Eira Consulting Ltd
Consolidating Multiple Pay Frequencies
Nowadays more and more companies are going through mergers and acquisitions making the life of payroll and HR teams ever more complex. As new payrolls are brought on, staff TUPE’d in and out, the payroll department is left to deal with multiple pay frequencies, pay dates, deadlines and sometimes even multiple systems to manage.
You may not have considered the benefits of bringing some, if not all of your pay frequencies into a single date, but it is worthwhile investing some time in understanding what the specific benefits will be to your organisation including any cost savings which in some cases could be considerable.
Some of the more significant benefits are detailed here, but of course they will vary from company to company depending on how complex and diverse your organisation is;
-
Cost reduction - improved cash flow and financial benefits associated with interest accrued as a consequence of moving the pay date later in the month for a range of employees (if your current pay date is early in the month)
-
Re-engineering processes to make them fit for purpose – reduction in payroll processing time and checking procedures
-
Improved and consistent financial reporting
-
Reduction in the monthly accountancy checking performed during the payroll processing and at month end
-
Reduction in the monthly payroll processing resulting in efficiencies in time and effort of the staff
-
Improvement in the spread of the work load with continuous input right up to the one deadline date
-
Consistency in processes across the whole payroll - improved quality of payroll data input as a consequence of moving the pay date later in the month (more information on new starters and leavers for example)
-
HR would be able to work to one single deadline rather than multiple deadlines throughout the month for each individual payroll
-
Single payslip format for all employees
-
Merging all the payrolls into one tax scheme enables a reduction in the year end reconciliation i.e. P35's, P11d's etc.
-
Improvement in the ease of pay over of statutory and non statutory deductions including Inland Revenue and Pension contributions
Depending on the diversity of your payrolls the project itself could become quite complex and would require input from the payroll team and manager, system specialist, HR advisor, IT, Finance, and internal communications to ensure staff are kept informed throughout the whole process. There will need to be consultations with individual employees as your pay date is a contractual provision and any changes will need to be consulted and agreed by both parties under the variation of contract procedure. Consideration will also need to be made regarding paying advances or other financial incentives to employees that will require financial support while changing their pay date.
Supporting a variety of pay dates and pay frequencies costs far more in the long term than the investment required to consolidate the payrolls into a single pay frequency and pay date. It may seem like a daunting project to undertake, and many organisations believe that it would be too complex to even attempt with all the HR implications. Eira Consulting has vast experience in all aspects of consolidating payrolls and can support you through the whole payroll and HR process.
Eira Consulting will manage the project, provide the documentation and communication requirements and ensure you follow the statutory HR requirements for consultations and contract changes for staff. We will also provide fully documented processes to assist you to go through the same consolidation without additional support should you acquire more companies in the future.