What with the payroll industry dealing with such change as; Real-Time Information (RTI) and Automatic Enrolment (AE), plus the rapidly-changing workplace, Mark Paraskeva, Chief Executive SME Division at IRIS Software Group, looks at what the needs and expectations of payroll will be in the near future.
RTI, which was introduced in April this year, was widely-regarded as the biggest single change to payroll since PAYE was introduced in 1944. Automatic enrolment, meanwhile, as we all know – the flagship component of Government’s workplace pension reforms – has also started to rolling out, with all of the compulsory implications that we are coming to terms with. It goes without saying that these changes will majorly impact on the way payroll is processed. Using software to run your payroll used to be a choice for businesses, but due to RTI this is now a necessity, rather than an optional extra.
In the past, payroll software may have been viewed as an unnecessary financial burden on a company and often systems were neglected as a result. Failing to comply with changing legislation can lead to financial penalties for your company. In the case of automatic enrolment, businesses which fail to comply can be fined up to £10,000 per day. Having software in place also provides you with an audit trail and can provide evidence against potential tribunal cases. As automatic enrolment is rolled out to more businesses, we will start to see stronger relationships built between HR and payroll departments. Pension providers often require information, which is held by these two business functions. HR will need to provide basic employee details, while payroll will provide information for payments and deductions. Bringing HR and payroll together will make the transition to automatic enrolment much smoother. With industry experts urging businesses to start preparing for automatic enrolment at least 18 months before their staging date, businesses are starting to review their systems to ensure they can achieve compliance, by taking the relevant deductions for pension schemes and providing employees with the correct communication at set dates. Business priorities are also changing and payroll needs to be prepared to adapt to deal with new requirements.
There has been a growing emphasis on “green initiatives” in recent years, with companies being expected to consider the environmental impact of their activities. Reducing your “carbon footprint” is a major concern for many businesses, and at its simplest level this can often begin with reducing the amount of paper printed on a daily basis. Work patterns are also changing, with it no longer being considered the norm for employees to only work the traditional “nine to five” in the office. There has been a steady increase in the number of people working “in the field” who may only visit their office once or twice a month. Some people believe that these changes are leading to “the demise of traditional software” and the rise of cloud based solutions, although this may not be entirely true. Cloud-based solutions are definitely on the rise, with clear benefits in being able to access your solution from anywhere, without the need to reinstall the software. Moving to cloud-based digital payslips for example, allows a business to greatly reduce their carbon footprint while saving time and manpower.
Technology is also dictating trends as people are becoming more and more comfortable with the idea of using “the cloud” with personal and home devices. This doesn’t mean that we are going to see the end of traditional software however. Some people may have no desire to switch to cloud-based solutions, so it is important for businesses to be given a choice. Cloud solutions may be suitable for certain businesses, but others may be better suited to traditional software. Choosing to focus all of your attention on one or the other leaves you at the risk of alienating a large section of your customer base. You may decide to move completely to cloud-based payslips for example, but some employees will be reluctant to change and start using a new technology. Having the choice to move to the cloud or stay using traditional paper payslips means you can keep both sides happy. Change is inevitable, there is nothing you can do to stop it, but it is the businesses that are prepared to adapt to these changes that will win the day.
Mark Paraskeva Chief Executive (SME Division)
IRIS Software Group