Back buttonBack
28th June 2023

Payroll Costs Explained

As an employer it’s important to understand the different costs associated with payroll to help you run your business efficiently, while ensuring employee satisfaction.

Despite payroll fees being complicated, it doesn’t mean that employers can’t understand them. Once the necessary people within your organisation recognise the intricacies of payroll, it will be easier for them to spot mistakes.. 

Find out everything you need to know about payroll fees, so that you can make the best decisions for your business.


Employer costs

When it comes to payroll there are a few charges that directly affect employers, such as:

The cost of employing someone

Employing someone involves more than paying their salary. You’re also responsible for pension and National Insurance contributions.

Other prices could include:

●       Recruitment fees

●       Training

●       Background checks (DBS etc)

●       HR charges, such as paying for salaries and onboarding prices 

To develop a better understanding of the prices relating to employing someone, read our blog on ‘The cost of hiring new employees (+ how payroll can help)’.

Payroll software

Implementing payroll software is a great way to keep on top of all of the spend you'll incur when paying your employees. These types of software can vary in price depending on the company you outsource it from, the size of your business, whether you’re using cloud based or hybrid solutions and any fees associated with implementing the software.

Here at Payescape, our payroll software has many benefits, including:

●       Improving your company’s efficiency

●       Achieving compliance

●       Improving data security 

Employers’ Insurance

Employers’ Insurance protects businesses when an employee is injured or falls ill at work. It's a legal requirement and without it, you're liable. Avoiding it could cost your business even more in the long run or even lead to the closure of your company.


Hidden costs of payroll

A reputable supplier will outline all the upfront prices, but these are fees  you may not have thought about:

The prices associated with staying compliant

Staying compliant with the latest rules and regulations may mean that you spend more money than you would like to. However it’s important that you abide by the rules, as not doing so can have serious consequences on your business, such as being hit with fines, penalties and even being forced to close your company.

Penalties and fines

When it comes to penalties and fines, this is obviously something that businesses want to avoid. Businesses can avoid these through asking them a few questions, like:

●       Are there any general issues or mistakes being made within your company relating to payroll?

●       Are you using digital payslips?

●       Are your employees personal records up to date and accurate? 

●       Do staff members understand the steps needed to stay compliant with the latest rules and regulations? 

To understand how you can stay compliant, take a look at our handy payroll compliance checklist to help you stay on track.

The importance of software maintenance

Software maintenance is crucial, as it helps you identify any issues or mistakes being made within any of your processes. This can be completed through undertaking a payroll audit, as this can help you spot any manual errors, prevent fraud and verify tax deductions.

Find out more about how you can conduct a payroll audit and how it could benefit your business.

Software maintenance is also a great way to prevent data breaches. Recently, companies like the BBC, British Airways and Boots were targeted by cyber crime group Clop resulting in their employees' personal data being stolen.  

This breach was related to payroll and led to staff members addresses, National Insurance numbers and banking details being compromised. This therefore highlights the need for keeping on top of your software maintenance and undertaking payroll audits.

Training staff members

Training staff members can be expensive, but it plays an important part in expanding and developing both your business’ and employees' knowledge and expertise, helping both of them to grow. 

According to 2020 government figures employers spend £42 billion a year on training.

This highlights that training is clearly a priority for organisations that are investing in their team. It also plays a huge role in retaining staff, helping to reduce the overall cost of hiring. Ultimately when you invest in your team, you save money in the long run!


How can you reduce your payroll costs?

When it comes to reducing your payroll fees there are a few things you can do, including:

Automating payroll

Automating your payroll software will help you keep on top of your  processes, making it easier to stay compliant with the latest rules and regulations. This will reduce the chances of you receiving any fines or penalties, therefore helping decrease any extra costs.

Automated softwares takes the repetitive, time intensive tasks, freeing up time for employees to focus on other areas of the business. Doing this will also reduce the risk of human error, helping you remove the need to spend money on rectifying tasks. 

Outsourcing payroll

Outsourcing payroll with a reputable provider, such as a company with CIPP certified experts that understand the ever changing, complex regulations, can reduce the likelihood of fines, as long as the information given to the provider is accurate. If accurate information is given then the risk of mistakes should also be reduced.  

Integrating payroll, HR and time and attendance software

Another great way to reduce your payroll fees is through integrating your payroll, HR and time and attendance software. This not only can help you save money, but can also save you time through keeping all of your data in one place and giving you the ability to automate and link tasks between each department.

If you’re interested in moving away from manual payroll efforts and using outsourced payroll, get in touch with us today to see how we can help you understand the charges associated with payroll, as well as how to improve your processes.

Logo of PayEscape's payroll service
Payroll ServicesHR ServicesTime & Attendance ServicesRequest a Demo
About UsCompliancePartnersFAQsPrivacy Policy
Logo of Faster Payments
Logo of BitSight
Logo of Automatic Enrollment
Logo of RTi
Logo of FCA

Payescape Limited is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017 (register number 821826) for the provision of payment services.

In order to provide you with the best online experience this website uses cookies. By using our website, you agree to our use of cookies.I understandFind out more