29th January 2021

Where does payroll sit?

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It’s no accident that during the Coronavirus pandemic, payroll practitioners have been categorised as key workers, given the responsibility they have for paying the wages of those still working, as well as navigating the complexities of the Coronavirus Job Retention Scheme (CJRS) in order to process payments to furloughed workers.

This recent pandemic has really shone a spotlight on the true value of the payroll department, yet even now it is rare for an organisation to have a payroll director, with most payroll departments falling under the auspices of either the HR function or Finance.  And there continues to be a burning question amongst many organisations, where does payroll sit? 

HR or Finance?

The wide range of responsibilities means that payroll spans across both HR and Finance, but with the majority of core payroll duties such as starters, leavers, changes to pay, salary, bonuses, employee working hours, statutory payments and benefit deductions linking with HR activities, it’s perhaps not surprising that payroll often sits within the HR function.

However, with wages forming the largest financial outlay for many businesses, payroll is able to provide budgetary reports and, with access to historical data, the payroll department is often able to anticipate potential problems, thereby influencing operational decisions.

It is easy to see that when payroll practitioners work with Finance, and participate in planning meetings, they become a strategic partner in business decisions: key strategic decisions such as mergers and acquisitions, adjusted business models as companies respond to changing customer demands, or designing crisis response and recovery plans.

Is there another way?

There are growing calls, increasing even more given the heightened profile of payroll during the Coronavirus pandemic, for payroll to be a stand alone department in its own right. For payroll to finally take its seat at strategic planning and board meetings. And given the skill, knowledge and commitment prevalent amongst payroll practitioners, maybe the tide is finally going to turn.

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