The personnel and payroll functions may seem different but there are areas of overlap - especially the information their systems hold about staff. But this information differs a great deal between the two functions, and this is reflected in software design. Ian Congreave reports
There is a general view among payroll people that their colleagues in the personnel department don’t understand them. One commonly expressed reason for this is that payroll work is driven entirely by contractual and statutory deadlines - neither employees nor the Collector of Taxes can be paid late.
Another factor is the nature of the legislation within which the payroll function operates. Most of the requirements set out in the Employment Rights Act 1996 are to do with the protection and enforcement of employees’ rights, with only a few affecting payments through the payroll, such as the “time off with pay” provisions. The effect of employment legislation on personnel departments is largely procedural, involving the manner in which employees’ rights and benefits are administered.
By contrast, the payroll function operates principally within the requirements of the Income Tax (Employments) Regulations 1993, various social security Acts and regulations, and many other sets of regulations relating to Statutory Sick Pay, Statutory Maternity Pay, Court Orders, Tax Credits and Student Loan deductions. The effect of this legislation on payroll departments is mainly calculative, ensuring that employees’ pay and deductions are properly computed.
There are areas of overlap, however. Compliance with the minimum wage and working time rules is a joint payroll and personnel exercise. The annual reporting of expenses and benefits, and the calculation and payment of Class 1A National Insurance contributions liabilities, can be carried out by either function, or both.
The frequency and scale of legislative change is another important difference. Changes that affect personnel are spasmodic - irregular but significant when they occur. Examples are the maternity and parental leave and the trade union recognition provisions of the Employment Relations Act 1999. Much of the change originates in Europe, such as the Part-time Workers Regulations 2000 and the upcoming Fixed-term Workers Regulations.