Payroll: Reducing Paper Output With E-Payslips, P11ds & P60s Let Unity ripple through your business
CONTENTS Contents...2 1 Introduction...3 2 The Business & Environmental Case for Change...3 2.1 The True Cost of Paper Payslips...3 2.2 Other Considerations...3 3 Exploring the Alternatives...4 3.1 The Different Types of Electronic Payslips Available...4 3.2 Distribution via Employee Self-Service...4 3.2.1 What is Employee Self-Service?...4 3.2.2 How it can Be Used To Deliver Payslips & P11ds (& P60s)...4 3.2.3 Pros of this Distribution Method...5 3.2.4 Cons of this Distribution Method...5 3.3 Distribution via Email...5 3.3.1 How it can Be Used To Deliver Payslips & P11ds (& P60s)...5 3.3.2 Pros of this Distribution Method...5 3.3.3 Cons of this Distribution Method...6 4 What Are Your Legal Obligations as an Employer?...7 5 Arrangements for Employees without Computer Access...8 6 Conclusion...8 7 Further Reading... 9 8 A Bit about Carval Computing Limited...10 9 Contact Us...10 Payroll: Reducing Paper Output with E-Payslips, P11ds & P60s 2
1 INTRODUCTION There can be few organisations today that do not feel the need to give some consideration to the environmental impact of their business activities. At the most basic level this process often starts with reducing the amount of printing that is carried out on a day to day basis. Unlike some green initiatives, which can require capital investment, reducing the output of printed matter has the added attraction of associated cost savings. Reducing printing saves on paper, printers and expensive printing consumables. Traditionally, Payroll and Human Resources Departments are arguably some of the biggest producers of printed matter in many companies. In recent years advances in technology have helped to address this issue, with the advent of HR Software and document management systems helping HR departments reduce their paper trails considerably. However, most Payroll departments still routinely churn out huge quantities of printed payslips and associated pay-related communication to their employees. In this document we examine the alternative methods available for communicating pay-related information to employees and outline your legal obligations as an employer. 2 THE BUSINESS & ENVIRONMENTAL CASE FOR CHANGE 2.1 THE TRUE COST OF PAPER PAYSLIPS The environmental and financial costs of paper payslips go way beyond the paper that the pay information is printed on. In calculating the true cost it is important to consider: The environmental costs associated with manufacturing and distributing printers and consumables, along with the financial cost of purchasing these. The energy required to run the printers. The energy associated with distributing payslips. The cost of stamps. Bureau costs. Labour costs 2.2 OTHER CONSIDERATIONS It is not just the regular production and distribution of payslips that needs consideration, you should also factor-in: P60s P11ds Payroll: Reducing Paper Output with E-Payslips, P11ds & P60s 3
Responding to employee requests for replacement or historical documents. Carval Computing Limited s Operations Director, John Ovington is confident that the business and environmental case for change is clear, Generating and distributing a paper payslip, each time an employee is paid, is not only costly in both financial and labour terms, but there is also a considerable environmental impact. If one contemplates the sheer quantities of paper, and postage involved in delivering payslips, it really does make the case for changing the way organisations manage this function. 3 EXPLORING THE ALTERNATIVES 3.1 THE DIFFERENT TYPES OF ELECTRONIC PAYSLIPS AVAILABLE So what are the alternatives to distributing paper payslips and P11ds (and from the end of the 2010/11 tax year P60s)? Essentially the choices are: Employee Self-Service Email 3.2 DISTRIBUTION VIA EMPLOYEE SELF-SERVICE 3.2.1 WHAT IS EMPLOYEE SELF-SERVICE? The option of Employee Self-Service is available with many modern HR Software systems. When used effectively these browser-based systems can dramatically reduce the administrative burden placed on the Human Resources department by devolving responsibility for certain key tasks to employees and line managers. The exact functionality available will vary from supplier to supplier, essentially Self-Service systems deliver an accurate, easy and cost-effective way for keeping employee records up to date, managing certain HR processes such as holiday bookings and authorisations and for dealing with employee requests for information. 3.2.2 HOW IT CAN BE USED TO DELIVER PAYSLIPS & P11DS (& P60S) In order to deliver payslips and P11ds (and going forward P60s) via Employee Self-Service, investment in the right technology is necessary. Typically you will require: Payroll software with the ability to output payslips in this format An integrated Employee self-service module And for P11ds, an integrated Expenses & Benefits module Not all software solutions are able to deliver pay information via Self-Service: this requires integration with your in-house Payroll System or an interface with your bureau. As an integrated HR and Payroll Software supplier Carval can offer their clients employees secure access to online payslips, P60s and P11ds whether they have an in-house payroll department (using Carval s HMRC accredited Uniwage Payroll Software) or Payroll: Reducing Paper Output with E-Payslips, P11ds & P60s 4
