An accurate and effective payroll system helps your business run smoothly, and is a major factor in developing a contented and trusting workforce. The day-to-day problems payroll managers face, however, are often complex and challenging.
If they aren’t addressed efficiently they can severely damage your business and its reputation, and cost you dearly in fines.
So what are the main challenges payroll managers have to deal with in 2019, and how can you overcome them?
Like death and taxes, changing legislation is one of life’s certainties – so true in 2019 with the number of new regulatory amendments that have come into force. These could easily lead to non-compliance if not correctly implemented, however.
The minimum contribution employers need to make to their workplace pension scheme has risen to 3% in 2019. The total minimum contribution is now 8%. Previously (in 2018) the minimum levels were 2% and 3% respectively.
From April 2019 the Welsh government can set its own rates of income tax, so if you employ people who live in Wales as well as other areas of the country you may have to deduct different rates at some point.
For the tax year 2019/20 Welsh income tax rates are the same rate as in England and Northern Ireland, but they may change in future years. New tax codes have also been issued to taxpayers who are resident in Wales.
The requirement to provide itemised payslips for hourly paid workers, introduced following the 2017 Taylor Review into modern working practices, also adds complexity to payroll functions overburdened by legislative change.
Previously, the law required itemised payslips to be provided only to those with ‘employee’ status, but now all workers, including people on a casual and zero hour contract are included.
With effect from April 2019, the National Minimum and National Living Wage have increased as has the HMRC’s focus on employers getting this right.
To help with National Minimum Wage Calculations, the HMRC have introduced a new tool to help employers stay compliant.
Maintaining data security and privacy is a key challenge for payroll managers in 2019, and the threat of hefty fines and adverse publicity looms large under the 2018 General Data Protection Regulation (GDPR).
Robust and cohesive payroll and HR systems are essential to ensure GDPR compliance, and considering it’s now a year since GDPR was introduced the regulator is likely to take a tough approach to businesses that fail to protect sensitive data in 2019.
So what are the maximum fines you could receive for non-compliance with GDPR?
The Information Commissioner’s Office (ICO) can issue fines on a discretionary basis using a two-tier system, with the maximum fines currently being:
The tier that’s used depends on which part of the legislation has been infringed.
In their Internet Security Threat Report, 2019, leading cyber security firm, Symantec, report an increase of 25% in the use of malware to directly target and disrupt businesses, with one in ten “targeted attack groups” using this method.
Payroll managers also face serious threats from ‘phishing’ attacks on their staff. These are executed to extract sensitive or confidential information for malicious purposes. Cyber criminals disguise their identity within emails that appear to be legitimate, but that typically contain malicious links or attachments.
Gender pay gap reporting enters its second year, and it’s expected the data generated in 2018 will be closely scrutinised. In this demanding and high profile environment payroll managers need to maintain data accuracy, not only in terms of paying staff, but also to present information that can be relied upon for these important issues.
A case in point is low-cost airline, EasyJet, who reported a gender pay gap of 47.9% for 2018. This was due to the number of male pilots and female cabin crew members they employ, however, rather than a hugely disparate pay scale as the figures might suggest at first glance.
As a result of this information being presented, the company is trying to attract more female pilots, with a target of 20% of new entrants being female by 2020.
PayFit are here to help you overcome the inherent challenges of payroll. Our user-friendly software deals with the complexities caused by changing payroll regulations, and ensures accurate and reliable reports are produced without fail.