As one of the leading payroll providers in the UK, we often get asked: what are the functions carried out in payroll software? Below, we’ve written a detailed guide on what functions are carried out as standard by payroll software providers and what we offer through our own payroll software solutions.
What Is Payroll Software?
To start, you may be looking into payroll software for the first time. Payroll software is a digital tool designed to automate, streamline and manage the process of paying employees. It calculates wages, deducts tax and National Insurance, generates payslips, and ensures compliance with employment and tax laws.
Payroll software helps employers stay accurate and compliant while reducing the time and risk involved in manual payroll processing.
Whether you’re managing a small team or a large organisation, payroll software is essential for staying in line with HMRC requirements and for ensuring staff are paid on time.
How Does Payroll Software Store Data?
Payroll software stores employee and payroll data securely in the cloud or on-premise, depending on the solution used. Cloud-based payroll systems are most common as they provide real-time access, automatic updates, and better security protocols.
Key employee data stored includes:
- Personal information
- Tax codes and National Insurance numbers
- Salary, bonuses, and deductions
- Bank details
- Pension contributions
- Leave and holiday records
Data is encrypted and regularly backed up to prevent loss or unauthorised access. Many solutions are integrated with GDPR compliance controls, offering employers better oversight and protection of sensitive information.
What Functions Are Carried Out in Standard Payroll Software?
1. Wage and Salary Calculations
One of the core payroll functions is calculating wages, salaries, and deductions accurately. This includes gross pay, tax deductions, National Insurance, and pension contributions. Payroll software automates these calculations based on current legislation and employee profiles. It factors in hourly rates, overtime, sick leave, holiday pay, and statutory payments such as maternity or paternity leave.
This reduces the chance of manual errors and helps employers remain compliant. It also streamlines monthly, weekly, or custom pay runs for different employee types such as salaried or hourly staff.
2. Payslip Generation
Another key feature is the automatic generation of payslips. Payslips are a legal requirement in the UK and must show earnings before and after deductions. Payroll software creates electronic or printable payslips for each pay period and distributes them directly to employees via secure portals or email.
These payslips contain all necessary information including salary, tax, National Insurance, pension deductions, and net pay. Some software also allows custom branding and additional notes such as bonuses or reimbursements.
3. Real-Time Information (RTI) Submissions to HMRC
Payroll software ensures timely submission of RTI data to HMRC. Employers are required to report payroll information every time employees are paid. Standard payroll software automatically generates and sends RTI files including Full Payment Submissions and Employer Payment Summaries.
This feature removes the need for manual uploads and ensures compliance with HMRC deadlines. It also includes automated reminders to keep your reporting on track.
4. Pension Auto-Enrolment Management
Since auto-enrolment is mandatory in the UK, standard payroll software must include tools to handle workplace pensions. The software assesses employee eligibility, enrols staff into pension schemes, manages contributions, and produces communications required under pension regulations.
It also ensures timely submissions to pension providers. This reduces the admin burden on HR teams and helps prevent fines for non-compliance with The Pensions Regulator.
5. Tax Code and NI Adjustments
Payroll software keeps track of tax codes and National Insurance rates, adjusting payments as needed. If an employee’s tax code changes, the software automatically updates future pay runs.
It also categorises employees based on age, earnings and employment type to calculate the correct National Insurance class. This avoids costly mistakes and ensures that every employee pays the right amount of tax and NI based on their individual status.
What Functions Are Carried Out in Exceptional Payroll Software?
1. Holiday and Absence Tracking
Beyond standard features, advanced payroll software includes built-in holiday and absence tracking. Employers can log time off, sick days, maternity leave, and other absences directly into the platform. The software then automatically adjusts pay and leave balances. This feature reduces the need for separate HR systems and ensures accurate payment. It also helps managers spot trends in absenteeism and plan cover more effectively.
