According to PayFit, a provider of payroll and HR software, manual payroll can cause what is known as “payroll parlysis” with 37 percent reporting high levels of stress among their teams due to these time-consuming tasks.
Data entry, complex calculations and salary transfers are the main sources of stress in payroll. New regulations add to the already stressful year-end period, putting additional pressure on payroll teams.
The Compliance Changes Increase Pressure
In April 2025 the National Insurance Contributions (NICs), which are employer NICs, will be increased from 13.8% to 15%, and the secondary threshold will drop from 9.100 PS to 5,000 PS. This adjustment will require HR and Finance teams to make additional calculations and updates.
Gleichzeitig, the Employment Allowance (PS10,500) will be doubled, providing relief to smaller businesses. The new Employment Rights Bill, which will provide expanded employee protections, will add to the complexity. The measures include a first-day statutory sickness pay, stricter rules for holiday pay under the new Fair Work Agency and enhanced protections of pregnant employees and those who are on maternity leave.
Firmin Zocchetto (CEO and co-founder of PayFit) said: “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 recognise the signs that this paralysis has occurred. “If we don’t take action, the health of our HR and Finance teams as well as our company’s performance is at risk.”
Year-End demands compound the issue
Payroll teams are under increased pressure as the end of the year approaches. They must distribute bonuses, adjust holiday pay and prepare for self-assessment returns. These tasks demand precision and compliance which puts additional strain on resources.
The survey revealed that 68 per cent of respondents wanted to automate some payroll functions. They recognized the benefits in terms of accuracy and productivity. Automating payment information (15%) and calculating statutory wages (13%) were identified as critical areas. Only 9 percent automate up to 25% of their payroll tasks. 15 percent automate the majority (more than 75%) or all of their payroll functions.
Dr Melissa Carr is a Lecturer at Henley Business School in International Human Resource Management. She said: “It’s important to recognize that work can include periods of intense intensity. It is important 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.
