Should You Outsource Payroll or Keep It in-House?

Payroll is becoming increasingly complicated year after year. Compliance obligations are constantly changing, from superannuation to awards, benefits, and wage reviews. The costs of ensuring accurate payroll are rising, as are the risks and personal fines associated with getting it wrong.

While many businesses in Australia and New Zealand continue to process their own payroll in-house, an increasing number are looking to outsource, as has been the trend in other countries such as the United States, where over 70% now outsource their payroll. According to Jo Sutton, People & Payroll marketing manager at The Access Group, the compliance burden is often intimidating for businesses, especially at the end of the fiscal year. As a result, businesses are increasingly looking to outsource the administrative burden of payroll to an external expert who can assist them in ensuring accuracy, timeliness, and compliance, as well as helping to cut costs and eliminate people risks.

“If you want a really qualified payroll person to handle your payroll, that’s quite a big resource spend,” Sutton told HRD.

“They’re doing processing, which is very administrative, but they also need to know the legislative background and be aware of all the ongoing changes. If companies find that operational piece of the business too hard, or if they don’t want to spend as much money in-house and create a key person dependency, they can outsource to a company that specialises in payroll.”

“We’ve seen a lot of major companies that have gotten it wrong,” she explains. “There can be significant consequences in those cases, and that’s another reason to outsource to a specialist.”

Compliance, according to Head of Marketing Stephen Duncan, is a “ever-moving beast” that can introduce a lot of risk to an organization.

Only in the last 12 months has Australia implemented a number of changes to its Superannuation system, rolled out phase 2 of Single Touch Payroll, and updated Fair Work Australia guidelines for the fiscal year 2022/23. Different organizations will have different compliance requirements and needs, so delegating the entire department to an outside expert relieves the business of a significant burden.

Duncan adds that outsourcing makes sense from an HR standpoint because it ensures business continuity in the event of any unforeseen circumstances. It reduces the risks of losing key in-house experts, protects against uncontrollable local and global events such as the Great Resignation and the shift to flexible working, and frees up staff to focus on the core functions of the business.

“Outsourcing is about taking the overheads, costs and burdens that companies face in-house and putting them into an external environment,” Duncan said.

“From the HR side, there is an opportunity for better business. Instead having your staff do administrative process tasks, you can rely on that external expertise. That leaves you free to focus on your most important asset – your people, their journey and their wellbeing.”

“It’s also a good step from a business continuity perspective, particularly with trends like the Great Resignation,” he adds.

“If your payroll people leave for whatever reason, whether that’s maternity leave or just normal attrition, how do you fill that gap in a way that isn’t disruptive to the business? You need to ensure accurate, compliant and timely payroll, irrespective of what your issues are, and outsourcing is a great way to do that.”

Currently, the Access Group processes tens of thousands of payslips per month and has access to a large team of expertly trained payroll professionals. Discover how Access Outsourcing can help you transform your payroll.

Source : hcamag.com

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