Furlough changes contributing to payroll errors

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Numerous changes to furlough and government support schemes means nine in 10 employers have paid staff incorrectly over the past year.

A survey of 250 HR and payroll managers found 91% have made payroll errors every month over the last year, due to frequent changes to business support schemes including the Coronavirus Job Retention Scheme.

Ninety-four per cent have run into problems processing payroll and 46% said HR and payroll employees had to work extra hours to process the frequent changes to wage subsidies.

At various points over the past 12 months, the level of wage support offered under the furlough scheme has ranged from 60% to 80%, with organisations having to make changes to their processes in order to reflect this.

The level of support offered by the government is currently at 80% of wages for hours not worked, up to a maximum of £2,500 per month. In July this will reduce to 70%, up to £2,187.50; and in August and September it will be 60% of wages up to £1,875. The scheme closes on 30 September.

A third of those surveyed by HR and payroll platform provider MHR International said the number of payroll errors had increased, while 37% said these errors distract them from other critical tasks.

“Payroll and HR teams have shouldered a heavy burden during the pandemic, with changes imposed at the drop of a hat. These have required extensive knowledge of rules about furlough and employment support, National Insurance, pensions, holiday entitlements and employment status,” said MHR CEO Anton Roe.

“These teams need as much support as possible from employers to increase efficiency and avoid delayed or incorrect pay. Having good payroll software in place will not only significantly improve errors made, it will reduce the pressure on these hard-working teams.”

The company also surveyed 1,000 UK employees about their experiences of payroll errors over the past year. Of those paid incorrectly, 71% said it has happened three times since the pandemic first hit, and 65% have had to borrow money from friends or family, or use high-interest loans or credit cards to get by.

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