Every year, the Chartered Institute of Payroll Professionals (CIPP) compiles a survey report determining the latest trends in payroll.
When this is published, it provides a valuable moment of reflection with a chance to consider how the future of payroll can move towards greater compliance.
Overall compliance is quite a mixed picture, so we are going to take a deeper look at the CIPP survey report.
Where has compliance improved?
Since 2019, all employees have been entitled to itemised payslips.
This was meant to empower employees to understand exactly how the fruits of their labour were being divided to avoid any confusion or friction.
As of the latest CIPP report, compliance with this has now reached 91.16 per cent.
While this is a good score, it is disconcerting that, after more than half a decade, compliance is still not absolute.
In other good news, compliance around Full Payment Submission (FPS) for payday reporting has increased by more than 10 per cent in the last year.
The previous survey listed this compliance as only being around 58 per cent, so while it is a relief to see improvement, there is still a long way to go.
A vast number of businesses may face repercussions from not fulfilling these compliance requirements.
If the recent changes to Companies House are anything to go by, there is a current trend of cracking down on noncompliance.
As this is an area where many businesses still seem to struggle, it is worth any payroll advisor giving particular focus to improve the rates of compliance in this regard.
Knowing that this may be something that clients struggle with may allow for conversations to take place to determine the extent of the knowledge concerning this.
Businesses are risking fines from HM Revenue and Customs (HMRC), so accountants can work alongside them to improve the overall quality of payroll compliance.
Where has compliance fallen?
Disturbingly, the CIPP report does not chart entirely positive trends.
Compliance on holiday pay reference periods fell by 6.8 per cent.
This may be because of the nuances and complexities that surround holiday pay, with many businesses not able to accurately determine their full responsibilities.
This is resulting in diminishing rates of compliance and is a cause for concern for payroll experts.
Compliance training and raising awareness of the rules around holiday pay will help stem this issue before it becomes a greater problem.
While not a compliance issue, a disturbing 57.57 per cent of employers do not use any tools to help their employees understand their payslips.
This is a missed opportunity to help employees feel more connected to their wages and take greater control over their finances.
Payroll is not simply about ticking boxes for compliance, but should be about protecting and empowering employees.
There is scope for accountants to introduce best practices to businesses rather than solely focusing on compliance checks.
Employers can be shown the benefit of empowering employees, as this increases employee satisfaction and leads to a healthier work culture.
The main payroll focus of accountants should be on boosting compliance.
Many businesses fall into noncompliance through ignorance, so accountants can use their unique skills and expertise to highlight pitfalls and work to rectify issues.
The CIPP are due to release their next survey report soon, and it will be fascinating to chart the trends further.