Manual payroll processes are becoming a major stress source for UK employers, leading to ‘payroll paralysis’ and affecting team productivity.
- A survey by PayFit found 37% of employers face increased stress due to time-consuming manual payroll tasks.
- Complex payroll requirements, including data entry and compliance with new legislation, are seen as primary stressors by businesses.
- National Insurance Contributions are set to rise, adding to payroll complexities for HR and finance teams from April 2025.
- Employers express a strong need for automation to tackle payroll challenges, yet few have adopted these technologies extensively.
A recent study points out that manual payroll processes are causing significant strain on UK employers. The research conducted by PayFit reveals that over one-third of employers are experiencing increased stress levels, which is impacting both productivity and team morale. The manual nature of tasks such as data entry, intricate calculations, and the distribution of payslips is contributing to what has been termed ‘payroll paralysis’.
Further compounding the issue for many employers are the new and complex payroll requirements introduced by the Labour government. From April 2025, National Insurance Contributions will increase from 13.8% to 15%, while the secondary threshold for NICs will be reduced significantly. These changes necessitate careful adjustments in payroll calculations to ensure compliance, adding to the already heavy workload of HR and finance teams.
Moreover, the introduction of the Employment Rights Bill, which includes measures such as first-day statutory sick pay and stricter holiday pay regulations, is placing additional compliance demands on employers. These legislative changes coincide with the year-end period, a time already fraught with tasks such as bonus distributions and tax return preparations, further exacerbating the pressures faced by companies.
PayFit’s CEO, Firmin Zocchetto, has highlighted the overwhelming nature of these payroll tasks, noting the emergence of ‘payroll paralysis’ among teams. Zocchetto stresses the importance of recognising and addressing these challenges to safeguard the wellbeing of HR and finance teams and maintain company performance. Businesses are increasingly looking towards automation as a solution, with a significant portion of respondents indicating a desire to automate payroll functions to deliver better outcomes.
Despite the evident benefits of automation in easing manual payroll burdens, few employers have embraced these technologies. The survey indicates that only a small fraction of firms have implemented automation extensively within their payroll processes. This reluctance to adopt automated systems persists even though nearly 59% of those surveyed agree that automating tasks like payment information submission and statutory pay calculations would enable teams to focus on more strategic initiatives.
The evident strain manual payroll places on UK employers underscores the urgent need for automation to enhance efficiency and reduce team stress.
