Payroll compliance should be built in, not billed
Payroll software with automatic regulatory updates should be the standard, not an upsell.
Payroll regulations keep pace with a fast-moving and complex world, keeping payroll professionals on their toes. PwC's Payroll Complexity Survey highlighted this trend last year, writing that "payroll regulations are evolving more rapidly and payroll compliance is coming under increasing scrutiny by government and tax authorities."
This is evident across Africa, where recent changes have included increases in employee benefits in South Africa, updated contribution limits for Kenya's National Social Security Fund, and new rent relief allowances for employees in Nigeria. For organisations operating across multiple jurisdictions, keeping pace with these developments is essential to maintaining compliance.
Payroll staff spend substantial amounts of time on compliance. Even then, they encounter barriers, calculation errors, and delays that risk penalties and other repercussions. Yet, there is a solution called Compliance-as-a-Service (CaaS), and it ought to be a native part of their payroll software.
CaaS and payroll
Sectors that have immense regulatory obligations, such as healthcare and finance, routinely use compliance services to reduce compliance workloads.
The general concept is a third-party service that specialises in compliance and regulatory management on behalf of its client, charging a fee for the work. But CaaS in payroll is different.
Payroll without reliable regulatory updates is a broken service. Payroll regulations change constantly, and those changes have a direct impact on the entire payroll environment. For example, a new allowance means changes to calculations and how they apply to different employee groups. So, you can quickly get a cascading effect of errors because one law has changed, especially since payroll is a monthly, weekly, sometimes daily or ad hoc event. This is why regulatory updates should be built into the core payroll product.
Applying regulatory changes to a payroll system can be complex and costly, especially for large companies that use ERP systems or local software. Timelines to apply regulatory changes can take months, often after the new regulations take effect and typically not before the software's customers request the changes.
Modern cloud payroll platforms flip this around, enabling the payroll software vendor to push updates as they happen, at no extra cost.
Compliance teams monitor for changes so that customers don't have to. Cloud technologies let payroll providers take control of regulations and automatically update regulatory changes, as well as the affected calculations and processes.
Why bake CaaS into payroll?
In many industries, adding a compliance update service would be an upsell for the software vendor and an extra cost for their customers. But in payroll, this makes little sense.
Customers expect a working product. If regulations change, then the payroll software will produce errors, and that is not a working product. Compliance updates are not a value-add. They are fundamental to a working and trusted payroll experience. Without compliance updates baked into a system, the system would stop doing its job.
This consideration applies to all companies. Small businesses don't have dedicated compliance staff to track recent developments, and teams at larger companies must manage layers of complex employment categories. Businesses with global workforces would waste enormous effort on regulatory updates if they didn't have native payroll CaaS features.
Payroll compliance is not just about following laws, avoiding fines, and ensuring accurate calculations. Regulatory responsibilities include securing payroll data, meeting deadlines, producing useful payslips, and conducting audits. Some of these tasks can be automated, while others require the skills of payroll professionals. One regulatory change can derail all of that momentum, which is why CaaS must be part of payroll's foundation.