Payroll: More than just a payslip

Michael McAllister

Michael McAllister

Partner & Head of Payroll Services

01 September 2022

The UK has always been exceptional at nurturing talent and creating entrepreneurial businesses for the future.

When it comes to practicalities though, the thought of leading a business can seem like an uphill battle and many people worry at the idea of payroll, believing it to be time-consuming and a labyrinth of legislation. We can confirm that it is – so it’s vital not to underestimate the importance of your payroll function!

Myth: Payroll is easy

You may assume that while every employer experiences a payroll-related hiccup now and again, for the most part everything runs smoothly. The reality is that problems can occur frequently due to the number of stakeholders involved with payroll, people, and pensions administration – and the consequences can be very damaging.

Compliance is a pressing concern, particularly because payroll legislation is complex and constantly changing, and the Government is strongly committed to enforcing its rules – we all remember the furlough scheme?! One of the most significant ways in which employers have been caught out recently is inadvertently allowing take-home pay for individuals to fall below the National Minimum Wage. This is just one very small part of the payroll compliance jungle that is growing daily.

Companies that meet certain criteria are now also required to publish gender pay gap and CEO pay ratio reports. Additionally, following the recommendations made by Matthew Taylor in his “Proposals for Workplace Reforms” report, the Government has been running consultations on various topics, with further legislation likely to follow. Are you prepared for all of this?

You may also have seen that in recent months, large UK retailers have received unfavourable press online due to payroll and pension errors. When it goes wrong, it really does create a tornado of problems. However, we shouldn’t forget that the sector employs very talented individuals, and payroll shouldn’t be thought of as a simple ‘add-on’ to a finance or people function.

Myth: Changing payroll systems is impossible mid-year

The myth that payroll is easy ties in closely with another myth: that you should avoid changing payroll systems mid-year. This is partly because many don’t understand the nuts and bolts of payroll systems – remember those old P11 forms? They still exist! Whilst P14s and P35s are long gone, the basic build of a payroll has never changed.

No technology project of any scale and significance will be completely problem-free. However, deciding not to make changes will only cause you more trouble further down the line. Without the willingness to adapt, you’ll never realise improvements in the way payroll is conducted within your business, while crucial tasks like data cleansing and system upgrades will remain uncompleted. Above all, the employee experience will never evolve. Having a payroll system in place that can meet the complex and ever-changing requirements of a modern business is essential. At Johnston Carmichael, we are in the midst of migrating clients to a variety of platforms through simple cloud platforms, HR integrations, and benefiting from robotic process automation, which is a must for any payroll department in 2022.

And if you’re looking at that consolidated HR & Payroll system? Someone will have to compromise - as we all know, the perfect solution just doesn’t exist!

Fact: Payroll is key to employee engagement

Employee engagement is the buzzword of the year, if not the decade. Yet, at its core, workplace engagement is much more than flexible working offers and gym classes at lunch. Employee engagement starts with trust, and there are few things as important to building trust with employees than ensuring they are paid the correct amount at the same time each month. Payroll is the default thing you need to do for each employee, and if you don’t have a good payroll provider you won’t have the foundation you need to build employee engagement. Working with your payroll provider is the only way that you can truly succeed.

Payroll, for employers of all sizes, should be managed by qualified professionals. In addition to making sure your payroll is accurate so that neither your business nor your employees pay too much tax, a professionally trained specialist can be a strategic asset to your business - whether internally employed or outsourced to a provider like Johnston Carmichael. By considering the payroll implications of your overall reward and remuneration package, a payroll professional can help you make strategic decisions that save your employees money (through things like salary sacrifice) and improve their wellbeing, motivation, and morale in this current testing financial climate.

Payroll so much more than providing a payslip at the end of the month. It is one of the core assets of the running of any organisation, from a large international bank to your local butchers. It’s not a nice-to-have add-on - it absolutely must happen.

Get in touch

To discuss any aspects of this article in more detail or to find out how Johnston Carmichael's Payroll team can support your business, please don't hesitate to get in touch with me.

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