Payroll compliance: 10 tips to get it right every time

Payroll compliance is an important consideration for HR and payroll professionals.

You need to make sure you can protect your payroll team – and your business as a whole – from any penalties that may stem from non-compliance.

You’ll also want to make sure that you’re keeping your employees happy by paying them on time – and seeing that they’re receiving the correct salary in the process.

To help you with payroll compliance, we’ve compiled a series of tips that will keep you on the right track.

Here’s what we cover in this article:

1. Keep accurate personal records

2. Manage employee expectations

3. Understand workplace pensions

4. Use audit trails

5. Stay up to date with payroll legislation

6. Understand international legislation

7. Speak to the experts

8. Get feedback from your employees

9. Switch to a self-service model

10. Submit your payroll information on time

Final thoughts on staying compliant with payroll

Making sure you have the correct personal information for each employee may seem obvious but it’s really important.

Remember, it’s your responsibility to maintain employee records accurately for the duration of their tenure.

The personal information of your employees can change on a regular basis – and some of that info will be likely to affect your payroll.

No matter whether the change is down to a promotion, a salary increase after a pay review or taking time off for maternity leave, everything needs to be processed in the right way.

While it may seem like a juggling act at times, keeping accurate personal records is something you need to stay on top of.

It’s vital you ensure your employees understand what they need to do in terms of remaining compliant.

One example of this is making sure they stick to your company’s expenses policy. Another is keeping overtime records accurate.

To help your employees, put procedures in place where you explain how to document expenses and overtime properly, so they don’t leave you exposed.

Put together a comprehensive set of policies and practices for all issues that affect the pay of your employees.

This provides a useful guide for your staff to follow and will help if they have any queries around additions or deductions to their earnings.

Workplace pensions were introduced in 2012. It doesn’t matter what type of business you run – even if you have just one employee, that makes you an employer and you therefore have ‘duties’ under the pensions law.

Have you heard about automatic enrolment?

If not, it simply means that your business, as an employer, needs to put certain staff into a pension scheme, which you will make contributions towards.

Key sites such as the Pensions Regulator will have more information on workplace pensions.

Your payroll provider should be able to offer advice too, while this guide on auto enrolment reveals information and tips to help you along the way.

Did you know there’s a way to protect your business and your reputation if there’s an investigation?

Audit trails are the answer – check to see if your payroll software offers this functionality.

They allow you to link each transaction that is made with supporting information, such as purchase orders and invoices, which will validate any payments that look unusual.

Other things audit trails can do:

  • Guard against fraud
  • Ensure corporate accounts are as accurate as possible
  • Provide insights into the health of your company.

One thing you’ll need to keep up with is payroll legislation, as things can change regularly.

But how do you keep up with it?

Attending payroll seminars, watching webinars and going to industry conferences can help to enhance your knowledge.

You’ll find they offer advice on various topics such as legislative changes and new payroll procedures.

You and your payroll team will learn about the latest regulatory changes, industry trends, innovation around payroll and more topics that will have an impact on payroll processing.

Experts in their field will be on hand at seminars, conferences and webinars to provide you with the valuable insights you require.

Your payroll software provider may also offer advice and updates so you can keep on top of legislation. And HMRC will have news on payroll legislation too.

Does your business operate across multiple countries? If so, you’ll need to deal with the complexities of international payroll.

When it comes to wages, deductions, remittances and reporting, each country has its own rules and regulations. You’ll need to keep up to date with them.

Meanwhile, more countries are moving to real-time filing and electronic deposits. Having to deal with different currencies, customs and time zones will make this process more of a challenge.

Having a good understanding of international legislation will make things easier.

Read more about payroll

Need help with payroll compliance and legislation? Have a chat with an expert.

If you use an accountant (discover how to choose an accountant for your business), they will have a good knowledge of payroll compliance and can assist you with regulations, important changes and updates.

In addition, they can help you keep records up to date, file your returns and remit taxes.

And if you need support around payroll issues or with finding solutions for discrepancies in records, they can provide it for you.

One thing that can help your business is to monitor complaints and request feedback from your employees on how processes can be improved.

This counts for your payroll processes too.

Once an issue has been identified, you and your payroll team can analyse workflows to spot where errors are creeping in.

If your employees feel they can comfortably voice any concerns, managers can be informed before problems get out of control.

By reassuring your staff that you have their best interests at heart, you’ll be helping to maintain a committed and happy workforce.

Your payroll team shouldn’t have to chase and add every piece of data about the working lives of your employees into systems.

Chasing timesheets and expense forms takes a lot of time (try using online timesheets instead) – time that could be better spent doing more valuable tasks.

By moving to a self-service model, you’ll be giving your employees more responsibility. It makes it easier to review and approve their requests as they come in.

It also puts the responsibility on your staff to submit their personal information.

If you make late submissions, your business risks being penalised.

Payroll can be very complex and you have numerous considerations that need to be dealt with including:

  • Tax deadlines
  • Shifting paydays
  • Quarterly reporting.

So make sure you factor in enough time to get tasks done.

To help you stay on top of things, you could create an annual calendar. It should feature all the important dates that you need to stay on top of, covering the submission of timesheets and invoices, and when payments need to be made.

This will help you ensure that key tasks aren’t missed.

The calendar will also allow you to keep employees informed on when they’ll get paid. And it will help your team stay on top of any tasks that need to be carried out so payroll is run smoothly.

One task you need to cover is payroll year end.

This is the process that involves you ensuring your final reports to HMRC are submitted by 19 April. And your employees must have access to their P60s by 31 May.

There are more steps you need to cover to close off the old payroll year and start the new one.

Want to learn more about the process? Read our payroll year end checklist article.

Payroll can be complex but staying on top of legislation is important. As you’ve seen, there are a number of things you need to do to stay compliant.

By getting support where you need it from accountants and other payroll experts, using good payroll software, and keeping up to date with legislation changes via training, webinars and seminars, you’ll give yourself the best chance to stay compliant with your payroll.

Editor’s note: This article was first published in August 2019 and has been updated for relevance.

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