HR Payroll
Ancient Sumerian slave traders in 4th Millennium BCE Mesopotamia would record their transactions by making pictorial markings in clay tablets which they would then harden in the sun. A particularly imaginative reader could be convinced that this was the earliest form of HR Payroll recording.
While modern HR Payroll involves less clay, the amount of effort involved is no less considerable. The payroll run is a painstaking and laborious task made all the more difficult by regular changes to tax rates and employment law. A payroll manger needs not only be adept at financial calculations but an expert in tax and an immaculate record keeper. A large requirement considering this may not even be his/her primary job in the organisation. In a small business the person with responsibility for payroll may even be the owner or MD.
It’s no wonder then that outsourcing HR Payroll is such a common option for companies of all sizes and types. In fact, come to think of it, those Sumerian slave owners probably weren’t marking those tablets with their own hands.
HR Payroll: The Advantages of Outsourcing
Whether the person responsible for payroll in your organisation is the owner or not, they are almost certainly carrying out the task in addition to their primary job function, they are almost certainly not a payroll specialist and they would most probably be happy to give up processing payroll in order to concentrate on other, core business tasks.
Outsourcing to a HR Payroll company can:
- Free up key personnel for more important work
- Improve the efficiency of the payroll process
- Minimise errors and resultant penalties
- Ensure compliance with tax and employment law
- Cut costs
- Standardise payroll across different regions
- Standardise payroll reporting
- Remove the need to worry about filing forms with HMRC or changes to tax and employment law
- Provide an ever present point of contact for your employee payroll enquiries
- In combination with HR outsourcing, provide a one-stop-shop for all your HR needs
HR Payroll: The Potential Drawbacks
For some kinds of business, outsourcing your HR Payroll can have deleterious effects. These might include:
- Making current payroll staff redundant
- Damage to employee relations if the HR Payroll company provides bad service
- Damage to employee relations through having to go through a 3rd party to make payroll enquiries
- Lack of on demand data on payroll
- Hidden costs pushing up the price of the service
- An inflexible contract leading to unnecessary expenditure if circumstances change
Of course, all these potential drawbacks depend heavily on the choice of HR Payroll company, the type of service package you buy from them and the terms of the contract under which the service is bought. It is therefore of vital importance that time and care is taken in sourcing a HR Payroll provider to ensure a good fit for your company and a smooth transition to the kind of benefits that outsourced payroll can realise.
Choosing an HR Payroll Company
The two main options for HR Payroll outsourcing are:
- A managed HR Payroll solution, whereby the payroll company takes over full processing of the payroll, payments to employees, HMRC, unions and pensions, payslips and reporting and provide the liaison with your employees in payroll related matters.
- A hosted HR Payroll solution, whereby the payroll company provide your in-house payroll personnel a full suite of tools for processing a fully compliant payroll. Your staff are still responsible for liaising with employees over payroll issues and for reporting to management but all the heavy listing is done for them.
A variety of degrees of service between these two is available, practically allowing you to decide point-by-point which elements you wish to outsource and which you wish to leave in-house. Ultimately, the decision will depend on your specific needs but careful consideration of the above listed pros and cons should provide you with a good idea of what to look out for.
