Seismic changes ahead in payroll

Kevin O’Rourke, MIPA, Payroll Manager, Byrne Casey & Associates on big changes ahead for payroll departments.

Truthfully, most business owners, managers or CEOs, view their payroll department as an administrative burden that is necessary, but that provides no real added value to the business. It is ironic that payroll is, perhaps, one of the most vital components of any business. It is easily forgotten, that even a small error could cost a business thousands and even lead to loss of staff.

Payroll requires a high level of accuracy and a quick turnaound. Payroll impacts on the morale of employees. Your payroll department not only remunerates staff, but supplies the data to comply with employment law legislation, Revenue requirements, CSO requirements and Pensions Board requirements, and can provide valuable reporting for your financial accounts. There are massive changes coming that will impact payroll.

Revenue-led changes

As of June 2017, the face of Revenue Online Services has started changing and users will be greeted by a newer, fresher front end. Online PAYE services have changed with the PAYE Anytime system being replaced. Revenue has also made changes to the ROS registration process. This is only the start of major changes within Revenue and ROS.

The plan is that, over the next year, Revenue will eliminate the filing of P30s, P45s, P60s and the dreaded end-of-year return Form P35. They envisage that once a payroll is completed, the data will be submitted via the payroll software directly to Revenue and then exchanged with social welfare. The benefit is that Revenue will see any new employees or leavers and also will know what payment to expect at the end of month from employers (the old P30 payment). Also due to the “instant link”, social welfare can credit individuals with PRSI contributions on an ongoing basis – no are mid-year social welfare PRSI record inquiry forms to be filled in.

So all is good – well, almost! There may be huge implications in the ‘long grass’ for employers. It is envisaged that with this “instant filing”, the opportunity to amend a payroll or rewind a payroll to account for a late timesheet, bonus, deduction, updated tax cert, etc. is limited or, perhaps, even eliminated.

According to a recent meeting between the members of the Irish Payroll Association (IPASS) and Revenue, representatives at the 2017 Annual IPASS Conference, subsequent payroll changes may be looked at closely by Revenue’s system. For example, if a payment is forgotten and payroll is amended, the resulting effect is to increase liability – which may be ok. But take a situation where payroll is revised to bring down a liability, Revenue will, in their own words “look closely” as to why that happened. Considering they will see the initial return and the revised return, they will most certainly work out the reason for the adjustment.

So we are entering into a future where each payroll must be correct first time and where any attempt to subsequently amend a payroll already filed with Revenue, could be considered ill-advised. No one wants to raise a red flag with Revenue that would lead to closer scrutiny and a possible PAYE audit. It’s time to fully resource your payroll department!

GDPR

Also coming in May 2018, is the European Union’s General Data Protection Regulation (GDPR), considered the most sweeping revision to European privacy and data-protection legislation ever. Replacing our Data Protection (Amendment) Act 2003, it gives consumers greater control over how their personal data is used by businesses, large and small, across the EU. With the explosion in the volume of consumer data, current regulations are not robust enough for this digital economy. That’s a significant problem for both businesses and consumers. Payroll data falls fairly and squarely under GDPR. There will be serious fines for non-compliance.

Under the GDPR, it is envisaged that employers can be requested to disclose and then, if requested, they must delete/ remove all employee records (more than three years old) held by them, both electronic and physical. It is time to organise your employee data and payroll files now.

In payroll, you have an opportunity to look at and control staff costs, to be compliant with all employer legal and legislative requirements. But to stay ahead of future changes, it is now time to look at your payroll department and plan for these major changes.

This Business Support article featured in the September/October 2017 edition of The Hardware Journal.