Payroll and compliance: Best to pay by the rules

29 April 2009:

For payroll, post-Enron and Worldcom, compliance is no longer just about navigating through the maze of fairly mundane employment legislation, but also playing its part in demonstrating transparent, squeaky clean corporate behaviour.

And post-credit crunch, the regulatory burden is only likely to increase.

"The crunch was as much a result of the failure of the regulatory framework as of banking incompetence," says Keith Rodgers, co-founder of Webster Buchanan Research, a market intelligence company specialising in human capital management and financial management sectors. "So everyone's going to have to live with that."

Mike Ellis, finance director at payroll and HR services provider ADP, which as well as ensuring its own house is in order also helps its outsourcing clients remain compliant, also expects a rise in controls imposed on payroll.

"Certainly with the way things have moved you do need to be obsessed with compliance," he says. "There's going to be more and more regulation and more focus on control."

If you are not directly involved with payroll, you might think you can turn a blind eye to the legislative and regulatory detail. 'Someone else will sort it'. This may be true to a degree, but no-one working in pay and reward can absolve themselves of responsibility for compliance in all its many guises.

Even if you don't know all of the intricacies and complexities, it is important you appreciate what is being introduced and what impact it will have on HR, payroll and across the business.

Compliance challenges

So what legislation is likely to present the biggest compliance challenges to organisations over the coming months and where do the biggest burdens lie? The sheer volume of regulation and pace of change presents perhaps the biggest challenge in itself, and there will clearly be no tailing off in terms of compliance that arises from employment legislation and regulations.

"The expanding requirements, in relation to statutory deduction, statutory payments and reporting are the main impact on employers and clients," says Simon Parsons, director of payments, benefits and compliance strategies at HR services provider Ceridian. "This year has seen one of the largest rewrites of national insurance (NI) calculations for some considerable time. We will also see major expansion of compliance requirements in relation to in-year electronic filing."