By Neil Lagden, Head of Bond Payroll Services
Last Wednesday the Chancellor announced his budget. What is apparent is that the UK is finally experiencing green shoots of growth: the economy grew 2.6% last year and is forecasted to grow by an additional 2.5% this year. Unemployment is set to fall by 0.1% and record numbers of people are now in employment. The small business is picking up the pace and beginning to grow rapidly.
Confidence brings challenges
The positive budget has simply reinforced the recent message of a confident outlook from the Federation of Small Businesses. Smaller businesses are now seeing the opportunity to increase the number of people they are employing, offer existing employees pay rises and ultimately are experiencing high levels of growth. But how can these businesses manage this growth? With more employees, comes more responsibility – employee contracts, and payroll and benefits packages are a whole new world for businesses who previously have managed to maintain a relaxed outlook for a relatively small number of employees.
One way that smaller businesses have hired more staff and maintained a scalable approach is through zero hours contracts. Zero hour contracts have always had a place in business – the leisure industry is a prime example of a vertical which requires support staff on an event-by-event basis – and this type of contract provides essential business flexibility, particularly for the smaller business.
The administrative burden for businesses is set to continue with employer National Insurance (NI) contributions for under 21s to be abolished from this April and for young apprentices from 2016. Payroll is an ever changing remit, and while many businesses choose to manage their payroll in-house taking this approach can be administratively heavy – therefore those businesses taking this approach must ensure that they have the necessary knowledge to manage the manual data entry, as well as producing the necessary reports which may not provide all of the detailed knowledge required.
With the economy continuing to grow and more job opportunities arising, the employee will have more control than ever before. Opportunities will be available and changing employer will become ever easier – those loyal employees that have stayed with the organisation through the recession are now in a strong position and it is critical that employers put employee retention high on their priority list. Having an employee benefit scheme in place, offering flexible working, and giving opportunities for bonuses and commission – all of these areas are additional offerings that not only incentivise employees but can make them feel valued.
In order to process these additional incentives, the organisation must have in place a system that can store information securely and manage the calculations, production of payslips, HMRC forms, NI and also adhere to recent Auto Enrolment (AE) legislation. However, some solutions only manage some of these functions and require ‘bolt on’ functionality in order to manage all of these processes. Therefore, it is advisable to select a solution that not only gives the organisation the most for its money, but also provides high levels of customer service and support and is scalable enough to grow with the organisation.