# How payroll will shape up for the year ahead
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-02-25
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Boosting Payroll Automation in 2021: Trends & Challenges
Meta Description: Discover how automation is transforming payroll in 2021, with new technologies shaping the future of payroll processes and revolutionising user experience.
URL: https://financedigest.com/how-payroll-will-shape-up-for-the-year-aheadhtml

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_By **Simon Parsons,** Director of UK Compliance Strategies,_ [_SD Worx UK_](https://www.sdworx.co.uk/en)

As we start to move through the early months of 2021, we’re already seeing continued recognition of the important role payroll will play for businesses for months to come. Payroll has worked at the backbone of the UK economy and has been integral in reassuring British workers their cash flow during these challenging times.

**Boosting the uptake of payroll automation in 2021**

The introduction of new [technology in terms of automation](https://www.financedigest.com/being-nimble-and-responsive-in-banking-and-business-has-arrived-thanks-to-accounting-automation-technologies.html "Being Nimble and Responsive in Banking and Business Has Arrived, Thanks to Accounting Automation Technologies") will greatly affect payroll in 2021; payroll teams are always looking to reduce the administrative burden and automation can help achieve this.

It is likely that payslips will become more interactive with more [flexible options for when workers get their pay](https://www.financedigest.com/flexible-pay-can-boost-low-productivity-in-the-uk.html "Flexible pay can boost low productivity in the UK"). Features such as ‘pay on demand’ and ‘any [day pay day’ could see an uptick of AI usage in payroll to ensure that payment for work](https://www.financedigest.com/productivity-and-the-four-day-working-week-in-financial-services.html "Productivity and the four-day working week in financial services") isn’t static but rather fluid instead. In addition, automation is opening up exciting new avenues for user interaction. For instance, chatbots can be also used to answer cursory payroll enquires to reduce requests on professional time.

However, with tightened business purse strings, a strong case for automation [investment needs](https://www.financedigest.com/weighing-up-buy-now-pay-later-what-you-need-to-know-before-you-invest.html "Weighing up Buy Now, Pay Later: What you need to know before you invest") to be made. According to SD Worx research, nearly half (48.8%) said payroll is somewhat automated, but that more is needed, so overcoming barriers to automation like skilling and [building a proper business case](https://www.financedigest.com/building-a-business-case-for-integrated-payments.html "Building a Business Case for Integrated Payments") for it will be key. Nearly half of respondents (46.4%) cited cost as one of the biggest barriers to automation, but it certainly pays dividends in the long term, so payroll professionals [need to fight for automation’s value here when approaching](https://www.financedigest.com/why-businesses-need-to-shift-their-e-invoicing-approach-from-local-and-tactical-to-scalable-and-strategic.html "Why businesses need to shift their e-invoicing approach – from local and tactical to scalable and strategic") the C-suite.

**Keeping an eye on legislation in 2021**

Reorganisation trends for payroll will continue well into 2021 with legislation being a key factor; research from SD Worx found that almost half (48.8%) of payroll professionals believe legislative changes have been the most [important](https://www.financedigest.com/popcorn-containers-market-important-changes-in-industry-dynamics-during-2017-2027.html "Popcorn Containers Market  Important Changes in Industry Dynamics during 2017-2027") changes in payroll over the past decade.

It will be important for payroll professionals to track updates to employment law, such as pensions auto-enrolment, changes to the national living wage and, more recently, changes to furlough pay. HRMC is set to tighten its focus on fraud crackdown, both accidental and intentional, so it’s critical to keep payroll practice aligned to the letter of the law.

The difficulty when calculating payroll in 2021 is that you need to focus on compliance, adhere to rules around initiatives like the Job Retention Scheme and follow over thirty different updates of guidance from [HMRC](https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme). However, having the right technology in place can help [manage these various](https://www.financedigest.com/asset-management-it-solution-market-asset-management-grow-crucial-for-various-organizations-to-evaluate-entire-business.html "Asset Management IT Solution Market – Asset Management Grow Crucial for Various Organizations to Evaluate Entire Business") tasks simultaneously.

**Leveraging payroll data for [business strategy](https://www.financedigest.com/animal-drug-compounding-market-trends-business-strategies-and-opportunities-with-key-players-analysis-2030.html "Animal Drug Compounding Market Trends, Business Strategies and Opportunities With Key Players Analysis 2030") in 2021**

When it comes to [business strategy](https://www.financedigest.com/foot-orthotic-insoles-market-to-generate-us-5-billion-by-2026-growth-key-business-strategies.html "Foot Orthotic Insoles Market to Generate US$ 5 Billion by 2026 | Growth & Key Business Strategies"), payroll can be valuable for determining the future of people and talent management. [Payroll is evolving from being seen](https://www.financedigest.com/euro-zone-yields-fall-as-us-payrolls-seen-easing-rate-hike-pressure.html "Euro zone yields fall as US payrolls seen easing rate-hike pressure") as simply reactive. Nowadays, payroll is set to become more advisory in its capacity, helping companies future-proof operations. Three in five (61.9%) payroll professionals said they analysed their own [data regularly to see how it can be refined, while almost a third (32.1%) said they analysed external data regularly to see how they are performing in the market](https://www.financedigest.com/sterling-little-changed-after-mixed-labour-market-data.html "Sterling little changed after mixed labour market data").

