COMPLIANCE
Risk assessment and management
Jerome Smail, freelance journalist, presents the experience and views of several industry luminaries
T he payroll process entails many and varied risks. Think about it: even beyond getting payments and timings wrong, what would happen if you suddenly had no system? If you had no one to process the payroll, because of sickness or other reasons for absence? So, the risks are very real. But how to manage them? And even before you do that, how can you work out the risks your operation actually faces? Clearly, this is an aspect of the industry that needs serious consideration – and in case you need convincing, I spoke to some key figures in payroll who are only too keen to emphasise the point. “Carrying out risk assessments in payroll is hugely important,” says Julie Northover, Payroll Assurance Scheme (PAS) assessor for the CIPP. She explains: “Errors in the payroll process can cause issues such
as employer breaches in statutory and contractual obligations, financial losses from penalties or the inability to recover overpayments, a demotivated workforce or a damaged company reputation.” Karen Thomson, payroll partner at Armstrong Watson, agrees on the importance of risk assessments, particularly when it comes to data and systems. “There’s not only data protection legislation to consider,” she says, “but storing correct information and the management of that information is vital for many reasons now – such as universal credits, HMRC tax compliance checks – and will be in the future when it comes to off-payroll working data to reconcile with company accounts and so on.” There is also risk to individuals to consider. In any organisation, the payroll function is the custodian of a huge amount
of confidential and sensitive data. If it is exposed it will have a direct impact on every worker. “Anything that goes wrong with the payroll process can have far-reaching and costly repercussions not only for the business but also for employees,” says Richard Dutton, account director for Symatrix. “Cost is always an important issue to payroll professionals, of course, but the protection of people’s data is far more important. This is illustrated when you look at the impact incorrect payroll payments can have on individuals and their ability to get on with their life – and increasingly organisations are including their employee’s financial wellbeing on the agenda.” The landscape has changed significantly over recent years and risks are bigger than ever, says Rob Gimes, head of payroll product at CoreHR. As he points out, payroll is a key system for any organisation; it’s also generally the most accurate and up-to-date record within an organisation regarding the personal data of employees. “The adage of ‘no one ever notices
...payroll function is the custodian of a huge amount of confidential and sensitive data
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| Professional in Payroll, Pensions and Reward | March 2020 | Issue 58
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