The COVID-19 pandemic has disrupted labour markets globally in 2020. The short-term consequences were severe – people lost their jobs, small businesses struggled to stay afloat and employees scrambled to adjust to remote-working arrangements.

At the same time, we also saw how organisations and their payroll management schemes continually adapt and keep on top of the ever-changing schemes implemented by the Singapore Government to support employees through this difficult and uncertain time. Digitalisation, automated work processes and flexible working arrangements were some of the adjustments that organisations had to make in order to ensure employees are still paid their salaries in a timely and accurate manner.

Considering the way COVID-19 has impacted businesses and operations, organisations may have identified certain limitations in terms of HR operational processes when it comes to working remotely. As a result, many organisations and HR professionals recognise that there is a need to improve their payroll operations. Here are some of the payroll management trends that we can expect after the COVID-19 pandemic.

Managing payroll with cloud-based payroll software

The move towards a remote-working arrangement during the pandemic means that running payroll on excel spreadsheets or on-premise payroll software becomes extremely challenging and complex. The first limitation is the lack of accessibility, in which payroll staff are unable to physically go back to office to use the organisation’s payroll software. The second limitation is data security. Payroll contains sensitive and confidential information. Managing payroll outside of the organisation’s IT systems and servers exposes the data to potential security breaches and hackers.

The pandemic has highlighted an imperative need for advanced payroll systems that are accessible to employees regardless of location or geographies. Cloud-based payroll software addresses those limitations by allowing remote access to payroll data, eliminating the need for payroll staff to be physically present in the office while ensuring that the necessary data security controls are in place. Most cloud-based payroll software are also able to integrate other HR functions such as time-tracking and tax filing as well as regular software updates to ensure compliance with changes in employment laws and statutory contributions. This allows organisations to streamline standalone HR processes onto a unified HR platform, ensuring accurate and compliant payroll despite remote work arrangements.

Robust remote data security

Businesses are gradually adapt to the new norm of hybrid working. Data security within payroll software becomes an increasingly critical focal point for organisations today. According to Shred-It’s 2018 State of the Industry report, they found that more than 80% of C-suites in North America believe that the risk of a data breach is higher when employees work remotely. Organisations are moving towards adopting a hybrid work arrangement. Employees are allowed to work a certain number of days remotely and the rest of the days in office, this means having to overhaul internal security controls to strengthen data procedures. Particularly in the case of managing payroll processing, where payroll staff have to handle sensitive and confidential payroll and employee records, it is imperative to introduce new data security protocols as well as educate employees on data security procedures.

Some of the new data security controls that organisations can put in place include multi-factor authentication (MFA). This requires the user to go through a two or more steps verification process before they are able to access the payroll system. Other controls could include introducing Virtual Private Networks (VPNs). Instead of using unsecured WiFi networks to access payroll if it happens to be a cloud-based payroll platform. Besides implementing new data security protocols, payroll staff should also be trained on the internal data security procedures. They are well-equipped with the necessary knowledge to handle potential payroll data breaches.

Integration of payroll system with HRMS

The shift towards hybrid in-office and remote working also stresses the need for integration of payroll software with other HR functions. Such as employee attendance, leave application, and expenses management. Organisations can consider platforms such as Human Resource Management System (HRMS) that supports the full spectrum of payroll functions.

Remote working means that there are certains limitations if HR functions were executed on individual software or platforms. This could include delayed payroll processing times, inaccurate employee records, failure to accurately capture employees’ reimbursement, delayed expenses reimbursement and more. It is useful to integrate payroll with the organisation’s human capital management system (HCMS) or HRMS. This facilitates accurate tracking and record-keeping of employees’ details and payroll information. This also means that salary items such as leave applications, expenses claims or allowances are automatically captured during payroll processing. The result? Minimal payroll errors, high payroll accuracy and timely salary disbursement which in turn leads to happy and engaged employees

The impact that the COVID-10 pandemic had on managing payroll is clear that traditional payroll processes will change. While it is difficult to predict what the exact changes are. Organisations need to be agile and adapt quickly to the changes. Besides automating administrative processes and leveraging on technology to streamline workflows, it is also crucial to ensure that managing payroll remains accurate and compliant at all times. Hybrid-remote working becomes the new norm, organisations have to find ways to ensure payroll remains highly efficient and cost effective.

Key considerations when switching to in-house payroll processing

Payroll staff capabilities

Switching from outsourcing payroll to processing it in-house is a herculean task. Not only does this mean that payroll staff have to be inherently aware of the end to end payroll process. They also need to familiarise themselves with the nuances of the respective countries labour laws and regulations.

Migration process

Ensuring internal staff’s capabilities is important. Organisations also need to migrate historical payroll records from the external vendor back in-house. At the same ensure the data is formatted in accordance with the in-house payroll software. The entire migration can be an arduous and long process, whereby multiple steps are involved – integrating the Human Resource Management System (HRMS) with existing systems, setting up payroll Standard Operating Policies (SOPs), linkage to organisation’s corporate bank accounts, and setting up appropriate levels of employee access to payroll data. What is the next step after these integration and migration steps are completed? Organisations may also need to roll out a communication and change management plan. This is to educate employees on the new payroll process and system.

Fraud

In-house payroll processing makes it easier for fraudulent activities to occur. Payroll data and confidential employee records are stored within the organisation itself. There may also be instances in which fraudulent activities occur unknowingly when payroll staff are executing daily payroll operations. Some of the common instances include misclassification of employees or poor records management, leading to inaccuracies in payroll data.

No single solution

There is no single solution for organisation when it comes to payroll processing. Organisations may choose to outsource their payroll services, only to switch back to in-house payroll processing at a certain juncture. The key consideration is to weigh the benefits as well as the opportunity costs between outsourced payroll versus in-house payroll processing. It is helpful for organisations to consider which payroll processing option is sustainable in the long run.

Why is it crucial to maintain payroll confidentiality?

There are many reasons why it is crucial to ensure payroll confidentiality.

Prevents identity theft

Payroll records do not simply provide an employee’s compensation records. It may also contain other sensitive employee information such as registered name, personal identification number, and personal address. For this information falls into the wrong hands, this may risk the employee’s personal information being used for illegal purposes.

Prevents jealousy among employees

Compensation may be a sensitive topic for some employees. Imagine the consequences if two employees from the same team at the same internal grade finds out that one is being remunerated more than the other? Employers cannot stop employees from willingly discussing compensation among themselves. It is important to keep employees’ payroll information confidential from employees.

Protect business information

Keeping your payroll records confidential provides you with a competitive edge over your business competitors. It prevents them from “stealing” away your employees and key talent. Consider offering a more competitive compensation package than what your organisation is currently paying.