CIPP payslip statistics report 2008-2018
THE CIPP HAS BEEN CONDUCTING RESEARCH INTO THE LONG-TERM TRENDS AFFECTING PAYROLL AND PAYSLIPS SINCE 2008
Helen Hargreaves MSc ChFCIPPdip Associate director of policy
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CIPP PAYSL IP STATISTICS REPORT 2018
Contents
EXECUTIVE SUMMARY
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DATAGRAPHIC FOREWORD
4
KEY FINDINGS
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SUMMARY OF RESULTS
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Year on year payslip trends
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Number of employees paid
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Payroll frequencies operated
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Most popular pay days / dates
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Responsibility for processing payroll
10 11 11 13 13 13 13
Method of distributing payslips
Complaints regarding the distribution of payslips
New for 2018
The effect of GDPR on payslip production
Payment methods
Pay on demand
Conclusion
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CIPP PAYSL IP STATISTICS REPORT 2018
Executive summary
The CIPP has been conducting research into the long-term trends affecting payroll and payslips since 2008. The policy and research team would like to thank all those who responded, as we would not be able to undertake this research each year without the support and input from our members and the profession. Forming part of the CIPP’s Future of payroll survey the research was conducted using an electronic survey tool, links to which were circulated to CIPP members through news alerts. The survey was also published on the CIPP’s LinkedIn page to obtain views of payroll professionals who may not be members of the Institute. There were 554 responses which is the highest response rate ever. This annual research looks at the number of people being paid, the frequency with which they are paid, how the payslips are distributed as well as looking at the potential benefits brought about by the use of electronic payslips and the emergence of technology on the payroll profession. The CIPP payslip statistics research has now been running for ten years, and spans a period of great change both generally within the UK, including the economic recession and the vote to leave the EU; and more specifically within the payroll industry with the introduction of RTI and automatic enrolment into a workplace pension to name but two.
HELEN HARGREAVES MSc ChFCIPPdip ASSOCIATE DIRECTOR OF POLICY CIPP
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CIPP PAYSL IP STATISTICS REPORT 2018
Datagraphic foreword
It’s often difficult to find research that is truly focused on payroll: and not part of a wider study of HR or Finance. That’s why, I’m a keen supporter of the work the CIPP does to scope, implement and deliver this Payslip Statistics Report and this year is especially important. Unbelievably, it’s a decade since the report started and we now have a wealth of data to reflect on how payslip distribution has evolved. A good starting point is the frequency of payslip distribution. Although the mix has remained fairly static over the last decade there has been a drop in weekly payrolls (19.5%). It would be interesting to understand if legislation has made a mark here, with the implementation of RTI and automatic enrolment for pensions during the period. One statistic to watch is the daily pay frequency. Over the last ten years, daily payments have only increased by 0.6%, but with increasing dialogue around pay on demand, will we see this impacting daily payrolls in the years ahead? Undoubtedly, the most noticeable change in the last ten years is the impact of epayslips. Back in 2008 only 12.4% of respondents providing a self-service option for payslips. In contrast by 2018 that figure has risen to 60.2%. And it’s fair to assume the rise in epayslips has made a positive contribution to reducing staff workloads: with a marked reduction in printed payslips distributed by the payroll department.
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Employee confidence in digital payslips also seems to be improving with concerns around security and identity fraud at an all-time low. The results suggest complaints over confidentiality (in respect of personal information on payslips) dropping by 46.6% and identity fraud concerns by 36.0%.
From these initial observations it would be easy to conclude that epayslips are working effectively for every organisation. But the results present some additional findings that should be explored.
One example is the rise in payroll teams posting payslips: an increase of 8.8% over the last decade to 40%. Although the scope of this year’s report doesn’t provide reasons for this increase, qualitative data over the last ten years, could provide clues. In previous years, respondents have cited needing to provide print to people who are off sick, work outside the UK, who have no permanent workplace or simply want a choice of print and online. Many of these reasons are removed by epayslips which are accessible at work, home and on-the-go. If any of these barriers remain, it would be worth exploring epayslip providers who can give employees access to information outside the workplace. And where print is still needed, payroll teams should consider automating printing with a secure print partner to streamline residual payslip distribution. The report also indicates the need to communicate more strongly with employees on the benefits of epayslips (with a 25.4% increase in complaints about the method of distribution: paper to online). We can’t identify the reason for this rise, but can all work to make the employee experience of epayslips a positive one, both through improved access to information and by providing more detailed information, so the epayslip is valued by the employee (requested by 32.4% of respondents).
