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The Secrets of Achieving Payroll Compliance

Powerful payroll and compliance strategies are critical to modern organisations. Especially in legislation-led industries such as financial services, where payroll and HR requirements are different. 

So how do you put the right systems in place to simplify the pay-run, confidently remain compliant, and get through each pay-cycle without stress? 

Our recent Payroll & Compliance webinar brought together industry experts to highlight the ever-changing world of compliance and payroll rules and regulations, and advice on successfully navigating this complex landscape. Here we outline five key takeaways from the webinar, featuring valuable insights from two thought-leading payroll experts. 


  • Simon Parsons (Director, UK Compliance Strategies) – SD Worx
  • Helen Bailey (Business Risk Management, HR) – Capital One

1. How recent changes to legislation have impacted payroll 

Many years ago, the operation of payroll was around calculating wages predominantly, getting sufficient cash from the banks and putting them in brown envelopes and making sure we securely issued them to the employees. But over the past 20 years, the compliance obligations of payroll have increased rapidly with several elements. This is an area that SD Worx is interested in with having a long legacy in financial markets and sectors.

  • Rishi Sunak’s Spring Statement made further changes to payroll and added complexity. This reflects how the government is always tinkering in the current volatile and uncertain economic climate we find ourselves in.
  • The challenge in the financial market in recent news – sanctions against Russia. There’s an element of ‘What do we do about economic crime controls and obligations that fall on you as financial institutions? And where do you place your trust in ensuring that you’re meeting your regulatory obligations as well?’
  • The pace of change is ever-increasing and recently we had the Chancellor announcing a change to employment allowance that impacts more employers. On 6th July comes changes to National Insurance thresholds and then in 2024 changes to basic rate predictions.

Remuneration and reward are becoming more complex but equally also is the value of individual data.” – Simon Parsons, Director of UK Compliance Strategies, SD Worx 

    Poll #1 – How confident are you that your current payroll practices can respond to changes in legislation?

    1. Complete confidence – 41% 
    2. Fairly confident, but with some specific concerns – 46% 
    3. Not very confident – 7% 
    4. I don’t know – 5% 

    Reflecting on the poll’s findings, it’s rather telling that only 4 in 10 people say they have complete confidence that their payroll system is compliant. 

      Essentially, we must use our frameworks to help us ensure we comply. So, it's all about making sure you can identify those requirements and build controls around them. We use SD Worx as a trusted provider, so we look to them to support us with these changes.” – Helen Bailey, Business Risk Management, Capital One 

      The government has got a massive tax gap that it’s trying to close as it’s spent billions, if not trillions, that they want to get back and reduce the national debt. So, we don’t think we’ve seen the end of changes yet, and much-vaunted tax simplification just never seems to get there. 

        Watch our on-demand webinar on achieving payroll compliance:


        2. Key considerations around compliance, risk management, and data security 

        Data security is perhaps even more important now than at any other time, with so much going on. Ambiguity is something we always look to avoid at SD Worx. We purposely look to make things more clearcut. But when you're faced with a fast-moving environment like this, where there are so many changes going on, you can't anticipate every possible scenario, every possible set of circumstances. 

        Compliance, data security and risk management are table stakes. For us, they are non-negotiable, and how we structure our frameworks is based upon them. For me, the biggest thing is having a process to identify them and creating a level of structure around what you do in this space.” – Helen Bailey

        • The key considerations are ‘What are legal and regulatory obligations? How are you going to identify them and make sure you comply? 
        • “If you can't outsource your compliance obligations, you have to own and be accountable for that yourself.” It’s important to build frameworks around making sure that we can test processes are working as they should be.
        • Create a structure that allows you to lean on experts and gather insights from the right people, allowing you to put in place proportionate risk management practices and controls to make sure that we can assure compliance moving forward.
        • It’s important to adhere to industry-standard type obligations and have controls, and tests of those controls in place to see that they're fit and proper.

        Know your risks, understand them, and ensure you build adequate controls to monitor and mitigate them. You must have a level of structure that allows you to capture and do something meaningful. Knowing something is one thing, but it doesn't help you if you don't take action. 

        3. How to hold third-party providers to the same standards and controls expected of your industry 

        We've already introduced this idea of a ‘partner’. So, when we're working with partners, while we can't outsource your compliance obligations, how could we hold third-party providers to the same standards and controls that we expect of ourselves and our industry? So how can we measure the performance and hold them accountable for those standards and controls? 