use Carval s bureau service or in some instances even if a third-party bureau service if used. The availability of P11d information is possible because Carval s HR and Payroll software includes an integrated Expenses & Benefit module. Not all suppliers can offer this flexibility so do check with your current or prospective software provider what will be possible. 3.2.3 PROS OF THIS DISTRIBUTION METHOD Considerable financial, time and environmental savings are deliverable. Employees can view (and print if desired) both their current payslip and also historical pay information, including past payslips, P11ds and P60s. Convenient source of information and reference for employees. Potentially reduced administrative burden on Payroll Department in responding to employee requests for replacement documents and other requests for information. 3.2.4 CONS OF THIS DISTRIBUTION METHOD Requires considerable investment in technology. The option of paper documents will need to be made for employees who permanently or temporarily have no access to a computer and / or the internet. Many employees will be happy just to read their payslip details on-screen but others, for a variety of reasons, will want to print it out. Employees without printing facilities, or who have privacy concerns about printing their payslip on a network printer, may need to be given paper payslips instead. A further practical problem is that a payslip printed out by an employee may not be accepted as valid proof of earnings for mortgage, loan, work permit or other status purposes, requiring the employer to make special arrangements to supply copy payslips or to sign and stamp the employee s payslip. 3.3 DISTRIBUTION VIA EMAIL 3.3.1 HOW IT CAN BE USED TO DELIVER PAYSLIPS & P11DS (& P60S) Some of the most modern Payroll Software systems, such as Carval s secure HMRC Payroll Standard and Pensioner Standard-accredited Uniwage Software, allows users to schedule the automatic email distribution of password protected.pdf payslips and P11ds (and going forward P60s) to all or selected employees. In addition this service is also offered by some Payroll Bureaus, including Carval Computing Limited. 3.3.2 PROS OF THIS DISTRIBUTION METHOD Considerable financial, time and environmental savings are deliverable. Payroll: Reducing Paper Output with E-Payslips, P11ds & P60s 5
Does not require investment in Employee Self-Service software. 3.3.3 CONS OF THIS DISTRIBUTION METHOD Requires investment in Payroll Software that offers this functionality. It doesn t offer employees the same opportunity to access to historical information that Self- Service does. The option of paper documents will need to be made for employees who permanently or temporarily have no access to a computer and / or the internet. Many employees will be happy just to read their payslip details on-screen and file it away somewhere, but others, for a variety of reasons, will want to print it out. Employees without printing facilities, or who have privacy concerns about printing their payslip on a network printer, may need to be given paper payslips instead. A further practical problem is that a payslip printed out by an employee may not be accepted as valid proof of earnings for mortgage, loan, work permit or other status purposes, requiring the employer to make special arrangements to supply copy payslips or to sign and stamp the employee s payslip. Email can be used to distribute secure.pdf payslips. Payroll: Reducing Paper Output with E-Payslips, P11ds & P60s 6
4 WHAT ARE YOUR LEGAL OBLIGATIONS AS AN EMPLOYER? When considering the move to electronic payslips, many employers are quite rightly concerned about their legal obligations as an employer. The critical issue, when planning the introduction of any kind of electronic payslips, is whether the electronic delivery arrangements meet the statutory requirements. We consider these issues below. The requirement for employers to provide an itemised pay statement is set out in Section 8 of the Employment Rights Act 1996. It says: An employee has the right to be given by his employer, at or before the time at which any payment of wages or salary is made to him, a written itemised pay statement. Section 8 also defines the information that must be included on a payslip. This is not usually an issue for employers as computerised payroll systems generally provide more information on their standard payslips than is required by law. However, a number of other issues are raised by the right to an itemised pay statement, as quoted above. Notice that: the payslip must be given to the employee by the employer, this must be done at or before the time when the payment is made, and the payslip must be written. There is clearly no stipulation that the payslip must be printed on paper and physically given to the employee HMRC agree that providing electronic payslips is entirely permissible. However it is not currently legal to provide P60s in this form, but will be so from the end of the 2010/11 tax year. (See Guide to filing PAYE forms online and paying electronically, paragraph 6.15, at www.hmrc.gov.uk/helpsheets/mp2.pdf) The critical issue, when planning the introduction of any kind of electronic payslips, is whether the electronic delivery arrangements meet the statutory requirements. Consider the following issues: Is each employee being given a payslip? The responsibility is on the employer to make the payslip available to the employee. If the employee does not know where to find the payslip or has no computer access to it, then it has not been given to the employee. Employees who normally view or print out their payslips at their desks or workstations may not have access to them when they are sick or on holiday. Many employers will find, therefore, that scrapping paper payslips altogether is not possible and some employees will still require a paper payslip. Also, personal circumstances change so there must always be the option for employees to revert to paper payslips. Is the electronic payslip always available on or before payday? This imposes the same strict deadline on the payroll department as does the production of paper payslips, although issuing payslips electronically will likely reduce time pressures. However, can all employees actually see their payslip on payday if they wish to do so? What about employees who only have access to their payslip on their work computer but get the full benefit of stopping the production of paper payslips altogether. The statutory requirements Payroll: Reducing Paper Output with E-Payslips, P11ds & P60s 7
