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Best practices for maintaining payroll compliance

The knock-on effects of payroll non-compliance can be far-reaching, placing your organisation at risk of hefty fines and reputational damage. As a business, operating in line with current regulations prevents errors and fraud in payroll processing – and is a key component of employee satisfaction and engagement.

The knock-on effects of payroll non-compliance can be far-reaching, placing your organisation at risk of hefty fines and reputational damage. As a business, operating in line with current regulations prevents errors and fraud in payroll processing – and is a key component of employee satisfaction and engagement.

Compliance reaches far beyond paying your workers on time, but prompt, accurate pay is a business basic you can’t afford to get wrong. Correct, consistent earnings make it possible for staff to heat their homes, put food on the table, and plan for the future. Without these fundamentals firmly in place, organisations risk the erosion of employee trust, productivity, and retention.

To maintain payroll compliance, companies should implement best practices such as regular audits, record-keeping, and staff training. It’s also important to have a robust process in place to handle issues and inaccuracies. This begins with a clear understanding of compliance law.

Navigating payroll compliance requirements

The UK’s PAYE policies have shifted significantly in recent years, with a raft of additional compliance concerns – from pension auto-enrolment to data privacy. Your company’s payroll planning will also be impacted by changes in parental leave entitlement, minimum wage levels, and inflation, so it’s essential to stay on top of new developments.

Relevant laws for payroll compliance in the UK include the National Minimum Wage Act, Working Time Regulations, Data Protection Act, GDPR, Employment Rights Act, and Auto Enrolment. These laws regulate areas such as minimum pay, maximum working hours, breaks and holiday, safeguarding employee data, redundancy pay, flexible working requests, and workplace pensions.

The knock-on effects of payroll non-compliance can be far-reaching, placing your organisation at risk of hefty fines and reputational damage.

Avoiding the high cost of non-compliance

Preventing non-compliance means keeping a close eye on your systems and equipping your payroll team to identify and deal with concerns. But even with solid processes and a proactive approach, errors can occur. Here’s how to head off and handle potential compliance issues.

• Conduct regular audits to identify compliance obstacles.

• Train payroll employees on laws and regulations and encourage them to report issues.

• Develop a clear non-compliance process that is communicated to all payroll employees.

• Seek advice from payroll compliance specialists or legal advisors.

• Keep meticulous digital records of all payroll transactions and employee information.

• Take responsibility and corrective action if a compliance breach occurs.

• Consider appealing an unfair fine by gathering evidence and submitting an appeal.

• Regularly review policies and procedures to ensure compliance with changing regulatory requirements.

Company-wide payroll compliance – stumbling blocks and solutions

Payroll compliance is an ongoing effort, often requiring innovation and collaboration between your business and a team of trusted advisors. Leveraging technology and working with tax and payroll specialists can minimise irregularities and keep processes in step with current payroll legislation.

While every organisation is unique, large enterprises share many of the same barriers. We’ve outlined the most common tax and payroll compliance considerations for UK businesses, along with cost-effective, achievable solutions.

Staying current with changes to tax laws and regulations
By subscribing to relevant newsletters and updates from government agencies and professional organisations.

Ensuring employees are taxed correctly
By working alongside a payroll provider with an established track record of compliance with UK tax laws and regulations.

Reporting and paying employer’s National Insurance contributions on time
By using Real Time Information (RTI) systems to report staff payments and deductions to HM Revenue and Customs (HMRC) as they occur, rather than via a complex year-end tax return.

Accurately taxing employee benefits
By using payroll software designed to handle the intricacies of UK tax laws and regulations.

Reimbursing employee expenses tax efficiently
By training workers to submit detailed records of their expenses, including receipts, invoices, and other supporting documentation.

Get support from Adecco’s payroll outsourcing specialists

Managing your payroll effectively and compliantly can be extremely time-consuming. It is vital that you pay your people correctly and on time, especially when the impact of errors can have far-reaching consequences.

Our outsourced payroll solutions help free up your time, allowing you to focus on core business activities. Get in touch with us to find out more.

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