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CIPP PAYSL IP STATISTICS REPORT 2018
Key findings
› › Monthly remains the most common pay frequency with more than 96% of respondents reporting they operate a monthly payroll › › Friday continues to be the most common pay day for weekly, fortnightly and four weekly payrolls. Unsurprisingly, the last working day of the month remains the most common pay day for monthly payrolls. › › Just over one third (36.6%) of respondents reported using the payslip as a means of delivering other information to employees › › The number of respondents providing self-service access to payslips has increased from 12.4% in 2008 to 60.2% in 2018 › › Similarly the number distributing payslips by email has increased from 23.3% in 2015/16 to 35.4% in 2018 › › In sharp contrast, the number sending paper payslips to the relevant department has dropped from 31.4% to 19.3% and hand delivery has reduced from 20.8% to 12.4% › › More than 95% of respondents say that they use some form of electronic method of distributing payslips in 2018 › › 22% of respondents reported that they had changed their method of distributing payslips as a result of GDPR
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CIPP PAYSL IP STATISTICS REPORT 2018
Summary of results
YEAR ON YEAR PAYSLIP TRENDS
Number of employees paid This question asks payroll bureau respondents to add up the number of employees across all their clients’ payrolls and employers to add up the total number of people they pay across all the payrolls they operate, with up to 6,281,050 workers being paid by the respondents to this survey. Once again the results remain relatively consistent throughout the years of this research; however this year there has been a significant increase in the number of respondents paying fewer than 50 individuals which is up to 8.9% from 1.7% in 2015-16. What the results do not tell us conclusively is whether this is as a result of larger companies decreasing their workforce, whether there is an increasing number of small businesses, or perhaps whether the increasing complexity and changing requirements of payroll over the last few years have resulted in increasing numbers of small employers, who were not CIPP members, outsourcing their payroll to agents who are members of the CIPP, thereby changing the demographic of employers directly or indirectly covered by this research.
This is an issue which will be explored in future research.
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CIPP PAYSL IP STATISTICS REPORT 2018
Payroll frequencies operated With 96.2% paying employees monthly, this remains the most common pay frequency, as it has been every year that this research has been conducted. In 2008 when this research began almost half of respondents (44.3%) operated a weekly payroll. Since then there has been a steady decline and this downward trend continues in 2018 with less than one quarter (24.7%) of respondents saying that they run a weekly payroll. The number of fortnightly payrolls has also reduced from 13.1% in 2015-16 to 9.9% in 2018. Whilst the introduction of RTI reporting requirements and the complexities of automatic enrolment may be responsible for this reduction it will be interesting to see how this trend for reducing pay frequency interacts with the emergence of pay on demand, of which more detail is provided on page 13 of this report. This is an issue which will be explored further in the 2019 research.
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CIPP PAYSL IP STATISTICS REPORT 2018
Most popular pay days / dates At almost 84%, Friday continues to be the most popular pay day for weekly payrolls although the number of respondents paying on a Sunday has increased from 0% in the last couple of years to 2.3% in 2018, perhaps due to companies choosing to pay through internet banking rather than the more common use of Bacs.
Monday
Tuesday
Wednesday
Thursday Friday
Saturday Sunday
The last working day of the month continues to be the most popular pay day for monthly payrolls at 34.8% followed by 20.5% who pay on the 25th of the month, 20% on the 28th of the month and 13.4% on the 15th of the month. The popularity of paying on the last working day of the month has, in some cases, had an impact on Universal Credit payments with the DWP suggesting that employers should change their payment dates when the normal payday falls on a non-banking day, however the outcome of a recent judicial review concluded that instead the DWP should change the way it calculates a claimant’s benefits.
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CIPP PAYSL IP STATISTICS REPORT 2018
Monthly pay days
Once again Friday is the most popular day for paying fortnightly and four-weekly payrolls
Fortnightly pay days
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CIPP PAYSL IP STATISTICS REPORT 2018
Four weekly pay days
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday Sunday
Responsibility for processing payroll The number of respondents processing payroll in-house has remained relatively consistent since we began asking this question in 2011. However, this year sees a significant reduction in the number of respondents who completely outsource their payroll from around a third in previous years to 5.6% in 2018.
Who processes the payroll?
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CIPP PAYSL IP STATISTICS REPORT 2018
Method of distributing payslips The emergence of technology and the increasing move to online over the last decade is perhaps best illustrated by examining how payslips are distributed. When the research began in 2008 more than two thirds (67%) of payslips were sent to the relevant department for distribution. The 2018 research sees a significant shift to electronic distribution of payslips rather than manual intervention, with more than 95% of respondents stating that they use an electronic distribution method to some extent. In 2018 the number sending paper payslips to the relevant department has dropped from 31.4% to 19.3% and hand delivery has reduced from 20.8% to 12.4%.
The number of respondents providing self-service access to payslips has increased from 12.4% in 2008 to 60.2% in 2018 and more than a third (35.4%) now distribute payslips by email.
