REWARD
The power of payroll
Now National Payroll Week (NPW) is upon us, Louise Connah, principal payroll consultant, Phase 3, discusses why the work performed by the payroll industry is so important and why the profession should celebrate I f you asked your employees what the function of the payroll team is, most would simply respond, ‘to make sure to understand the impacts of upcoming legislative changes on their budgets.
payroll departments will be the system administrators for their own software. While payroll software can perform the complex calculations needed, there needs to be a person or people behind it to ensure the setup and configuration is correct. So, where does payroll sit? There’s the age-old argument regarding where the payroll function should sit in a business – many argue it should sit within the people team, but others are adamant it sits within the finance team. There does, however, seem to be a new trend of payroll falling into transactional processing teams. As the payroll industry and the realised impact of payroll across the wider business grows, there’s a growth in the argument for payroll being its own independent department which forms a bridge between the people and finance teams. Payroll doesn’t tend to fit neatly into either area, but there are multiple touchpoints which link us to both business areas. However, the work we do can fall under the radar as we don’t tend to shout as loudly as other functions in a business. As part of NPW, use this opportunity to highlight the capabilities of your payroll department and increase the visibility of the wide range of tasks payroll professionals undertake. Think about what your team does that goes unnoticed, and the impact on other parts of your business. We input, we process, we check, we report, we analyse, we balance, we test, we’re system administrators and we post journals, all the while keeping abreast of legislative changes and their impacts on the wider business. We ensure we’re providing the best possible service to our customers, whether that’s our colleagues as an in-house payroll team, or for our clients in a managed service environment. Take time this month to celebrate the work we do and show everyone we offer far more than simply paying people. n
“We input, we process, we check, we report, we analyse, we balance, we test, we’re system administrators and we post journals, all the while keeping abreast of legislative changes and their impacts on the wider business”
everyone is paid on time’. Although the primary function of payroll professionals is, indeed, to ensure everyone is paid accurately and on time, we know payroll should, and does, have a bigger impact on the wider business. The hidden impacts of payroll A lot of the work the payroll function does will go unnoticed – after all, it’s not often we get an email thanking us for paying someone correctly. However, we have more to offer a business than simply ensuring everyone is paid on time. When we think about the end-to-end payroll process, there are many touchpoints which impact other areas of the business. While the people team may handle the onboarding process, a positive experience can quickly change if a new employee’s initial payslip isn’t accessible or correct. The introduction of automatic enrolment in 2012 brought extra complexities to the payroll run and presented another area in which payroll can impact the employee onboarding process. When pay day arrives and payments are made, the payroll department will ensure general ledger postings are made accurately so the wider finance team can reconcile the postings against the bank payments made to employees, HM Revenue and Customs, pension agencies and any other third parties for whom deductions are made. Often, a payroll team is involved in budgeting and forecasting, especially when a company needs to understand the impact an increase to the national minimum wage will make on its wage bill. Similarly, increases to employer National Insurance (NI) rates in the 2022/23 tax year affected planned budgets, as did the reversal of the uplift. Many finance teams throughout the UK look to their payroll department
The complexities of payroll If there’s anything the coronavirus job
retention scheme showed us, it’s the positive impact payroll professionals can have on the wider business. There seems to be a new appreciation for the work we do and the complexities of the calculations involved. Although many companies now payroll benefits, there’s still annual administration associated with P11D(b)s and pay as you earn (PAYE) settlement agreements (PSAs). This may not seem like the most attractive subject, but it’s another area involving complex legislation and calculations of estimated liabilities ahead of time, which can help a company estimate its cashflow. Additionally, most modern payroll software requires complex implementation and rigorous testing before it can be rolled out within a business. Payroll is required to undertake user acceptance testing, as only payroll professionals understand how to set pay elements up correctly for tax and NI purposes. Once the software is up and running, any legislative changes impacting payroll must be updated and tested to ensure compliance, and many
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| Professional in Payroll, Pensions and Reward |
Issue 93 | September 2023
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