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Payroll

It’s National Payroll Week. Here’s why that matters.

With lockdown ending, the countdown to the end of furlough is well underway. As workforces around the UK prepare for a return to normality at the end of the month, payroll teams are inevitably facing a host of challenges. 

It is to celebrate the payroll profession that the UK holds National Payroll Week on 6-10 September. This year the event, run by the Chartered Institute of Payroll Professionals (CIPP), is entitled ‘Keeping the UK paid’. 

Established by the CIPP in 1998, this special event demonstrates the impact the payroll industry has in the UK through the collection of income tax and National Insurance and gives the those who work within the industry the recognition they deserve. 

Whilst we would not get paid without the people working in this critical area of business, the UK Government would have also missed out on £249 billion through income tax and National Insurance Contributions in the 2020/21 financial year. 

 

Why does National Payroll Week matter? 

Over the past 18 months, the Covid-19 pandemic and social restrictions drastically altered and changed the way we do business. 

As offices and business closed around the country, 11.6 million jobs were furloughed under the job retention scheme (CJRS). At its highest peak on 8 May 2020, 8.86 million jobs were furloughed, according to HM Revenue & Customs

Under the CJRS, which cost the government £64 billion, 80 per cent of an employee’s usual monthly wage was covered by the government – up to a maximum government contribution of £2,500 a month – with employers required to pay staff wages, National Insurance Contributions and pensions for hours worked (if not on furlough), as well as NICS and pensions for hours not worked. 

Human Resources and payroll teams had to quickly adapt to these new legalities, which inevitably came with tax implications. They had to keep up with the evolving complex payroll requirements to stay compliant and avoid payroll errors that may have resulted in costly penalties and fines. 

Additionally, they had to quickly update processes. For instance, payroll staff could no longer rely on physical form signing or bank cheques. 

 

Adapting to changes 

All systems had to be updated to reflect these changes – HMRC provided templates making it easier to add the details of multiple employees – and all this all happened remotely with, at times, sub-optimal digital infrastructures available to payroll departments.  

According to ADP’s Global payroll survey 2021, 82 per cent of companies polled said they had found the Covid-19 pandemic challenging “particularly when it came to accessibility and reliability of payroll systems, and delivering accurate, timely staff pay.” 

Facing these complex challenges, businesses were forced to outsource their payroll teams partly or fully, to ensure payroll business continuity and accurate guidance through the furlough minefield. According to Deloitte, payroll was outsourced by 81 per cent of employers in Europe. 

Other businesses were forced to invest in new, agile, and smarter payroll solutions to adjust to the crisis. This was especially true by the end of 2020, as different geographical locations faced different local restrictions under a four-tier system – with some employees allowed back into the workplace, and others still on furlough, based on business requirements.  

Turbulent jobs, work-time reduction and forced leave impacted payroll teams, who had to ensure employees were remunerated on time and in line with their contributions. 

 

Back to normality 

As we navigate the post-furlough months ahead, payroll teams – recognised as ‘key workers’ during the pandemic - will face new challenges.  

Tough economic conditions will continue putting financial stress on companies, and payroll teams will have to make strategic decisions. They will also be paramount to ensure an easy transition back into the workplace and will be key in giving the relevant information to staff.  

Already, around four in ten organisations (39 per cent) said they would place a stronger emphasis on payroll in their business continuity planning as a result of the pandemic. 

The crisis has shown us the importance of timely and accurate payroll systems – first and foremost because the payroll industry kept us, our businesses, and our economy afloat. So, this week, let’s celebrate the profession that has kept the nation paid on time.