This is perhaps not unexpected given the increasing use of technology in everyday life, perhaps helped by the fact that the last time this research was undertaken in 2016, 83.3% of respondents who issued electronic payslips experienced cost savings as a result, ranging from £1,200 to £6,000 per year. Respondents also reported other benefits of electronic payslips such as time saved in sorting and distribution, more security, and the number of payslip queries and requests for duplicates significantly reduced.
What is surprising is that the number of respondents posting payslips in 2018 has increased from 34.7% to 40%. This issue will be explored further in 2019.
Just over one third (36.6%) of respondents reported using the payslip as a means of delivering other information to employees, down from 46.7% in 2015/16. In previous years payslips have been used as a means of delivering generic, ad hoc messages. Information such as that National Fraud Information is being collected; changes to pension tiers; achievement of bonuses; or changing pay dates due to Christmas were amongst the messages delivered using payslips. This practice will be explored further in future research.
Payslip distribution methods
2012- 2013
2013- 2014
2014- 2015
2015- 2016
2008 2009 2010 2011
2018
Posted
31.2% 41.7% 41.8% 40.2% 39.5% 29.8% 43.1% 34.7% 40.06%
Sent to departments for distribution Hand delivered by payroll department Self-service (employees access via a computer terminal)
67.% 51.3% 43.4% 48.2% 45.4% 37.3% 33.7% 31.4% 19.34%
31.2% 25.1% 28.7% 29.5% 26.9% 25.4% 12.9% 20.8% 12.43%
12.4% 15% 27.9% 25% 26.9% 38.8% 33.7% 47.2% 60.22%
Email facility
9.6% 12.7% 11.6% 16% 16.4% 21.8% 23.3% 35.36%
Employee collects from payroll department/other designated area
8.6% 7.2% 7.1% 8.4% 4.5% 6.9% 3.8% 6.91%
Complaints regarding the distribution of payslips Over the last decade complaints regarding the method of distributing payslips have reduced by over a third, down to 21.9% from 37.8%. But when the research began back in 2008, electronic distribution methods, now commonplace, were not widely used. As technology has developed over the last decade and more employees have access to devices at work and home, it may be that where a decade ago they might only have been able to
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CIPP PAYSL IP STATISTICS REPORT 2018
access their online payslips at work they now find payslips are more accessible, perhaps reducing the number of complaints about the method of distribution.
When exploring the reasons behind the complaints, the number of complaints regarding the concept of moving from paper to online payslips continues to rise (58.7% up to 60.2%) and is by far the most common source of complaint. However, previous concerns regarding the security of self-service have reduced from 19.6% to 13.3% and the shift towards electronic payslips has significantly reduced the number of complaints regarding the ease of identifying a paper payslip.
This was a concern for more than half of complainants when the research began in 2008, but with the removal of paper payslips in many workplaces this issue now accounts for only 10.8% of complaints.
2012- 2013
2013- 2014
2014- 2015
2015- 2016
Type of complaint
2008 2009 2010 2011
Concerns over confidentiality in respect of personal information on payslip
67.4% 59.0% 52.2% 60.0% 41.2% 33.3% 19.6%
Costs
8.7% 10.0% 11.8% 14.3% 2.2%
Employee requires more information on the payslip
10.9% 8.2% 26.1% 30.0% 29.4% 23.8% 21.7%
Identity fraud concerns
45.7% 34.4% 39.1% 36.7% 29.4% 23.8% 10.9%
Internal mail system
39.1% 36.7% 52.9% 33.3% 13.0%
Method of distribution e.g. paper to online Payslip recognition i.e another person knows it is a payslip
34.8% 20.0% 47.1% 52.4% 58.7%
58.7% 50.8% 52.2% 36.7% 17.6% 28.6% 21.7%
Postal system
47.8% 54.1% 60.9% 40.0% 23.5% 14.3% 15.2%
Self service security concerns
21.7% 13.3% 29.4% 14.3% 19.6%
Employee wants payslip sent to home address
43.3% 58.8% 47.6% 28.3%
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CIPP PAYSL IP STATISTICS REPORT 2018
NEW FOR 2018
The effect of GDPR on payslip production The introduction of the General Data Protection Regulation on 25 May 2018 caused many businesses to examine the personal data they hold and how they use it. This research explored whether GDPR had any effect on payslip production or distribution. More than one fifth of respondents (22%) reported that they had changed their method of distributing payslips as a result of GDPR. However GDPR had less of an effect on the information contained in payslips with 95% stating that payslip information had not changed as a result of GDPR. Payment methods With Bacs consistently the most common payment method across all pay frequencies for the duration of this research, in 2018 the survey focused on respondent awareness of possible new payment methods. Blockchain is a new buzzword in technology right now, with the first major application of blockchain technology being bitcoin which was released in 2009. Bitcoin is a cryptocurrency and the blockchain is the technology that underpins it. Although it is likely that a significant number of respondents have heard of bitcoins, only 15.8% have heard of blockchain. When asked if they could see blockchain being used as a future alternative payment method, respondents were unsure, with 13.7% saying yes, 35.6% saying no and the remainder (50.7%) unsure. The use of new payment technology versus more traditional payment methods will be explored in future research. Pay on demand This report has already identified the most common pay frequencies operated in UK payroll. However, pay on demand is another option for employers to consider. As the name suggests, pay on demand is a service which enables workers to ask for payment as and when they ask for it, rather than on their contractual pay day. Although in many cases this takes the form of a loan rather than a genuine payment on demand. Less than a quarter (23.7%) of respondents had heard of pay on demand. Even fewer (8.8%) have considered introducing pay on demand in their organisation. However, when asked whether pay on demand would be an attractive benefit for employees the responses were less clear cut, with 58% unsure. This is another area which will be explored more fully in future research.