cannot be ignored because the penalties can be severe. The objective of the legislation is to ensure that employees are aware of all of the deductions that have been made from their pay at each payday. If they are unable to see those details on payday they can make a complaint to an employment tribunal. If the tribunal considers that the statutory requirements have not been met, the employer can be required to repay to the employee up to 100% of all of the unnotified deductions made from the employee s pay in the 13 weeks prior to the date of the complaint, even if they were legitimate or statutory deductions.who do not normally work on their payday? Can employees make a written copy of their payslip? When the legislation was originally devised, this referred to a hand-written or typed piece of paper. Many employees will be happy just to read their payslip details on-screen and file the document away somewhere, but others, for a variety of reasons, will want to print it out. Employees without printing facilities, or who have privacy concerns about printing their payslip on a network printer, may need to be given paper payslips instead. A further practical problem is that a payslip printed out by an employee may not be accepted as valid proof of earnings for mortgage, loan, work permit or other status purposes, requiring the employer to make special arrangements to supply copy payslips or to sign and stamp the employee s payslip. As a result of these issues, it may not be possible for employers wishing to introduce electronic payslips to entirely do away with paper payslips. 5 ARRANGEMENTS FOR EMPLOYEES WITHOUT COMPUTER ACCESS Another common argument that companies have for not implementing electronic payslips is that some or all of their employees, perhaps in a manufacturing or shop floor environment, do not use computers or have access to the internet. This will impact on their ability to meet statutory requirements. However it is important to consider that: Many employees will have access to computers outside of work and increasingly. Many companies provide kiosks or PCs in quiet area to ensure all employees can access the benefits provided by a Self-Service solution, whatever area of the business that they work in. That said, there will be individuals for whom electronic payslips are not a workable solution. Therefore it is important to: Offer all employees a choice. In our experience the most common scenario is that employees have the opportunity to opt-out of e-payslips if desired. Ensure that your payroll software incorporates the flexibility to use different distribution methods for different employees without time-consuming manual intervention. 6 CONCLUSION Considerable financial and time savings are possible. Payroll: Reducing Paper Output with E-Payslips, P11ds & P60s 8
There is a strong environmental argument for moving away from printed payslips. HMRC agree that providing electronic payslips is permissible providing statutory requirements are met. The fines for not doing so can be hefty. Providing an electronic P60 is not currently permissible but will be from the end of the 2010/11 tax year. Alternative arrangements for employees who temporarily or permanently have no access to a computer and email / internet must be very carefully considered. Typically most employers will roll-out electronic payslips to all employees and then offer employees the opportunity to opt-out. This must be very carefully communicated to ensure statutory obligations are met. Investment in technology will be necessary and must include the flexibility to distribute payslips in different formats to different employees and ideally without manual intervention. 7 FURTHER READING Further information: Business Link Acas Itemised Pay Statements Payroll: Reducing Paper Output with E-Payslips, P11ds & P60s 9
8 A BIT ABOUT CARVAL COMPUTING LIMITED Carval Computing Limited develops, sells and supports the Carval HR Unity software range. HR Unity is one of the few truly integrated HR, Payroll and Time & Attendance software solutions available on the market today i.e. it operates from a single database and is written by a single supplier. HR Unity is designed to simplify and unify every aspect of Human Resource Management for thousands of employees across multiple companies. It combines ease-of-use and an attractive user interface with rich functionality, inherent flexibility and powerful tools to standardise and automate processes. Its use will help increase administration efficiencies, reduce operating costs and provide immediate access to accurate information for strategic analysis. The Carval HR Unity range comprises: HR Software Payroll Software Time & Attendance Software & Systems Manager & Employee Self-Service Timesheets for Cost & Project Management Access Control Carval s HR Software, Payroll Software and Time & Attendance Software modules are complete and highlyeffective standalone systems. However they can be implemented in a combination to suit your needs and then additional modules added as those needs change. To complement our software we also offer: Payroll Bureau Services Software Hosting Carval HR Unity is relied upon by over 250 organisations throughout the UK in virtually every sector including retail, manufacturing, legal and financial services, the public sector, local authorities, housing associations and charities. Our smallest clients have upwards of fifty employees and our largest many thousands. HR Unity is currently only available for installation in the UK. 9 CONTACT US Please do contact us for a chat about your potential software requirements or to arrange a no obligation demonstration. Tel: 01525 863869 (Sales) or 01525 863840 (General) Email: sales@carval.co.uk Web: www.carval.co.uk Address: Carval Computing Limited, Wrest Park, Silsoe, Bedfordshire MK45 4HS Payroll: Reducing Paper Output with E-Payslips, P11ds & P60s 10