2. Multiple Pay Schedules and Department Handling
Exceptional payroll software can handle multiple pay schedules at once. Whether you run weekly, monthly or four-weekly pay cycles, the system processes them in parallel without conflict. It also supports complex pay structures such as bonuses, commissions and custom pay rates by department. Larger businesses benefit from the ability to segment payroll by division, branch, or job role, allowing for better reporting and management.
3. Audit Trails and Reporting
Advanced payroll systems offer comprehensive audit trails and custom reports. Employers can view historic changes, track who made updates, and export reports for finance and HR teams. This includes detailed breakdowns of gross to net pay, PAYE, pension contributions, and liabilities. Strong reporting features help with forecasting, budgeting, and demonstrating compliance in audits or internal reviews.
4. Employee Self-Service Portals
Another feature of high-quality payroll software is a self-service portal for employees. Staff can log in to access payslips, update personal information, download P60s and check leave balances. This reduces admin for HR and improves employee satisfaction. It also cuts down on queries and manual data entry.
5. Integration with HR and Time Systems
Exceptional payroll software integrates seamlessly with HR and time and attendance systems. This ensures data flows between platforms without duplication or manual input. As a result, businesses benefit from a unified view of employee management and faster payroll processing. Integration also helps with compliance and workforce planning by combining payroll, attendance, and HR data in one location.
We Offer a Variety of Payroll Software Options
At PayEscape, we understand that businesses have different payroll needs. That’s why we offer a range of payroll software solutions to suit your organisation’s size, structure and processes. From fully outsourced to software-only options, our solutions are designed to be scalable, secure, and compliant with UK regulations.
Outsourced Payroll Software
Our outsourced payroll service combines powerful software with dedicated payroll experts. We handle everything from pay calculations to RTI submissions, so you don’t have to. This option is ideal for businesses that want to reduce internal admin and ensure full compliance. You retain full visibility via our software dashboard while we manage the heavy lifting behind the scenes.
Fully Managed Payroll Software
Fully managed payroll includes everything from calculations to pension submissions, year-end processing and direct BACS payments to employees. This is a complete hands-off service for employers who want peace of mind and expert support. Our team works alongside you to tailor the software setup to your needs, ensuring accurate, compliant payroll processing every time.
Payroll Bureau Software
Our payroll bureau software is designed for accountants and bureaus managing multiple client payrolls. It allows easy switching between client accounts, automated calculations, RTI filing, and batch processing. This solution includes tools to manage permissions, client-specific rules, and generate branded reports. It’s ideal for growing accountancy firms looking to scale their payroll services.
Software Only Options
For businesses that prefer to keep payroll in-house, our software-only option provides all the tools needed to run accurate and compliant payroll. You manage pay runs while benefiting from real-time data, secure cloud access, and ongoing support. This solution is perfect for experienced teams who want full control with the safety net of expert guidance when needed.
HR & Payroll Integration
Our integrated HR and payroll solution gives you a single system for employee records, holiday tracking, and pay processing. Changes made in HR are reflected automatically in payroll, removing duplication and reducing errors. It improves efficiency and ensures your team has up-to-date information across departments.
Time Attendance & Payroll Integration
Linking time and attendance with payroll ensures accurate pay for every hour worked. Our system collects data from clock-ins, biometric systems or digital timesheets and feeds it into payroll automatically. This reduces the risk of overpayment or underpayment, particularly in shift-based industries.
HR, Time Attendance & Payroll Integration
For complete workforce management, we offer full integration between HR, time and attendance, and payroll systems. All employee data flows between platforms seamlessly, offering one central hub to manage contracts, shifts, absences, pay and compliance. This setup is ideal for organisations looking to reduce complexity, cut costs and improve accuracy.
Get a Quote with PayEscape
Whether you’re looking to outsource your payroll, upgrade your current software or integrate with HR and time systems, we’ve got a solution that fits. Our UK-based team offers tailored support, competitive pricing and scalable systems to help you manage your payroll with confidence.
Get in touch today to request a free quote and demo, discover how PayEscape’s payroll software features can help you save time, stay compliant and streamline your payroll processing.
