10 Step Checklist for Outsourcing Payroll
- March 1, 2017
- Posted by: Gary Parsons
- Category: Pay, Reward & Benefits
Before your company makes a final decision to outsource its payroll function, there are 10 very important things to consider regarding your intended payroll delivery partner.
Outsourcing Payroll – 10 Step Checklist
1. Can they adapt to new legislation?
New payroll legislation is being introduced all the time. Recent examples include the introduction of the National Living Wage and the scrapping of pension contracting out. Can the payroll provider promise to keep track of all legislative changes and adapt their processes accordingly?
Explore changing Payroll Legislation for 2024, 2025 and beyond
2. Can they deal with all the complex features of auto-enrolment pensions?
You need to verify that your intended payroll provider can correctly deal with new joiners and opt-outs, as well as with staff wishing to contribute more than the minimum. There are also certain requirements for writing to staff within specified timescales to give them information about the pension scheme.
3. Will they be able to complete gender pay gap reports?
From April 2016, 8,000 companies with 250 or more employees will need to publish on their websites details of the difference in average salary between their male and female employees. The difference in basic salaries will need to be calculated based on both mean and median salaries, the differences in bonus payments will also need to be published, and there will be an additional requirement to report the proportion of male and female employees who fall into specified pay bands. If you will be required to adopt gender pay gap reporting, and you plan to outsource your payroll function, then it is likely you will look to your payroll provider to prepare these reports on your behalf.
4. Can they provide testimonials from satisfied clients?
You should check to see if the chosen provider can furnish you with a series of testimonials from client companies who have been satisfied with their services in the past.
5. Will their customer service be of the highest quality?
You need to ask your intended provider whether it can respond promptly to any queries raised via telephone, email, social media etc. Ideally the provider would provide you with access to a dedicated account manager or other personal contact, rather than making you call a general helpdesk for assistance. The provider should also ideally be able to answer queries outside normal business hours.
6. Do they have extensive experience of providing payroll services?
7. Can they handle all the issues that might affect the company’s payroll?
You need to ask the prospective payroll provider if they could handle overtime payments, bonuses, commission payments, redundancy payoffs, maternity/paternity pay, child support payments, auto-enrolment pension contributions, payments to other employee benefit schemes and other business expenses. A payroll run is about much more than ensuring employees receive the correct basic salary.
8. Can they adapt if the company expands?
Suppose the you took on a large number of staff in a short space of time – would the payroll provider be able to adapt quickly to the increased workload.
9. Do they have rigorous IT security arrangements?
Levels of cyber-crime are increasing rapidly. Hence, payroll providers need to take steps to ensure that their computer systems are secure, especially as they will be entrusted with the personal details of people who work for you. You should ask the payroll provider if they have firewalls, anti-virus software, password protection and encryption to protect their computer systems, and should enquire as to whether they train their staff on IT security matters.
10. Is their charging structure easy to understand?
Is the payroll provider transparent as to how much you will need to pay? Make sure you ask and check through their fees before committing to a contract.
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