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7 that ways UK payroll management is likely to evolve in 2024

Payroll is often overlooked, but it’s a vital process for any business, serving as the foundation of employee satisfaction and retention and a cornerstone for sound finances. That being the case, it’s good to see that payroll teams are increasingly enjoying the benefits of new tech.

But these new tools and solutions are also bringing changes to payroll management, as are shifts in work practices and norms. As innovative technology arrives, we can expect to see significant shifts in payroll management and the rise of new practices, concerns, and points of focus.

Here are seven trends that we are likely to see in British payroll management in 2024.

1.   The digitalisation of payroll will approach completion

For a number of years, payroll has been joining the shift of everything to cloud environments, ensuring that processes can be accessed and managed from any location and any device. In 2024, we’ll see the final stages of that digital transformation.

Even HMRC is slowly, but definitely, moving to encourage digital tax reporting, pushing the laggards onto the digitalisation bandwagon. According to the most recent CIPP Future of Payroll report, 38% of respondents already maintain fully paperless departments, another 54% are working towards that goal, and only 8% are not striving to achieve it.

2.   Compliance will grow in importance but not in burden

The pressure of compliance with payroll legislation is increasing rapidly, thanks to updates to the National Minimum Wage (NMW), inconsistent requirements for different Investment Zones, changes to tax reporting laws for 2024, and more. All that comes on top of growing data privacy regulations, which are partly the result of increased digitalisation.

Thankfully, payroll automation should ease the load from becoming any heavier. Tools like Dayforce offer unified payroll and time tracking integrations that reduce manual errors, freeing employees to spot and resolve more complex issues. Smart payroll software can alert employees to errors and even suggest the best way to fix them. In time, AI payroll tech can learn trends to automatically suggest fixes at the point of entry.

3.   Insourcing payroll

With the widespread adoption of digital payroll tools and automation software, organisations are reversing their previous decisions to outsource payroll. Outsourcing seemed like a good idea when payroll was highly manual and time-consuming, but now the drawbacks of high costs, complicated processes, and long turnaround times outweigh the benefits.

Next-generation payroll technology from Pento makes it far less stressful to manage payroll in-house. Features like automated data collection, tax calculation, payments, and HMRC reporting attract HR teams to handle payroll in house once more, so as to maintain control over all payroll processes, while spending less time and money on it. The balance of pros and cons for insourcing payroll has shifted heavily towards the positive.

4.   Payroll will become (even more) employee-centric

Employee experience is becoming paramount for payroll, just like for other aspects of HR. We’re seeing a growing trend of weekly or biweekly payments in place of the traditional monthly payroll, and flex payroll is also increasing. These changes are helping drive adoption for payroll management software to support employee preferences for pay frequency.

CIPP research indicates that on-demand payroll is also on the horizon. While only 5% of businesses currently offer pay on demand, with another 5% planning to do so, the number who oppose the idea dropped from 65% in 2020 to 46% in 2022. It’s likely that the arrival of payroll tech, which makes such an approach possible, has been driving this change.

5.   Self-service payroll will increase

The need to deliver better employee experience is also pushing a rise in self-service payroll services. Companies will increasingly offer AI chatbots and portals that allow employees to check and manage payroll information, tax forms, and time-off requests independently and around the clock.

In parallel, we’re seeing a rise in tech to help employees understand their payslips and tax obligations. Currently, over two-thirds of payroll teams receive employee questions at least once a month, and 40% at least once a week. Such queries are usually about pay or tax, showing the need for tools like PayDashboard, which provides resources to guide employees through their payslips.

6.   Real-time payroll will arrive

More and more companies are seeing the benefits of continuous payroll, or real-time payroll. This is when calculations are made immediately whenever data changes, enabling better visibility into mistakes and faster resolution.

It’s both the result of and driver for adoption of devolved data input solutions with integrations that automatically pull data from input sources such as time trackers, attendance recording tech, and rostering solutions. As real time payroll gathers steam, payroll professionals will need to keep an eye out for more new solutions like PeopleFirst by MHR, which do these tasks better and faster.

7.   Payroll receives a DEI role

The increasingly intense spotlight on DEI in general is being felt by payroll too. The CIPP report reveals that 29% of organisations are already reporting on ethnicity pay gaps, disability pay gaps, and pay banding gaps, alongside existing information about gender pay gaps. Another 24% plan to begin doing so in the near future.

As expectations rise for DEI reporting, payroll will have to step up to the plate. Payroll teams are likely to bear responsibility for collecting and analysing pay gap data, and potentially other DEI information. They will need to adopt more sophisticated analytics that can gather this data, preserve data privacy and anonymity, and aggregate it for public presentation.

2024 could be an exciting year for payroll management

With so many new payroll management solutions, and a wave of changes to employee expectations, compliance burdens, and DEI responsibilities, 2024 could be a banner year for payroll management tech adoption. The pressure on payroll teams isn’t likely to let up anytime soon. Payroll tech vendors should keep adjusting their offerings to meet user needs, and buyer groups should keep long-term pressures and trends in mind when making purchase decisions.