TECHNOLOGY
The future of payroll
Chris Deeson, UK country lead for KeyPay, presents his views
I n September 2015, a BBC online article suggested that the payroll profession was the eighth most vulnerable industry to be automated, with a staggering 97% chance of automation. However, the article cleverly did not specify a timeframe. Just over four years on and the payroll recruitment market is booming, salaries are increasing, and trained payroll staff are at a premium. In 2020, payroll now feels in a similar position to where the accounting industry was back in 2015. Back then, accountancy practices had not embraced cloud platforms. Today we all know that new technology will be widely adopted relatively quickly, but there’s a tension in the industry between ‘who will make the first move’ and complaining about the limitations on business growth of arcane desktop solutions. But the future of payroll is more than just embracing new technology; so let’s start off by considering some of the other areas that will change and evolve. Devolution Post-election, it is almost inevitable that the scope of devolution will increase in breadth and depth. Increased powers are likely offered to try and fend off independence, but Northern Ireland is an example of where inertia can widen the differences between the four nations. For the past three years there has been no sitting Northern Ireland Assembly, resulting in a wide range of legislative change in Great Britain that has not been mirrored in Northern Ireland (e.g. holiday reference periods of 52 weeks, which will not apply in Northern Ireland this April). Devolution-related diversity will be a key component of the future increased complexity that payroll professionals and payroll software will face.
Legislative change It’s not particularly insightful to predict increasing amounts of legislation that will make payroll increasingly complex. But the power of real time information (RTI) makes this inevitable. Payroll holds the key to the successful transmission of so much personal data to HM Revenue & Customs (HMRC) – and, by extension, to the Department for Work and Pensions and The Pensions Regulator. ...new technology will be widely adopted relatively quickly, but there’s a tension in the industry... Regardless of the long-term future of universal credit (which is ostensibly why RTI was introduced), it is highly likely that the breadth of data transmitted in RTI submissions will be expanded, requiring more onerous data capture and calculation for payroll and a widening of the scope of what ‘payroll’ means. Specific legislative changes are harder to predict, but it is likely that automatic enrolment will be extended to younger age groups and contributions amounts increased, in part to address the pensions gap for women. I also expect the government to eventually try and grasp the horns of the gig economy and determine how it wants to protect workers and claim its tax grab. Pay gap reporting is also likely to be widened to ensure that pay equality monitoring is extended over a society trying to be more inclusive. Even in politically uncertain times, it is
extremely hard to see a scenario where the impact of legislation on payroll is going to make anyone’s life simpler in the near to medium future.
The convergence of HR and payroll
Payroll holds the key to reporting data to government and, similarly, it also holds valuable human resources (HR) data that needs to be exchanged between various HR and business systems. CSV (comma separated values) downloads don’t really cut it. Though API (application programming interface) integrations definitely streamline processes, they are dependent on choosing the right integration partners in a world of finite development resources. In the short-term, I expect HR software providers to integrate and ‘white label’ payroll software to provide a more rounded solution. The longer-term is likely to be dominated by single systems covering both payroll and core HR requirements (e.g. qualification and document management, expenses, absence management, time and attendance etc). The exception may well be in the recruitment and performance management aspects of HR. The additional complexity and specialism give a competitive advantage to highly integrated specialist systems. The impact on payroll jobs? There may be some blurring of lines in some processes, but the complexity of the legislation is likely to mean that payroll and HR will continue to be separate functions, albeit working more closely. Technology The uptake of cloud payroll software will mark the biggest change to the payroll software market in decades. New entrants to the market are starting with a clean
| Professional in Payroll, Pensions and Reward | February 2020 | Issue 57 44
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