Top tips for payroll management confidence in 2020

Payroll has come into its own in the past six months. There has never been a greater focus on the importance of having solid payroll than during this pandemic.

The industry has been rocked by COVID-19 in terms of changing legislation, the need for compliance and the impact on the country’s employment levels. We’re even now seeing a huge gap in payroll across the economy; the number of employees in the UK on payroll according to ONS statistics is down by 730,000 compared with March 2020.

While businesses find ways to make a comeback, the role of payroll will be key. Navigating payroll will involve strategic planning, new attitudes to technology and payroll-centric people management. Here are some key steps for businesses to consider for managing payroll in the rest of the year.

Iron out payroll claims around CJRS Vs JSS

The Job Retention Scheme (CJRS) is winding down this month and this means employers will have to make difficult decisions around either paying full staff wages or terminating employment contracts.

The Job Support Scheme (JSS), which was announced last month, is a third option for your employees. This will involve subsidising non-working hours alongside a matching contribution from the government.

For now, you should prepare for the wage changes that will come in November. As you continue with CJRS, note that the employer contributions have increased to 20% of wages given that government claims are now only for 60%. Remember that you need to complete all October CJRS claims by the end of November 2020.

After CJRS finishes, JSS starts on 1 November. It is there to support businesses where employees are able to work at least 33% of their usual hours. Any unworked hours can be subsidised by the employer and government, each contributing 33% towards these unworked hours.

The employer will pay the employees and then make a claim to HMRC for the 33% value of the unworked hours in the month. Claims are whole months in arrears, so the first claim will be from 1 December.

Nail compliance by using audit trails

Businesses need to safeguard against government inquiry in the wake of furlough fraud. The CIPD recently reported that potentially anything up to £3.6 billion in furlough payments have been claimed fraudulently or incorrectly.

To protect yourself, you need to get on top of your books. Audit trails are key here. For this, you can check your payroll software for this function.

Audit trails allow you to link each transaction that is made with supporting information, such as purchase orders and invoices, which will validate any payments that look unusual, helping you prove that all money flowing around payroll in the company is above board.

Balance HR with payroll

Flexible payroll team structure is being introduced to meet the changing needs of temporary labour markets. This means payroll is increasingly becoming blended with HR. Ensuring employees are paid on time is not only a mandatory requirement but impacts levels of trust and productivity that workers have with the business.

Another way of balancing HR with payroll is how to keep on top of new hires. This is especially important now as churn for companies is high and the demands on flexible payroll are huge.

Balancing HR and payroll can be done by laying out a clear checklist for verifying new employee personal information and tax codes, cross-checking timesheets and implementing procedure plans for Statutory Sick Pay (SSP), statutory pay for parents (maternal/paternal leave), tips, bonuses, pensions and suspensions.

Have the right digital tools and skills

The popularity of e-payslip popularity in the wake of COVID-19 has grown. Largely this is because there is a need for reducing shared touch points where paper-based payslips will fall into many hands as opposed to an e-slip. However there are also cost savings for businesses too including postage and labour costs.

Digitalisation in payroll can also save a significant amount of admin time and therefore increase team productivity. Saving financial data to the cloud helps reduce time used for manual searching for information in storage systems like filing cabinets. Decision makers in the payroll sphere need to start investing in cloud technology for this and then train payroll professionals on how to leverage this technology.

By saving confidential payroll information to the cloud, you can also reduce physical storage expenditure and monitor access from authorised parties.

Payroll confidence for the future

Payroll has been brought to the fore by the impact of COVID-19 and, with its new visibility, comes a greater need for attentiveness and organisation, especially given the potential for the government to investigate a business’s financial books for JRS errors.

With this in mind, understanding changes that will impact payroll management, ensuring compliance, knowing how to balance HR and payroll and being armed with the right tools will help businesses to adapt to change both for this year and beyond.

Steven Watmore is product manager for payroll and HR at Sage

Further reading:

Making flexible payroll systems work

Organisations losing payroll capacity following coronavirus impact

Case study: Early wage access at Camden Town Brewery