Payroll for schools: What are your options?

Understanding payroll challenges in schools

Schools face unique complexities when it comes to payroll management. Unlike the private sector, the education system involves:

• Structured frameworks: Teacher pay scales, pension schemes, and specific leave entitlements add layers of complexity.
• Dynamic data: Frequent changes in staff hours, cover teachers, and leave require constant data updates.
• Compliance burdens: Keeping up with ever-evolving regulations and reporting requirements can be time-consuming.

These factors, combined with limited staff resources, often lead to challenges such as:

• Accuracy concerns: Inaccuracies can arise due to manual data entry or difficulty keeping up with regulation changes.
• Time constraints: Managing payroll in-house can take away valuable time from core educational functions.
• Lack of expertise: Schools may not have dedicated payroll professionals on staff, leading to potential compliance risks.

Now let’s explore your two main options for payroll for schools: in-house payroll or outsourced payroll.

In-house payroll for schools

In-house payroll for schools involves a dedicated staff member within the school itself taking responsibility for payroll. This is usually the School Business Manager (SBM) or perhaps the HR manager if you’re part of a Multi-Academy Trust (MAT). The person responsible for managing payroll will handle teacher and staff salaries, pensions and deductions. Their key tasks will involve calculating pay based on different pay scales and leave entitlements, handling pension scheme contributions and ensuring accurate and timely payment. All this is done while staying compliant with regulations.

Benefits of in-house payroll for schools

The key benefits of in-house payroll for schools include:

• Potential cost savings: Long term, payroll can be cheaper than outsourced services, especially if you’re a larger school or academy with dedicated payroll staff.
• Greater control: Keeping payroll in-house will mean you get complete control over the payroll process, allowing for faster adjustments if any changes are needed.
• Data security and privacy: Payroll involves handling sensitive employee data. Keeping it in-house will ensure employee data is kept under the school’s control, reducing privacy concerns.

From our experience, managing payroll in-house is a great option for smaller schools or those with dedicated expertise on the team. For larger settings who manage their own payroll, they will often utilise some form of payroll software, or outsource parts of it – which we will cover later on in this article.

Considerations and challenges of in-house payroll for schools

While there are plenty of benefits to keeping payroll in-house, there are some points for consideration.

• Expertise and training: Keeping payroll in-house means that you will need dedicated staff with expertise in payroll. Unfortunately, there’s little room for error when it comes to paying your hard-working staff!
• Time commitment: Managing payroll can be time-consuming – especially if the person responsible has other responsibilities within the school.
• Greater margin for error: As previously mentioned, the margin for error is great. Relying on manual processes can lead to inaccuracies (and a very disgruntled team!).

Despite these challenges, keeping payroll in-house is a relatively safe option. We recommend investing in a payroll solution that reduces manual processes, enabling you to maintain control while effectively managing your workload.

To learn about how our friends at DEALT Academy Trust utilise Access Education People and Payroll to centralise all HR and payroll data, watch the video below:

To read the full customer story, visit Customer Story: DEALT.

Outsourced payroll for schools

Outsourced payroll for schools involves partnering with a third-party provider, and their job is to handle all aspects of staff compensation. When you outsource, the provider takes care of things like compliance, freeing up school staff to focus on core educational functions.

Benefits of outsourced payroll for schools

Outsourced payroll offers many advantages for schools. These include:

• Reduced workload: By outsourcing payroll, you off-load the time-consuming burden of payroll, freeing you and your team up to focus on other important responsibilities.
• Enhanced expertise: You also gain access to dedicated payroll professionals. This is extremely advantageous, especially if you work with a provider who specialises in the education sector.
• Improved accuracy: Outsourced services utilise software and automated processes, reducing the potential for errors in calculations and data accuracy.
• Scalability: Outsourced payroll will also accommodate changes in school size and staff numbers without having to make in-house adjustments.

There are numerous payroll providers on the market. We recommend selecting a service that specialises in the education sector. As mentioned throughout this article, there are many sector-specific nuances to consider when it comes to teacher salaries, pensions, and similar matters. Our advice is to choose a reputable provider with a proven track record in the education sector.

Types of outsourced payroll services for schools

Choosing outsourced payroll offers a range of options to best suit your school's needs. Here's a breakdown of the most common types of outsourced payroll services:

1. Full-service payroll:

• This is the most comprehensive option, where the provider handles everything from data entry and salary calculations to tax deductions and pension contributions.
• They ensure compliance with all relevant regulations and generate payslips and reports.
• Ideal for schools seeking a complete solution and minimal in-house involvement.

2. Managed payroll services:

• Similar to full-service, but often includes additional features like employee self-service portals for accessing payslips and tax information.
• May also offer HR services like leave management integration.
• A good choice for schools wanting a comprehensive solution with added employee convenience.

3. Partial Outsourcing:

• This allows schools to outsource specific payroll tasks, like pension administration or year-end reporting, while handling core calculations and payments in-house.
• Offers flexibility and cost-effectiveness for schools with existing payroll expertise.
• Suitable for schools wanting to offload specific burdens but maintain some control.

Considerations and challenges of outsourced payroll for schools

Before deciding to outsource your school payroll, consider the following challenges:

• Cost: Outsourcing payroll can be more expensive than in-house payroll, especially for smaller schools. Consider setup fees, ongoing service charges and additional costs for specific features.
• Loss of control: If choosing a fully-managed service, you relinquish all control of your payroll processes, relying on the provider’s expertise and accuracy.
• Data security: Sensitive employee data is entrusted to a third party, requiring careful evaluation of the provider’s security measures.

Given the challenges of outsourced payroll, it's crucial to select a provider that fits within your budget, has a proven track record of ensuring security measures, and offers excellent customer service.

Further reading

If you’re part of an academy and want to learn more about in-house and outsourced payroll, read our article – Academy payroll: Outsourcing Vs in-house software

Choosing the right payroll option for your school

When it comes to payroll for schools, selecting the ideal solution requires careful consideration of several factors.

School size and complexity

Larger schools with complex pay structures and numerous staff may benefit more from the expertise and scalability of outsourced payroll (or a managed service). Smaller schools with simpler structures might find in-house payroll more cost-effective.

Existing in-house expertise

Does your school have dedicated payroll staff with the necessary expertise and up-to-date knowledge of education sector regulations? If not, outsourcing can provide access to this expertise.

Budgetary constraints

In-house payroll can be cost-effective in the long run, especially for larger schools. However, consider the cost of staff time, software, and training. Outsourcing may come with initial setup fees and ongoing service charges but can free up staff time and potentially improve accuracy.

Importance of control vs. time savings

In-house payroll offers complete control over the process, but requires dedicated staff time. Outsourcing reduces workload but relinquishes some control. Consider which aspect is more important for your school.

Conclusion

When it comes to payroll for schools, there are numerous options and considerations. With more local authority (LA) maintained schools moving away from LA provision, many are considering more modern, user-friendly solutions.

If you are in the market for a payroll solution, here at Access Education, we offer both a managed payroll service and an in-house offering. To find out more:

• Download a brochure
• Speak to an expert today

Further reading

• HR & payroll software integration for schools: Benefits of having your payroll work with your HR system
• How a proper school payroll system can help your organisation
• Cost of payroll software: What to consider for schools, academies and MATs