We’re beginning to establish a reputation for our useful “top tips” advice on topical industry issues, and recently published a “ten reasons to outsource your cashiering” guide focused on legal accounts and the commercial benefits of outsourcing this heavily regulated, complex business function.
Here, we’re concentrating on payroll but instead of the usual ten reasons, we’re presenting just one. Of course, many of the same reasons to outsource your cashiering will apply to outsourcing your payroll, for example lower operational costs, enhanced risk management, compliance assurance and availability of value-added support to name a few.
Why have we chosen one reason to promote the business advantages of outsourcing your payroll? Two words: automatic enrolment. Dubbed the biggest shake up of pension reform for a generation.
But before all that, an introduction…
Payroll clerks are tasked with an ever-growing list of complicated legislative and compliance responsibilities. The recent real time information (RTI) reform is a case in point. When mandatory RTI electronic payroll processing requirements were introduced last year, businesses up and down the country struggled to get to grips with HMRC’s newly defined regulations in time for the April deadline.
Often, reform comes hand in hand with financial penalties for non-compliance. Going back to automatic enrolment, The Pensions Regulator is adopting a risk-based approach to compliance with enforcement action ranging from fixed penalty notices of £400, right up to civil penalties of £50,000 for companies failing to pay contributions due.
Payroll personnel coping with a heavier workload and authoritarian legislative demands with potentially serious financial punishments for mistakes are feeling the increasing pressure of their role which demands a further investment of administration time and is more complicated in nature.
The payroll function isn’t a straightforward process of issuing salaries, although, that’s a full time job in itself. Payroll is a complex administrative task which necessitates keeping up to date with evolving legislation and liaison with government agencies.
Add into the mixing pot the fact that payroll clerks in smaller companies may also be the assigned business manager, accounts clerk, general administration assistant, receptionist and more. Needless to say, another burden is far from welcome and there aren’t enough hours in the working day for clerks to manage excess work.
As outsourcing experts, we know all about the challenges of performing payroll duties in house with limited internal resources. We know even more about the benefits of offloading your payroll responsibilities to a company specialised in the field.
Here’s where we get to the crux of the matter. The one reason to outsource your payroll…
#1: Automatic enrolment
It’s those two words again. This compulsory pension legislation means that every employer with staff working for them in the UK must automatically enrol eligible employees into a qualifying earnings and pay-dependent pension scheme. Once enrolled, the employee will pay a percentage of their salary each month, alongside a contribution made by the company, and a smaller share added by the government.
Subsequently, employees can choose to opt out but the process of automatic enrolment is repeated every 3 years. Additionally, non-eligible employees have a right to opt into the scheme at any time.
But the plot thickens. Assessment of employees’ eligibility must be undertaken on a monthly basis with ensuing automatic enrolments occurring throughout the year.
If your company already has a pension scheme, you may need to change it. If you don’t yet have a scheme, you’ll need to set one up and contribute accordingly.
And check your staging date because it may be sooner than you think. Don’t leave it until the eleventh hour to prepare. A last-minute rush is unnecessarily stressful and error-prone.
To develop plans to fulfil your payroll-related obligations, you need to cater for workforce assessment, postponement, joining and opt ins, opt outs and refunds, pension contribution calculations, general record keeping, reporting and compliance declarations. On top of this, some firms will be embroiled in negotiations with pension providers.
It’s a tremendous responsibility and, with staggered implementation and a final compliance staging-date deadline, now’s the time to act.
Your payroll software can go a long way to helping you with automatic enrolment management but not all aspects of employer duties can be supported by payroll systems. The best option by far is to outsource the full kit and caboodle to an expert team such as the Quill Pinpoint payroll division.
Which brings us to our conclusion…
By outsourcing your payroll, your designated payroll co-ordinator will manage not only all the usual time-consuming chores such as processing your workforce salaries, he / she will also look after pension contributions in accordance with this latest legislation. This includes checking for new eligible joiners, managing opted leavers, preparing statutory letters for relevant employees, uploading the pension contributions and pay data to the pension provider’s website and, if required, paying contributions via our BACS-approved bureau.
For you, it’s one less distraction and one less worry, leaving you free to channel your energies into other important business areas which may otherwise suffer from neglect of your attention.
To find out more on the Quill Pinpoint outsourced payroll service, contact the HMRC-approved BACS-registered Liverpool office by email at email@example.com, call 0151 230 5600 or visit our payroll web page.
Access the earlier “Ten reasons to outsource your cashiering” guide on the Internet Newsletter for Lawyers website.