National Payroll Week: Evolving payroll practices and challenges in the UK

The UK has witnessed a profound transformation in payroll practices in recent years. In the latest issue of Reward Strategy magazine, Richard George of the Payroll Centre shone a light on this evolution, emphasising the influence of flexible working arrangements and shifting payment cycles.

While monthly pay cycles have steadily gained prominence over the last two decades, certain sectors are now exploring shorter pay cycles to better align with flexible work arrangements. George introduced the intriguing concept of "pay on demand," underlining its potential to attract and retain employees. However, he cautions that a careful evaluation of its advantages and drawbacks is necessary for successful implementation.

Writing for Rewards Strategy, Group Editor Michal Lodej also highlighted the rising complexity of payroll processes in the UK. He attributes this to regulations aimed at safeguarding employee well-being and working conditions. Lodej spotlights the challenges confronting businesses that lack the necessary tools and resources for effective payroll management, noting the consequences of errors on employees’ mental health and financial stability.

Recent research conducted by workforce management platform Rippling supported this concept, unveiling that outdated and inadequate payroll technology is causing burnout among payroll teams. A survey of 259 payroll managers in the UK yielded alarming findings: 32% spend over seven days each month on the payroll process, leading to substantial stress for 77% of respondents. Medium-sized organizations were disproportionately affected, with a staggering 90% of payroll managers manually inputting data into spreadsheets. Despite these challenges, a staggering 78% of respondents hesitate to initiate changes due to fears of lengthy and complex processes. Consequently, 24% of UK businesses resort to external providers for payroll services, incurring substantial costs.

Ted Eltringham of Rippling underscored the burden placed on teams responsible for payroll management, a crucial function within all businesses, and emphasised the necessity of deploying technology to streamline administrative tasks.

Meena Salhan of CIPP explored another thought-provoking subject for Reward Strategy, discussing the nuanced distinction between guidance and advice in the context of payroll. She outlined the differences between the two approaches and the importance of grasping these nuances when seeking payroll-related assistance, shedding light on the intricacies of payroll support and its critical role in ensuring compliance and alignment.

This year’s National Payroll Week serves as a reminder of the ever-evolving payroll landscape in the UK, highlighting the current strain posed by outdated technology, the critical importance of compliance and guidance, and the need for innovative solutions to foster the well-being of employees and support the growth of businesses.