A new study has revealed that manual payroll is a major source of stress among employers. Some employers are experiencing ‘payroll parlysis’.
PayFit recently conducted a survey in which more than one third (37%) of employers reported that manual payroll tasks are time-consuming and stressful, affecting productivity and morale. Data entry, complex calculations and salary transfers are the most common stressors. Payroll is also impacted by the new, complex requirements of the Labour government.
The secondary threshold – the amount at which employers are required to start paying NICs based on employee earnings – will be reduced from PS9100 to PS5,000. Payroll teams will have to adjust their payroll calculations in order to ensure compliance with these changes.
The Employment Rights Bill, which will be introduced in the near future, will also expand employee protections. The bill also includes measures like a first-day sick pay, holiday pay rules enforced by a new Fair Work Agency and stronger protections for pregnant women and mothers. These changes will increase the compliance requirements for teams during a period of high activity.
Employers are faced with a flurry of tasks as the year ends. These include bonus distributions, holiday pay adjustments and preparation of self-assessment tax returns. These tasks may seem overwhelming as they require strict compliance, time and resources.
Firmin Zocchetto (CEO and co-founder of PayFit) comments: “The toll manual payroll takes on team members is undeniable. Businesses are experiencing a ‘payroll-paralysis’, as we describe it. The pressure to adapt to new legislation and ever-growing payroll tasks overwhelms teams. It is important to recognize the signs that this paralysis has occurred. We must act now to protect the health of our HR and Finance teams as well as the performance of our company. It is important to tackle these stressors in order to create healthier workplaces that promote productivity and satisfaction.
The study shows that there is a high demand for technology and automation to reduce the burden of manual processes. Over two-thirds of respondents (68%) want to automate certain payroll functions. 59% believe that automation can help teams achieve better results. The most important areas to automate were submitting payment information and calculating the statutory pay, with 15% and 13%.
Automation allows teams to focus more on strategic tasks by removing them from labor-intensive payroll tasks like calculating overtime and holiday entitlements. Few employers automate payroll. Only 9% automate a quarter or less of their payroll tasks. 15% automate most, if they do not automate all of them.
Dr Melissa Carr ,Lecturer of International Human Resource Management, Henley Business School says about the research: “The research highlights that increased complexity in tasks and work can have a negative impact on wellbeing. The increasing complexity of work and legislation illustrated in this study can increase psychological stressors.
It is important to recognize that work can include periods of intense intensity. It is important to ensure that high-intensity periods are balanced with rest and recovery time. Burnout can occur when employees are exposed to high levels of intensity for long periods. This negatively impacts employee engagement and wellbeing. The research highlights automation opportunities that allow teams to focus more on high-value activities and reduce some of the stress.”
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