From tax to AI, payroll personnel will need to pivot to keep up with changes.
Technological advancements, evolving workplace practices and well as a changing regulatory environment all keep payroll administrators – and the broader human resources function – on their toes.
This year will be no different and Jeff Ryan, MD at AWCape, has expertly summed up the top five payroll trends for 2023:
1. SARS’ Vision 2024
Annually, payroll teams hear about upcoming PAYE changes in the Finance Minister’s Budget speech. These changes typically involve only small tweaks to payroll calculations. However, significant changes are expected beyond 2023 as the government and SARS start to move ahead with long-delayed items on their agendas.
SARS’ ambitious Vision 2024 envisages doing away with the filing season in favour of a more real-time approach to personal tax. Vision 2024 anticipates using third-party data from third-party returns to pre-populate an “assessment” for the individual through a SARS app where near real-time tax liabilities will be shown.
Employers may be expected to withhold employees’ tax (PAYE) based on this data. For example, if an employee contributes to a personal retirement annuity policy or generates income from interest on a bank account, employers will be asked to adjust withholding tax appropriately.
2. Artificial intelligence (AI) and robotic process automation (RPA)
AI could play a role in data validation and anomaly detection, helping companies to further sharpen accuracy and more rapidly detect potential fraud or errors.
RPA, meanwhile, could help to streamline manual processes such as capturing data from scanned documents. An example of this is the “intelligent time” capture software that analyses previous timesheets as well as the calendar, to prepopulate timesheet entries.
3. Seamless workflows
Mid-sized companies are likely to increasingly follow the example of large enterprises by adopting solutions that enable tight integration of finance, human resources (HR), employee self-service and payroll. This helps them to reduce costs and improve efficiencies by working off consistent data everywhere in the business and eliminating the need to capture the same data multiple times.
4. The fluid workforce
Many employers are embracing more flexible modes of work, such as using contractors and freelancers more extensively, offering flexible arrangements like hybrid or part-time work, and even sourcing remote talent outside the head office geography.
Trends such as the four-day week promise even more change to come. Payroll teams need to adjust their processes to accommodate a wider range of working models.
5. Data-driven decision-making
Payroll is a potential goldmine of data, including absenteeism, overtime, employee attrition and retention, compensation, job costing and budgeting. This data can yield powerful insights about employee wellbeing, engagement and satisfaction.
Payroll teams are expected to ramp up their use of analytics this year, going beyond basic reporting to partnering with other functions on strategic growth.