YES 11%
Do you see pay on demand being as attractive benefit for employees
MAYBE 58%
NO 31%
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CIPP PAYSL IP STATISTICS REPORT 2018
CONCLUSION
This report provides a fascinating insight into the trends affecting payroll and payslips over the last ten years. But it also prompts further questions which will be explored further in forthcoming research; details of which will be published on the CIPP website later this year.
The content of this report is a more in depth look at the results arising from the payslip statistics section of the CIPP’s Future of payroll report 2018 .
Want more? Read the CIPP’s Future of payroll research survey report 2019 for further insights into a variety of payroll topics such as technology, recruitment and payslip distribution.
CIPP FUTURE OF PAYROLL REPORT 2019
Demographics and additional data Future of payroll Research survey report 2019
CIPP FUTURE OF PAYROLL REPORT 2019
Key issues facingyourpayroll departmentnow
TheCIPPs future of payroll report has beenmade possible through the collaboration of a high number of payroll professionalswithin the UnitedKingdom, and the support ofDatagraphic andWorkday.
Whatare thekey issues? Gender The payroll profession appears to be still dominated by females ( 71% ). This percentage is consistentwith the Office forNational Statisticswhich states that 75% of individuals in the profession are female. In an agewhere diversity and equality are important, it is encouraging to see that 40% ofwomenwho responded are in payrollmanager positions, versus 38% ofmenwho responded. Sector Almost all the sectorswere covered in the answers to the survey. The highest percentages (rounded) came from: ● Accountants/auditing/book-keeping/tax consultants (16%) ● Manufacturing ( 7% ) ● Education ( 6% ) ● Retail/wholesale/distribution ( 6% ) ● Local government ( 5% ) GDPR and theData ProtectionAct Automatic enrolment Holiday pay calculations 38.50% 32.50% 31.75%
Expenses and benefits
29.50%
Automation of business processes Thiswas cross-referenced against theCIPPmembership and industry data and is typical of the demographics overall. 28.75%
Gender pay gap reporting
24%
Implementing a new system
21%
Given the recent excitement around the implementation and go-live ofGDPR on 25May 2018, therewas no surprise thatGDPRwas at the top of the list (38.5%).With the impact of substantial fines (up to € 20million or 4% of global turnover,whichever is greater) payable by companies if there is a non-report of data leak/breach e.g. sending an emailwith personal datawhich is un-encrypted to awrong email address, someone receiving thewrong payslip; ensuring that your data is protected and controlled is nowmore critical than ever to every payroll team. The second-place issue is ‘automatic enrolment’; this is surprising given that this is not a new government initiative. The formerWork and Pensions Secretary EstherMcVey recently stated in her online article (https://www.gov.uk/ government/news/automatic-enrolment-breathing-new-life-into-britains-retirement-prospects) thatmembership of occupational schemes has gone-up by 49% in the last five yearswith a staggeringmembership of those schemes being 41.1million in 2017. Is it the sheer volume of people now having the opportunity of joining the scheme/s or , is it the complexity around themechanics of understanding if someone is in or out or , is it that the payroll systems aren’t helping payrollers by reducing the issues around automatic enrolment? It could be both the phasing of contributions and that employers are not aware of their obligations, especiallywhen outsourcing that has resulted in automatic enrolment still being a key issue for payroll departments. It could also be a key issue for organisations now facing their three year re-enrolment and having to enrol employeeswho have previously opted out. Thiswill cause additional administration, particularly around communications to assist employees in understandingwhy they have been put back into a pension schemewhich they previously opted out of.
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Holiday pay calculations ( 31.75% )was the nextmost common cause of concern facing payroll departments, unsurprising given the number of Employment Tribunal caseswhich have affected the rules formaking these
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