However, over half (52.4%) of businesses do not utilise payroll [data](https://www.financedigest.com/businesses-seek-better-access-to-data-to-support-environmental-objectives-bright-data-research-reveals.html "Businesses seek better access to data to support environmental objectives, Bright Data Research Reveals") to help the business make strategic decisions. In 2021 we’ll see more [businesses adopting](https://www.financedigest.com/the-medical-tourism-market-is-estimated-to-substantiate-i-e-grow-at-a-handsome-rate-in-upcoming-years-the-present-day-scenario-implies-the-adoption-of-smarter-ways-to-do-business-as-such-digital.html "The Medical Tourism Market to get filtered through organic digitized growth") payroll technology to boost strategic insights. Firms are awakening to the [ways that payroll data](https://www.financedigest.com/three-ways-data-unlocks-business-value-for-financial-organisations.html "Three Ways Data Unlocks Business Value for Financial Organisations ") might inform their strategic decisions, and with that the need for the right supporting technologies.

Payroll can [provide the ability to make informed decisions ahead of time](https://www.financedigest.com/finger-pointing-helps-no-one-it-is-time-for-retailers-energy-providers-and-government-to-band-together.html "Finger-pointing helps no one: it is time for retailers, energy providers and government to band together"). For instance, HR managers can use the people analytics derived from payroll to help to improve areas like employee retention, overtime compensation, and labour costs, and ultimately optimise that [bottom line](https://www.financedigest.com/how-high-performers-can-increase-a-bottom-line.html "How high performers can increase a bottom line").

![Simon Parsons](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/sd-worx-simon-parsons-photo-2-450x403-1736838555878-compressed.jpg)

Simon Parsons

**Assessing work disruption and payroll in 2021**

Historically, payroll has been perceived to be something that ticks over and never alters. But now we’re seeing sweeping changes within the industry; the payroll industry has brought itself front and centre for [businesses in many ways](https://www.financedigest.com/five-ways-businesses-can-prepare-themselves-for-the-digital-economy-be-kaler-pilgrim.html "Five ways businesses can prepare themselves for the digital economy – Be Kaler Pilgrim").

Corporate restructuring during the last ten years with the recession and the [pandemic has impacted](https://www.financedigest.com/wework-rival-iwg-quarterly-revenue-dips-on-prolonged-pandemic-impact.html "WeWork rival IWG quarterly revenue dips on prolonged pandemic impact") payroll. Over the past decade, payroll teams have needed to become more dynamic and responsive. Businesses are now less reliant on full-time, salaried employees, with flexible working practices [gaining traction](https://www.financedigest.com/av-power-conditioners-market-will-gain-traction-over-2026-owing-to-improvements-in-audio-and-video-quality.html "AV Power Conditioners Market Will Gain Traction Over 2026 Owing To Improvements In Audio And Video Quality") even before the pandemic; 44% cited flexible working and Generation Z as one of the most important changes of the past 10 years according to SD Worx research.

In 2021 it’s likely that flexible working will be more prevalent. Salary-based roles will become more flexible and this will require a corresponding adjustment in payroll, with [companies adopting more of a retail-style approach to work and pay](https://www.financedigest.com/why-it-pays-for-companies-to-hold-physical-assets-in-separate-limited-companies.html "Why it pays for companies to hold physical assets in separate limited companies") management.

**Safeguarding payroll data in 2021**

[Data protection](https://www.financedigest.com/modern-data-protection-how-organisations-can-protect-against-cyber-attacks.html "Modern Data Protection: How organisations can protect against cyber attacks") for payroll professionals in 2021 will be an ongoing challenge. Technology has proved absolutely vital for enabling [remote working](https://www.financedigest.com/it-departments-getting-a-bad-rap-over-remote-working.html "IT DEPARTMENTS GETTING A BAD RAP OVER REMOTE WORKING"), but some of these short-term solutions raise issues around security, especially when it comes to payroll.

Handling [data which relates to personal](https://www.financedigest.com/data-privacy-and-navigation-how-our-personal-data-is-used-in-navigation-apps.html "Data Privacy and Navigation: How our personal data is used in Navigation Apps.") private information can be tricky. National Insurance numbers flashing up on screen in a coffee shop with people behind you can be dangerous. Payroll professionals need to be [careful about confidential information](https://www.financedigest.com/health-care-information-systems-market-growth-set-to-surge-significantly-during-2018-2026.html "Health Care Information Systems Market Growth Set to Surge Significantly during 2018 – 2026") when it’s suddenly visible to or in the vicinity of strangers.

Our [research](https://www.sdworx.co.uk/en/press/2020/2020-04-09-payroll-is-king-in-times-of-uncertainty) found that 69.9% of British businesses manage payroll fully or mostly in-house, but ironically now most of that in-house work will be done out of the office. Bringing in this element of uncertainty means payroll professionals [need to keep on their toes when juggling cybersecurity](https://www.financedigest.com/why-cybersecurity-needs-to-be-top-of-the-agenda-for-fs-organisations.html "Why cybersecurity needs to be top of the agenda for FS organisations") alongside their day-to-day role.

**What will 2021 look like for payroll overall?**

There are many changes coming to payroll in 2021 that will motivate [businesses to reassess their payroll strategy](https://www.financedigest.com/albumin-market-in-depth-analysis-business-strategies-and-growth-rate.html "Albumin Market In-depth Analysis, Business Strategies, and Growth Rate"). Following the [impact of COVID-19](https://www.financedigest.com/covid-19-impact-could-hit-japanese-automakers-output-in-oct.html "COVID-19 impact could hit Japanese automakers’ output in Oct") in March 2020, many businesses are coping with payroll adequately, although finding it tough to do so. This is why implementing technology, [saving money](https://www.financedigest.com/working-from-home-heres-how-you-can-save-money-on-your-auto-insurance.html "Working From Home? Here’s How You Can Save Money on Your Auto Insurance") and boosting employee experience in payroll will be key moving forward.


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