Senior Policy Liaison Officer Chartered Institute of Payroll Professionals
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CIPP releases seven year payroll study

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21st Sep 2015
Senior Policy Liaison Officer Chartered Institute of Payroll Professionals
Columnist
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The CIPP’s policy team has been undertaking research each year since 2008 with the aim of understanding the long term trends affecting employee payslips, writes Diana Bruce, the CIPP’s senior policy liaison officer.  

This study looks at the number of people being paid, the frequency with which they are paid, the method of payment, the information included on payslips and how the payslips are distributed as well as looking at the potential benefits and cost savings of electronic payslips.

In addition, with the increasing roll-out of employer obligations to automatically enrol workers into a workplace pension scheme, this year the research has again included questions to establish whether these obligations have brought additional financial and resource burdens.

The research was conducted using an electronic survey tool, links to which were circulated to CIPP members through various news alerts. The survey was also published on LinkedIn and Twitter to obtain views of payroll professionals who may not be members of the Institute. There were 124 respondents in total, a pleasing increase on previous years, however as with all research, not all respondents answered all questions

Demographics

The proportion of respondents dealing with payroll in-house remains consistent with previous years at 81.5%, with 18.5% reporting that they were responding as a payroll bureau or agent on behalf of their client base.

The highest percentage of responses came from the education sector, closely followed by retail and manufacturing. Consultancy was the fourth most popular response with Local Government and construction equal fifth.

The number of respondents reporting that their business operates throughout the UK is in line with last year’s results at 35.6%, however, the number reporting that they operate in the UK and overseas has increased from 8.6% in 2014 to 12.5% in 2015. The South East of England remains strong with 19.2% of respondents saying they operate their business there, but the Midlands has declined dramatically from 18.6% in 2014 to 1% in 2015.

Paydays/number of employees paid

One result that remains reassuringly consistent throughout all the years of this research is the pay day, with Friday being by far the most popular pay day for weekly, fortnightly and four weekly payrolls. The last working day of the month continues to be the most popular pay day for monthly payrolls.

Reversing the results from 2013-14, there has been a reduction in the number of respondents paying more than 10,000 employees, down from 15.9% to 12.7%, though the number paying between 5,001 and 10,000 employees has increased.

Last year’s research saw a sharp rise in the number of payroll bureaux operating more than 1,000 payrolls, leading us to question whether this was as a result of the increasing administrative and legislative burdens being placed on employers. However this year the figure has dropped, becoming more consistent with the results prior to 2013-14.

Payslip distribution

Processing payroll and distributing payslips in-house continues to be the most popular response at 41.2%, however this year has seen a significant increase in the number who process payroll in-house and provide only online payslips, up from 12.5% in 2013-14 to 25.8% in 2014-15.

The number of respondents using electronic payslips has increased slightly from 33.9% in 2013-14 to 37.2% in 2014-15. The number of respondents providing payslips in pressure sealed / heat activated envelopes has dropped from 73.1% last year to 60.8% in 2014-15.

A surprising finding this year is that, despite more respondents saying they only provide online payslips, and the number of heat activated envelopes falling, the number providing online payslips has risen only slightly. Perhaps in the past respondents have provided a choice of how the payslip is received and it may be that the choice of receiving a hard copy payslip is being gradually removed.

Accessing payslips through an employee self-serve system is now jointly the most popular method of distributing payslips, along with sending the payslips to the relevant department. With the slow and steady progress towards electronic payslips, 77.8% of respondents who have introduced them say they have seen benefits from doing so, however 11.1% say they have not experienced any benefits from the introduction of electronic payslips.

Payslip information

Complaints regarding the confidentiality of personal information on payslips continue to fall, down to 33.3% in 2014-15 from 41.2% last year.  Looking at the information contained on the payslip, 100% of respondents include the tax code on the payslip but only 80.8% include the National Insurance category.

Despite having a legal obligation to show earnings before and after deductions, less than a third of respondents (30.8%) show the gross contractual pay, 96.2% show the tax deducted and 98.1% show the employee’s National Insurance contributions.

And finally, showing that last year’s results were not a fluke, we still have the extraordinary situation where only 97.1% of respondents show the worker’s name on the payslip.

Additional costs as a result of automatic enrolment

With the ongoing introduction of automatic enrolment, respondents who had begun automatically enrolling workers into a workplace pension scheme within the last 12 months were asked whether they had incurred any additional costs or administrative burdens.

All the respondents to this question were employers; none of the agents who responded reported that they had yet begun automatic enrolment duties for any of their clients. Of those employers who replied that they had begun automatically enrolling staff into a pension scheme over the last 12 months, the number who said they hadn’t incurred any additional costs has dropped from 43.33% last year to 23.16% this year. To build up a picture of the impact of automatic enrolment, this question will be asked again in next year’s research.

As last year, the most frequently given reason for additional cost was for upgrading payroll software with the automatic enrolment functionality. This was closely followed by the need for additional resource, both to prepare for automatic enrolment and for undertaking the additional duties once automatic enrolment was in place.

When asked to give an estimate of the costs involved, middleware to perform automatic enrolment functions resulted in high costs for one respondent at £35,000. Several reported costly additional resource estimated to be as high as £25,000, both to prepare for automatic enrolment and to perform the routine automatic enrolment duties.

Diana Bruce, MCIPP Dip, is the CIPP’s senior policy liaison officer. You can access the full report here: CIPP payslip statistics comparison report: 2008 – 2015

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