Long gone are the days when the Human Resources Department was strictly responsible for the people management (e.g. investigating complaints, employee experience) of a business, along with handling administrative tasks like creating a proper job description.
Nowadays, Human Resource Management is responsible for a wide range of tasks, from performance management (e.g. finding suitable candidates and employee development) to business management (e.g. changes to pay, salary, and bonuses). Specifically, HR Managers have a lot to think about when it comes to payroll processing, from ensuring the information is kept up-to-date to making sure employees get paid on time.
HR managers want to ensure they are properly managing payroll because even one small slipup can put employees’ trust and the organization’s reputation at risk. Ultimately, these mistakes can severely affect employee engagement. Payroll management, therefore, is a key task that needs to be done accurately.
In this post, we look at essential payroll tips and tricks for HR managers.
Understand Payroll Legislation
One of the most important aspects of payroll management is being compliant with legislation like the General Data Protection Regulation (UK GDPR). The UK GDPR governs the processing, handling and storing of personal data and applies to all UK businesses who process the personal data of an EU citizen.
Personal data can include more than you think. Beyond someone’s name, address and phone number, it also includes their health, economic and social details. This is essential for HR managers to know because GDPR concerns what data can be collected from and retained about clients and what data can be collected about employees.
HR managers also need to be aware of the Making Tax Digital (MTD) initiative. After April 2022 (which is quickly approaching), VAT-registered businesses (regardless of their taxable turnover) will be required to abide by the new regulations. This means that businesses will have to provide Her Majesty’s Revenue and Customs (HMRC) details of their revenue and costs on a quarterly basis instead of completing a tax return once a year.
Use the Best Payroll Software for Your Business
Luckily Human Resource Management can use payroll software to help them remain compliant with payroll legislation like the GDPR and MTD. If you’re using online payroll software, just ensure that the service provider is also GDPR compliant.
Business owners will want the best payroll software for their enterprise, which will depend on a few factors like the level of technical expertise they have, the company’s size, and whether employees are salaried, paid by the hour or even receive a commission.
You’ll want a system that’s tailored for your organization if you pay bonuses, commission, or overtime. However, if your payroll is predictable, you’ll need software that offers automated rules and scheduling.
Here are some other features and functions to consider when purchasing payroll software:
- Payroll and pensions go hand in hand because automatically enrolling employees into a pension scheme is now a requirement for UK businesses. This affects what payroll deductions must be made. Software can help with this by auto-enrolling new employees and managing pension payments.
- Consider software that’s accessible from any device (such as a smartphone) if you need access that’s not restricted to a desktop.
- Multi-user access is nice to have for employees to view their pay history and to enhance employee relations.
- Some software can give an accurate picture of tax paid and other deductions in real time, known as Real Time Information (RTI).
- Consider whether you need the ability to integrate with other systems, like accounting software.
- Save time on administrative tasks, like producing auto-generated pay slips.
Ultimately, investing in payroll software is one of the best decisions you can make because it’s time saving, and less prone to errors (especially when it comes to payroll legislation) compared to manually managing your payroll.
Complete Timely and Essential Payroll Reports
Payroll software will also assist Human Resource Management when it comes to sending a Full Payment Submission (FPS) to let HMRC know about payments and deductions made for your employees. You should send the FPS on or before your employees’ payday, regardless if you pay HMRC quarterly versus monthly.
To send your FPS, your software will ask you to enter your Pay As You Earn (PAYE) reference and Accounts Office reference, both of which will have been sent by HMRC after you registered your enterprise. The FPS will require employer information, employee information, pay and deductions, and National Insurance information.
More information may need to be included on an FPS if it’s a new employee, an employee leaves, an employee changes their address, you start paying someone a workplace pension, or it’s the last report of tax year. Extra information may also need to be reported about certain employee changes, such as if they took a leave of absence or got promoted to a leadership role, such as director.
Be aware that HMRC will send you a late filing notice if you send a late FPS or if you’ve paid any employees but failed to report it. This could result in a penalty charge unless you have a valid reason for missing an FPS deadline. Incorrect, late or entirely missing payroll reports can impact your employees’ Universal Credit payments.
Keep Accurate and Complete Employee Records
In order to send timely reports to HMRC, Human Resources needs to maintain accurate and complete employee records at all times. This begins with the employee onboarding process, where it’s essential to record new employee information accurately and completely. From there, any kind of information change (e.g. salary increase after an employee performance, they go from full to part-time hours) that isn’t properly recorded could result in legal issues.
In addition, HMRC can check your files at any time, so maintaining accurate records is an essential skill. While some information will remain constant, such as National Insurance Number and date of birth, other information can change, like marital status, address, and even employee pension contributions. All of this must be updated in a timely manner.
While keeping detailed and complete records may seem tedious, it’s essential to do during the development of employees at the organization and will ultimately impact payroll processing.
Having firm knowledge and comprehension of all aspects of payroll is a key component in Human Resource Management. It’s imperative to keep accurate records from the employee onboarding process up until the employee leaves the organization.
Proper payroll processing affects all aspects of the business, from legal compliance to employee engagement.
The job might still be called Human Resources, but it increasingly involves skillful use of technology and automation, and only more so as your business grows.
If you need advice on how cloud accounting can help your business with payroll, you can request a free consultation right here. Being cognizant of all aspects of payroll will keep your business running smoothly and your employees content.