Recent findings underscore the hidden stress of manual payroll tasks for employers.
- More than a third of UK employers report increased stress due to time-consuming payroll processes.
- Key stress points include data entry, complex calculations, and compliance with new regulations.
- Upcoming legislative changes are set to add more complexity to payroll management.
- Automation is seen as a potential solution to reduce stress and improve productivity.
Recent research has highlighted manual payroll as a significant stressor for many UK employers. The study reveals over a third of businesses experiencing ‘payroll paralysis’ due to the labor-intensive nature of these tasks, which impact team morale and productivity. Common stressors include data entry, calculations, distribution of payslips, and compliance with HMRC submissions.
Additionally, new government regulations are adding to the complexity. From April 2025, National Insurance Contributions will increase from 13.8% to 15%. The secondary threshold will be lowered from £9,100 to £5,000, compounding the challenges for payroll teams. These changes require careful adjustment of payroll calculations to ensure compliance, placing further burdens on HR and finance departments.
The Employment Allowance is set to double to £10,500, providing some relief but also requiring adjustments for smaller businesses. Moreover, the new Employment Rights Bill introduces expanded employee protections, including statutory sick pay from the first day and more stringent holiday pay rules under the Fair Work Agency, intensifying compliance demands.
During the year-end period, these challenges are exacerbated with responsibilities like bonus distributions and self-assessment tax preparations. Firmin Zocchetto, CEO of PayFit, warns of the overwhelming pressure of legislative shifts on teams, which if unchecked, poses risks to employee wellbeing and company performance. He emphasizes the importance of recognizing payroll paralysis signs and tackling stressors head-on to maintain a productive and satisfying work environment.
There’s a growing call for technology to alleviate these burdens, particularly through automation. A significant majority (68%) of respondents express a desire to automate specific functions like payment submission and statutory pay calculation. Despite the potential benefits, few employers have embraced automation extensively. Only 9% have automated a quarter of their tasks, and just 15% have automated over 75% of their processes.
This slow adoption of automation, experts suggest, may stem from the complexity of transitioning to automated systems or a lack of awareness about the potential efficiency gains. Dr. Melissa Carr from Henley Business School notes the importance of integrating automation to offset high-intensity periods and prevent burnout, thus enabling teams to focus on more strategic initiatives.
Prioritizing automation in payroll processes could alleviate stressors and enhance productivity, fostering a healthier work environment.
