment?
A COMMENDABLE 61% OF EMPLOYERS PAY ABOVE THE MINIMUM CONTRIBUTIONS FOR AUTOMATIC ENROLMENT
A commendable 61% of employers pay above the minimum contributions for automatic enrolment, this was a similar response to last year (62%). 39% don’t pay the above minimum.
61% Yes
39% No
Do you offer saving or borrowing through payroll?
21% offer saving or borrowing through payroll, this is down from 1% last year, however still an increase from 2021, and 79% don’t have any offerings. Of those that offer savings or borrowing, 48% said 1 – 10 percent of staff take this up, 15% said 11 – 30 percent of staff, and 33% stated ‘Other’.
21% No
79% Yes
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THOSE WHO STATED ‘OTHER’ SUGGESTED:
Which other saving incentives / initiatives do you operate alongside a pensions?
Employee stock purchase plan (ESPP)
56% Additional voluntary contributions (AVC)
1% Individual savings accounts (ISA)s
57% Salary sacrifice
Bonus shares
‘Ride2Work’ and childcare vouchers for those already enrolled before
6% Save as your earn (SAYE)
8% Share incentive plans (SIPs)
4% Savings scheme
None
Any unused flexible benefit allowance is paid into the pension scheme as an employer contribution
20% Other
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Percentages have been rounded to the nearest whole number for clarity and in some instances may not total 100%
Earned wage access (EWA) As mentioned in last year’s benchmarking report, the CIPP is interested in exploring the trend of EWA. The CIPP has united with seven leading UK providers of EWA to support an EWA Code of Practice, in response to a recommendation by the Financial Conduct Authority (FCA) which sets the common standard for firms providing EWA products to deliver good consumer outcomes. 13% offer earned wages access, and 87% don’t offer this. In comparison, this has proven to have increased in popularity in the payroll industry, with only 9% respondents indicating they offer this to employees last year.
Earned Wage Access Code of Practice
September 2023
Do you / your client(s) offer access to earned wages? (Pay on Demand, instant access, etc)
Supported by
13% Yes
Founded by
87% No
CLICK FOR DETAILS
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Global
13% process expat payrolls, this is 5% more than last year’s figure, and 87% don’t process these.
Do you process expat payrolls?
13% Yes
87% No
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Date of publication: November 2023
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