Changing payroll providers – 10 key considerations for schools

Deciding to change your payroll provider can be a daunting task, but it doesn’t have to be. You just need to give careful consideration before making any final decisions, particularly given the ongoing recruitment and retention challenges across the education sector.

Below are 10 key considerations to review before making any final decisions on your new provider:

1) Charging structure

All providers may charge differently depending on units e.g. by the number of employee contracts, per employee, per teacher, per support staff, etc. Some providers may also vary the charges throughout the year, determined by employee fluctuations.

Collate an annual charge to compare the costs on a comparative basis, or over three years if necessary (particularly if you have expansion plans).

2) Service Level Agreements (SLA)

Comparing providers on cost alone is not sufficient. You should ensure you are reviewing what is (and significantly what is not) included within the costs provided.

Make sure you are aware of any hidden costs that would be outside of the SLA issued and be clear of what level of service will work for the needs of your school or multi-academy-trust.

3) In-house or outsourced?

There will be various solutions in the marketplace and it is important that you find the right solution that works for you and your needs.

Consider reliability, business continuity, being up-to-date with statutory changes, implementation and upgrade costs of software.

4) Quality assurance

Make sure that the provider that you choose has the necessary credentials to deliver the payroll service that you need.

Consider questions such as:

  • Do they have accreditations?  For example, are they accredited by the Chartered Institute of Payroll Professionals?
  • Are they experts in their field?
  • Are they familiar with the changes that affect the education sector to ensure that they can support you with your statutory obligations?

5) Peace of mind

It is important to seek a range of references. Too often, there are horror stories of sales teams demonstrating a system and giving endless assurances to a school for them later to find that the reality is very different, only after they have joined the new provider.

Whilst deliberating between the different providers, ensure you have a full system demonstration of how you will submit payroll instructions. You should ensure that you have the opportunity to raise questions directly with payroll specialists from the organisation to help put any remaining fears or insecurities in relation to the transfer at bay.

6) Input and output

Make sure you are aware of what information you will need to submit to your payroll provider and also what reports will be available on a monthly basis.

Assess whether they address your needs, particularly for consolidated MAT reports to present to trustees comparable data across the trust.

7) Exit costs

Even though you may give your existing provider sufficient notice, they may issue exit data charges. This is just to provide you with the information for your employees in order to transfer the payroll.

You should ensure that you are aware of any additional costs that you may incur.

8) Communication with employees

It is important that employees are reassured and alerted of any changes they should expect as a result of switching provider, which may coincide with a change of employer status.

Changes that might incur include:

  • Pay dates
  • Payslip delivery method
  • PAYE reference
  • Pension employer rate

9) GDPR considerations

Ensure your existing provider releases any information relevant to paying your employees that they would no longer require once the contract agreement between you has ended.

Be aware of any data that they will retain and the legitimate reasons for doing so.

10) Transfer of Information

Check whether your existing provider will liaise directly with your new provider or whether data will be sent directly to the school.

If the transfer is affected by term closure periods, ensure that there will be sufficient resources to ensure there is not a delay in the Transfer of Information.

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