27 February 2024

Keeping on top of legislation changes in payroll

a man talking to a lady showing her the changes in payroll legislation.

Changes in legislation are a major source of anxiety for payroll teams. How can you stay on top of them without adding to your stress levels?

Getting the most out of your payroll function has two key elements. Firstly, you need to make sure people are getting paid accurately and on time every single pay cycle. Did you know that 35% of employees would leave a job if paid incorrectly even once? People come to work specifically to get paid, so if you can’t get this right, you’ll take a real hit to your reputation as an employer.

Secondly, you also need to consider compliance with legislation. These requirements come from the government, and failing to meet them can lead to huge problems, from fines to bad press to even legal action.

It’s vital that payroll managers and officers keep up to date with legislation changes as they’re rolled out. Changes are usually implemented at the start of a tax year but will usually be announced during the autumn budget. Occasionally, longer term changes will be mentioned in the spring, but you’ll have a year or so to action those.

For even bigger changes, HMRC is officially committed to aim at giving 18 months' notice. This is what normally happens – but there have occasionally been major changes with exceptionally short notice. The furlough scheme of 2020 is a famous example of this. This is largely the exception rather than the rule, but it pays to keep your payroll team agile so they can adapt quickly when this does occur.

What are other payroll experts saying?

So, what concerns are there about keeping up with changing government legislation? A recent MHR survey of 250 payroll professionals in the UK and Ireland highlighted some common themes across a range of industries.

Key findings:

Nearly half of respondents (48.8%) cited the length of time it takes to implement legislative changes as a concern. This figure exceeded 65% among those surveyed who work in either finance or IT & telecoms. 

‘Lack of knowledge or expertise within the team’ was a concern for 36% of respondents. 

Late (‘last minute’) implementation is also a broad concern with an overall average of 33.2% regarding it as a problem. 

Alarmingly, over 30% of respondents ticked the ‘unsure of how it applies to your organisation’ box. 

What can we determine from this?

Clearly, legislative changes are a concern for payroll professionals. The frequency and varying complexity represent a challenge among all the other problems payroll teams need to handle.

There is also an obvious concern about the amount of time it takes to implement changes. Considered alongside the high level of ‘lack of knowledge’ responses this suggests a lack of training or ongoing professional development. 

Late (‘last minute’) implementation concerns not only suggest a lack of planning in some organisations but also support the lack of training and knowledge point outlined above. Many tasks will feel ‘last minute’ to people not completely versed or confident in their execution.  

So what now?

MHR’s payroll software is automatically updated in line with legislative changes – meaning customers won’t have to worry about internal training (and the time and costs) or falling foul of HMRC. MHR’s range of customisable payroll solutions work for businesses and organisations of different sizes across all sectors and industries. 

Want to find out more about the other issues payroll teams are plagued with? Take a look at our full payroll report, which is packed full of interesting data and solutions.

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