The business landscape changed significantly over the past two years, and payroll has had to adapt to keep pace with the latest needs and trends of the workforce. People are changing where they want to work from, who they want to work for, and how they want to be compensated for their efforts.
The increasing distribution of the workforce, and the rapidly expanding gig economy, are forcing businesses that wish to attract – and retain – top talent to relook their payroll processes so they can stay ahead of the curve.
Here are some payroll trends we can expect in 2022:
I’d like that in dollars, please
The rise of remote working and the gig economy has seen many businesses tap into the now global talent pool. It is now much easier for employees in one country to work for companies in another, and for businesses of all sizes to access diverse talent in new markets.
From a payroll perspective, this means businesses need to deal with the challenges of making cross-border, multi-currency payments throughout the month, rather than once a month.
To meet these global payroll demands, businesses will need to invest in agile, cloud-based payroll solution that will not only support them with quick, accurate information, but will also keep them compliant regardless of who they hire and where they are in the world.
I want my money, and I want it now!
The pandemic highlighted the importance of having immediate access to funds to cover unexpected expenses. This has brought about a rise in Earned Wage Access (EWA), which gives employees the ability to access a portion of their accrued salary from a self-service application.
The best way to run EWA is through a cloud-based money movement solution like Floatpays. Rather than being paid on a set date, pay is accrued on a daily basis – in much the same way that annual leave is – and employees can withdraw a portion of their accrued amount at any time. This method of advancing pay is far superior to payday loans, which often force employees into insurmountable debt, and gives them unparalleled flexibility and control over their finances.
EWA is forcing traditional payroll practices to evolve as the workforce increasingly makes use of on-demand payroll systems. But that’s not all – employees are also favouring alternative ways of receiving payment, which includes digital wallets like Apple Pay, Google Pay, PayPal, e-wallet, and more.
Global payroll businesses are gradually using these methods to make salary payments, particularly in regions where mobile payments are more convenient for employees than traditional banking structures.
Pay as we go
South Africa’s high unemployment rate has forced many people – lots of them highly skilled and experienced – into the gig economy, and as contingent labour becomes the trendiest hiring and recruiting model, it brings with it payroll-specific issues. That’s because contingent payroll management can be complex, and leaves lots of room for error.
Businesses that wish to benefit from the contingent workforce need to be able to facilitate instant, flexible, and compliant payment for completed jobs, which requires integrated technology and advanced payroll systems.
Companies that use a centralised human capital management (HCM) and payroll solution have easy access to complete, accurate data on the various types of workers in their employ. This saves them precious time when processing payments – especially if they’ve linked their accounting or financial management systems. It also provides more flexibility around payments – a crucial feature as mobile payments and multicurrency deposits fast become the norm.
While these alternative payment types – and the initial complexity in facilitating them – may appear difficult or even unnecessary at first, they enable greater mobility and flexibility for workers and improve the employee value proposition (EVP) of the companies who wish to hire them. The best part? These new payment methods also offer increased security and the improved compliance that goes with it.
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Benefits: Traditional, with a side of your choice
Remote work is set to remain popular with employees and organisations alike, and as such, many are reviewing their benefits packages – not only for their permanent workforce, but also their contingent ones. Benefits are becoming personalised, and are typically tailored towards mental health, career development, autonomy, and flexibility.
The Sage HR and payroll in SA: Rising to the challenges of change research report shows that 79% of SMEs are being deliberate about catering to the specific needs of the incoming Generation Z workforce. This shift in focus for payroll professionals complements the work being done by their colleagues in HR to drive business growth through talent management, employee engagement, and showing sensitivity towards social issues that are important to Gen Z.
Unique perks and benefits that go beyond the typical medical aid and 13th cheque package are increasingly being offered by businesses hoping to attract the cream of the modern workforce crop. But what attracts them most?
- Professional development opportunities: From mentorship programmes to paid training, there are numerous ways to include professional development opportunities into a benefits package.
- Benefits that foster a healthy company culture: This includes perks that encourage an inclusive and stress-free working environment.
- Financial resources: Offering student loan repayments or reimbursement of ongoing tuition.
- Paid volunteering opportunities: This includes being a business that is purpose-driven and values corporate social responsibility. In fact, according to Sage research, 31% of SMEs are placing greater focus on the concerns of the LGBTQ+ community and the impact of social movements such as #BlackLivesMatter and #MeToo on the workplace.
- Medical aid packages that cover mental health: This includes other wellness activities that will aid stress-relief and improve wellbeing.
- Flexible work policies: Whether it’s the ability to work from home, or to take mental health days, flexible work policies that encourage a work-life balance top the list for Gen Z.
Tax and compliance: It’s complicated
Payroll and HR complexity increases practically every month, which makes keeping abreast of changing laws and regulations seemingly impossible. In fact, 77% of respondents to the Sage research struggle with the complexity of payroll taxes, and 49% believe that the continuous changes in legislation and regulations drive complexity.
To remain compliant, payroll and HR payroll professionals must understand the impact of legislative changes on processes and systems such as UIF and PAYE calculations, pension and medical aid fund contributions, and data security – something that is even more difficult to manage across contingent and permanent workforces.
Using a cloud-based payroll system, which automatically updates when there is a change in tax law or regulation, is the best way to navigate the turbulent waters of compliance.
Data security: No sharing!
Payroll departments handle massive amounts of sensitive information, and the storage, use, and transfer of this data is heavily regulated by data protection laws.
It’s no wonder that even though 91% of HR and payroll professionals say their organisations are fully compliant with the Protection of Personal Information Act (POPIA) and the General Data Protection Regulation (GDPR), 48% still worry about compliance, and 63% are concerned about securely sharing personal employee information.
According to the research, the top compliance concerns among payroll professionals are protecting data (24%), information leaks and theft (15%), and cyberattacks (12%).
As vast numbers of businesses migrate to the cloud, the number of cyberattacks continue to grow, which means cybersecurity must top the list of payroll priorities. Cloud-based payroll systems offer increased data security, and an astounding 88% of survey respondents who are already using them say their systems are more secure than ever before, and 65% note that they benefit from safer data processing and storage.
Are you ready?
These trends are not just likely – they’re here, and gaining momentum with each passing day. Are your payroll systems ready for the modern workforce?
[White paper] Payroll and HR in SA: Rising to the challenges of change
The global shift to remote and hybrid working and regular legislative changes have resulted in payroll challenges of considerable complexity for many businesses. Learn how payroll and HR professionals and small businesses are adjusting to the new challenges.