By: Simon Parsons, Director UK Compliance Strategies, SD Worx UK

By reflecting on the past year, and how widescale changes have disrupted the working world, we can see that people and payroll operations have gained renewed significance. Not only have we seen drastic changes to the way core operations are conducted, but we’ve found that improved offerings around salary, flexibility and benefits have been instrumental in attracting and retaining the right people for the job.

While the war for talent rages on, the pressure to deliver strong people and payroll services is high. Leaders will do well to remember that poor HR can and does lead to poor press – people aren’t afraid to post negative experiences online, if they feel a company doesn’t have a people-first approach or is lagging behind industry standards for HR practices.

Corporate reputations ride on the shoulders of HR teams, as c-suite executives depend on efficient HR to maintain employee satisfaction and HMRC compliance in an ever-changing landscape. With challenges from the past year in mind, and many more set to come in the next 12 months, here are my five predictions for how 2022 will pan out for people and payroll.

1. It’s a candidate’s market for job vacancies

A new record for the UK came in 2021 when job vacancies surged above 1 million for the first time. As talent becomes scarce across industries, senior leaders and HR teams will need to redouble efforts to make roles more attractive and competitive if they want to retain and develop their talent benches.

Tangible benefits for roles, like salary and benefits, are what workers value the most, but company culture also plays a vital part in the talent retention mix as well. Brits are strongly considering companies that offer connection and cohesion amongst teams, as well as flexible work arrangements in terms of location, culture and scheduling.

The bottom line is that, in the remote world of work, employees don’t want to feel like a contracted freelancer. They want to have a sense that there’s a work community attached to their role, which is why there needs to be a push to create a social identity in companies and prioritise wellbeing. Employers that don’t offer employees what they need are now in danger of losing ground in the war for talent.

1. Perks will become much more than ‘nice to have’

When joining a company, there’s no denying that perks have always played second fiddle to salary. For an occupation, salary has been front-and-centre as a main motivator, but new HMRC regulations next year will mean perks gain fresh importance.

Domino effects from the ‘health and social care levy’, slated for April 2022, will help put perks in the limelight. This government measure will see a temporary 1.25% increase to National Insurance contributions. At first glance this looks incremental, but in actuality it marks roughly a 10% extra cost for employees and employers, and could force a tactical reshuffling of finances.

To reduce NIC bills by replacing take-home pay with more tax-friendly perks, payroll leaders will likely explore options such as flexible benefits packages and salary sacrifice schemes for pensions. By scrutinising company-wide benefits packages, with memberships, promotions and medical plans, tax-savvy employers will not only attract new talent, but will also save money in the long-term.

1. HR and payroll data will be under stricter scrutiny

The furlough scheme was a huge lifeline for struggling businesses, but now that it’s drawn to a close the government will need to clamp down on compliance. Fraud and tax evasion, as well as the mishandling of people data, will all be addressed by tax inspectors.

Employers will need to have watertight policies to safeguard themselves. Fraud can be intentional, with reimbursement, wage or commission fraud, but it can also be accidental, with mistakes around inputting ghost employees or incorrect timesheet information. Whether there are motivations for fraud or not, it’s all the same to an inspector, so employers need to ensure digital systems are pristine.

A filing cabinet full of mismatched records won’t cut it. Leaders need to invest in HR technology which can accurately calculate hours worked and automatically request approval for overtime. By using an automated system, with features like document scanning technology to scan and validate receipts, expenses can be easily logged, approved and reimbursed. The right technology means the HR machine can run smoothly in line with compliance.

1. An emphasis on hybrid workstyle offerings will remain

Some CEOs have been very vocal about wanting staff back in the office, but workers won’t want to give remote opportunities up easily, as many are enjoying the benefits of remote work. Our research found that, with added emphasis on flexibility, nearly two-thirds (65.5%) of UK workers say they have a positive work-life balance.

With ongoing normalisation of the hybrid approach, mandating a return to the office will only prove unpopular. Empowering employees to make their own choice is the right path to take, as the majority (55.8%) say that remote working from home affords boosts in productivity.

Instilling a level of trust and appreciation in the workforce, given the disruption over the past year, will gain employers a lot of kudos. Historically, executives would be concerned that remote working would be exploited by lazy employees, but this mindset has been proven wrong. With enhanced productivity, as well as the widespread availability of teleconferencing tools, project teams are remaining efficient and demonstrating that remote working works.

1. Digitalisation will focus on empowering employees with data

Although we live in a technologically-driven society, digital HR maturity is lagging behind in UK industries. It’s alarming to see that our research highlighted only 36% of HR departments in the UK can boast of a high level of digital maturity when it comes to HR and payroll.

Armed with predictive data, HR teams can take on big-picture strategy, but the advantages don’t stop there. Positive digitalisation repercussions extend to the ground level, with data accessibility connecting employees to their payroll information, job perks and payslips. And when digitalisation goes mobile, platforms can also help employees upload sick notes, easily register timesheets and revise annual leave away from their computer.

Improving the employee experience by implementing good HR practices and processes is vital. A strong HR strategy can boost wellbeing, which is why leaders should keep technology top-of-mind: a well-informed, streamlined workforce is a happy one.