The transition to a new payroll system can be challenging for any employer, with workers and their families depending on the correct pay at the right time to meet their financial responsibilities. Asda came under fire recently when problems during the switch to their new payroll system affected 30,000 employees, with many still claiming they are out of pocket.
In this article, we look at what caused the problems and how you can avoid a similar fate for your employees.
Accurate and timely payroll is arguably the most important responsibility of any employer, failing to pay people on time will affect brand reputation and make both attraction and retention of staff difficult. But payroll can be a complex task, with even the biggest employers getting it wrong occasionally.
Supermarket chain Asda hit the headlines in March when a switch to a new purpose-built payroll system left 10,000 workers with incorrect pay slips and underpayments. The problem was apparently caused by incorrect holiday pay calculations.
Getting holiday pay right can be a complex task
A leaked internal memo confirmed that Asda were aware of the problem, “During our payroll checks, we have currently identified around 9,500 hourly paid colleagues who are impacted by incorrect pay, due to what we believe is an issue with a specific holiday calculation as we have moved to our new systems.” The letter went on to reassure managers that adjustments would be made to ensure that everyone received the correct payment by payday.
An Asda spokesperson said, “We have taken immediate and proactive steps to correct this – to help ensure there will be no shortfall in pay for these colleagues this month.”
However, a month on, many workers are still saying that they are out of pocket. And the number affected has since been reported to have grown to 30,000 employees, with employees taking to online article comments sections and forum Reddit to report missing wages and lost holiday allowance.
The Asda payroll glitch is just one of many IT problems that affected operations in many well-known retail chains at around the same time, with Tesco’s, McDonalds, Gregg’s, and Sainsbury’s all suffering software issues, some resulting in store closures and payment failures.
But while facing store closures is inconvenient for shoppers and results in lost earnings for business, staff not being paid on time can have far more devastating effects on an individual’s life.
Moreover, the issues with Asda payroll seem to be mainly affecting hourly paid employees, arguably comprising some of the most financially vulnerable staff members.
Protect the financial wellbeing of workers
Recent research suggests that 69% of UK adults are worried about money, and there have been countless studies over the years demonstrating the impact of money worries on employee productivity, wellbeing, and accuracy, as well as the level of absenteeism.
And with the ongoing cost of living crisis, the number of UK workers living payday to payday is estimated to be as many as 50%, making any error or unexpected underpayment potentially devastating for families who are already living on the edge.
Payroll is a crucial element of employment and while advancements in technology are generally positive for workers, any changes must be balanced with operational reliability in order to protect any business’s most valuable asset, its people.
Workers who feel secure in their financial situation are better able to bring their best self to work, are less distracted and less likely to suffer mental health issues that might impact their work.
The news that even large employers like Asda are prone to making payroll mistakes is enough to make anyone feel uncomfortable, especially smaller employers and recruiters who might not have the capacity, budget or specialty knowledge required to run an effective payroll internally.
Payroll for Growing Employers and Recruiters
A compliant umbrella company like MyPeople is a complete payroll solution which is convenient to both employers and workers. A team of payroll experts, with access to the latest payroll software and full knowledge of the latest employment legislation, helps provide peace of mind to recruiters and end-hirers.
Working with an umbrella company can help mitigate the risk of payroll inconsistencies while removing the burden of being an employer (including tax, NIC and other payroll responsibilities), maintaining compliance and ensuring that your workers feel valued and supported every step of the way.
In addition, outsourcing your payroll allows you to respond quickly to your changing workforce and scale your payroll as needed, all while protecting your workers from inaccurate pay.
Knowing that payroll and other employment responsibilities are in safe hands, and that workers will be paid accurately and on time, allows you to better focus on the day to day activities that help you meet your business goals as you grow your organisation.
If you’ve got any questions at all about how our umbrella solutions can help your business, or you’d like to find out more about MyPeople’s complete list of services, don’t hesitate to get in touch.