        • We need to know partners are meeting their obligations, and we're meeting our obligations at the same time. We need a level of structure and control around this which starts with the onboarding of third-parties.
        • This means having good third-party arrangements and contracts set up where clear expectations are set in the contract for what you expect around compliance or risk management, or contingency. Onboarding is a critical part of being able to hold a third party to account within that contract.
        • Upfront contracting, clear, ongoing monitoring frameworks in place, and maintaining healthy effective relationships with our suppliers are key.

        We're open and honest in what a partnership really is. It’s a partnership to deliver success for businesses. And we believe we’re a great partner for that.” – Simon Parsons 

        We at Capital One pay SD Worx to understand tax and HMRC. That’s a skill we don’t have. We’re a credit card provider. That’s why we’re seeking that skill out. And it’s a difficult balance between not being able to outsource compliance but actually buying a service that has the skill to ensure we comply, which is why I pay SD Worx to do it.” – Helen Bailey 

        The word ‘trust’ came up several times. Trust often means that there's an expectation, such as those set by organisations and legislators – a commonly agreed standard or a deliverable that we all want. But then there's the delivering it pragmatically, consistently, legally, and reliably.  


        4. What a best of breed payroll looks like for Financial Services 

        What does the best of breed payroll system look like for financial services? How would you define that? What's the best we can expect? 

        Best of breed means, to me, are they financially sound or could they disappear next week? You're trusting a lot of personal information to them. Do they have appropriate processing and quotations in place? Is it a true partnership arrangement?” – Simon Parsons

        • Look at their systems and the credibility and professionalism of the qualifications of their staff – are they at an appropriate level? Is your advisor qualified? And do they know what they're saying?  
        • Best of breed is based on stability, history, their adaption of new technology, and how responsive they can be to change.  
        • Look at the credibility and the associated risk because you don't want to fall foul of legislation. An organisation that keeps abreast of government and employment change that applies to you as a client is paramount. 
        • Working with true experts in their fields, and building systems, processes and relationships that can respond to constant change is critical. 

        SD Worx are payroll legislation experts, so why wouldn't I use them and their services as part of that relationship? True, deep subject-matter expertise and trusted partners are key to helping us manage our risk exposure. Payroll is a process that involves transferring money and involves personal data, so it must be effectively managed and controlled. A partner willing to engage with you on that and build adequate controls is key.” – Helen Bailey

        • A keenness to develop and grow and evolve is key. The world around us is changing and providers are continually scanning the external environment, picking up on new ways of doing things, from processes to skills. 

          Poll #2 – If you were looking to enhance your ability to remain compliant, where would you start?

          1. Outsourcing payroll to a third party – 22% 
          2. Payroll software with inherent compliance – 33% 
          3. Build your own internal expertise – 41% 
          4. I don’t know – 3% 

            The poll results tell us that traditional payroll is seen as maybe in-house, but it's not in-house generally. There is always some sort of outsourcing involved. There is a tendency to want to understand and control it all internally which depends on the size of the organisation. I think comes in thirds—some that will, some that won't, and some that don't really know or care.” – Simon Parsons 

            Indeed, the only constant is change. But what isn't constant is the pace of change, which definitely feels like it's accelerating. The ability to work with a partner who can give you this inherent agility and resilience, the reliability to trust, is incredibly important.  


            5. How to ensure a stable HR and Payroll set-up whilst remaining agile to legislative change 

            There are a couple of words that we hear all the time in almost every walk of business, and those words are ‘agility’ and ‘resilience’. So as people look forward, they're looking for solutions that are agile to change and resilient to things that are going on. So how can we ensure a stable HR and Payroll set-up whilst remaining agile to unexpected legislative changes?  

            If you're using the correct method, and a process that works to establish that the risk is not increased, you can continue compliance along that journey. There's an element of being prepared to embrace new technologies, yet not increase the risk of instability and security. I think there are significant benefits in simplification that can be obtained through technology.” – Simon Parsons 

            It depends on your interpretation of the word stable. But I would argue that you only have a stable HR practice if it's able to respond to change because if you don't comply, it's unstable in my mind. So, I think the two come hand in hand. It requires structure, understanding your risk, and ensuring you build adequate controls.” – Helen Bailey

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              At SD Worx, we forge payroll partnerships built on trust and collaboration. We offer integrated solutions and services for powerful Payroll and HR. So, if you’re thinking of investing in your payroll systems, you should request one of our free 1-hour Payroll Discovery sessions – where we offer tailored advice to kick-start any business case for upgrading your payroll solutions.