Managing payroll for academies: What are the best strategies?

Managing payroll for academies is a key responsibility that involves paying all salaries accurately and on time, as well as looking after pension and benefits administration. Some academies choose to outsource their payroll to improve accuracy and efficiency, as well as reducing fixed overheads. 

Managing payroll for academies involves:

• Calculating teacher pay
• Running payroll on time every month
• Making accurate tax deductions
• Distributing payslips
• Tracking leave and absences
• Oversight of staff pensions and benefits
• Managing processes in compliance with HMRC and education sector regulations
• Keeping accurate records and storing data securely

Academies have unique operating models and payroll processes will depend on the level of centralisation and the autonomy afforded to individual schools. This can make payroll more challenging for academies than maintained schools, especially in large or expanding MATs.

The importance of accurate payroll

Getting payroll right is crucial. According to Remote’s report, over 60% of surveyed employees experienced financial pressures such as late payment charges due to a payroll error. And according to Sage, mistakes would make 51% of employees lose trust in their employer — the stakes are high when managing payroll.

In addition to paying employees accurately, payroll processes need to be fully compliant, taking into account HMRC requirements, pension administration, data protection requirements and more. 

What are some of the unique challenges and considerations for payroll in the education sector and in particular, for academies?

1. The General Data Protection Regulation (GDPR). Schools retain and process large amounts of highly sensitive data, so must ensure compliance.
2. Real Time Information (RTI) reporting for employees paid through Pay As You Earn (PAYE), which must be submitted via the Full Payment Submission (FPS) on or before the date of payment.
3. Pension administration and auto-enrolment requirements. This can be complicated by the diverse job roles in a school — staff may work full time or part time hours, and there could also be adjunct employees, though they will likely not be entitled to benefits.
4. Gender pay gap reporting for academies with 250 or more employees, which needs to be calculated and published each year.
5. Year-end reporting, submitting returns to HMRC and providing employees with P60s by May 31.
6. The General Annual Grant (GAG). Funding must be ringfenced for salaries, the academy’s most significant overhead.

Requirements will vary by academy and regulations change, so payroll managers must stay up-to-date with the latest expectations — another challenge faced by payroll professionals in the education sector. 

To meet payroll obligations without overstretching internal resources, academies have the option of a managed payroll service. This involves outsourcing payroll to an external vendor that can take care of the process, relieving the pressure on academies and helping to increase accuracy.

This is what an effective payroll service for academies should be able to provide:

Comprehensive payroll processing

A managed payroll provider should have the ability to run and deliver payroll end-to-end. This includes all necessary calculations — tax, pensions, benefits etc. — as well as sending BACS payments and distributing electronic payslips.

If you only want to outsource parts of your academy’s payroll, look for a provider that can accommodate flexibility. As an example, Access Education offers:

• Fully managed payroll outsourcing
• Flexible managed payroll where schools retain control of HR and time/attendance data
• Payroll processing only 

Improved accuracy

Managed payroll services should increase accuracy, so what’s a reasonable expectation? 99.9% is achievable — we know this because this is what we offer for our managed payroll services. The Payroll Assurance Scheme from the Chartered Institute of Payroll Professionals is one of the best indicators of robust processes.

Look out for a provider that is accredited within the scheme.  

Secure, compliant data handling

While a payroll provider will carry out data processing, the school will still be the data controller so it’s essential to have full oversight of storage, processing and usage. Ensure the payroll manager uses advanced encryption and completes regular audits, and don’t be afraid to enquire how they safeguard against data breaches and unauthorised access to records.

Dedicated payroll support

You need to know that you can get support from your external payroll team whenever it’s required. Enquire about support options, including how and when you should expect communication, as well as what happens when there are queries.

DEALT is an exciting and unique MAT that was struggling with fragmented payroll operations. Since making the switch to Access Education’s payroll services, DEALT has seen significant time savings, plus queries and support requests that took over a week to resolve are now rectified within 24 hours. Getting the right support with payroll processing makes all the difference.

Choose a provider that understands education

Select a payroll provider that truly understands your needs as a MAT. School pay scales, pensions, operations and regulations are unique and deserve the attention of an experienced provider. Failure to find a provider that understands education could result in data breaches, late payments and a lack of response when your school needs answers fast.

Leverage dedicated expertise

You may not have dedicated payroll staff in your MAT, or finance staff may already be overstretched, which heightens the risk of mistakes. Selecting dedicated, expert payroll services for academies, to manage everything from RTI obligations to pension processing, is a good tactic when you need to increase accuracy.

Opt for scalable, agile processes

Agile ways of working are essential in a MAT and this can’t always be found by keeping processes in house, especially without additional recruitment. Managed payroll can be scaled up more easily, supporting your MAT now and into the future through periods of change and growth.

Enhancing payroll efficiency and transparency

Keeping payroll running smoothly requires efficient processes as well as the necessary transparency for administrators, managers and the people being paid. Making payroll more visible and accessible can improve clarity and reduce questions about pay.

Look out for these features to help with this.  

Secure staff portals

A self-service model allows staff to log in for access to payslips and HR information. This can take the pressure off finance departments, plus it’s a secure way to provide staff with necessary documentation. Many payroll providers can offer this option for payslip distribution.

Integration with current systems and processes

When you choose the right provider, managed payroll services can seamlessly integrate with your current systems and operations. You will need to provide the payroll data, so secure, smooth data transfer and management are important considerations.

Best practices for ongoing payroll optimisation

How can you keep payroll running smoothly and continue to optimise operations? Strategies include:

1. Regular reviews and audits. Run your own periodic system audits and consider the overarching questions: is payroll working as well as it could? Where can efficiencies be made? Even when outsourcing payroll, there’s always room for improvement.
2. Ongoing training. Continual training and proactive support from a dedicated payroll expert can contribute to operational excellence.
3. Monitoring key performance indicators (KPIs). Set your own KPIs around payroll accuracy and timing, as well as remaining aware of wider academy KPIs and how payroll fits into the bigger picture. 

What is a managed payroll service and how does it benefit academies?

A managed payroll service is offered by a third party to take care of all or part of an academy’s payroll processes. This frees up internal staff to focus on value-added tasks, plus choosing an experienced provider can ensure payroll compliance, increase accuracy and allow flexibility as the academy grows.

How does a managed payroll service ensure HMRC compliance and data security?

Managed payroll services can greatly improve compliance and data security, but check a service’s credentials. It all comes down to the systems and processes in place. If the provider is accredited by the payroll assurance scheme, this is a strong indicator that quality, compliance and data security will be prioritised.

What makes a managed payroll service scalable for schools and academies?

Managed payroll services offer schools and academies more flexibility; they can be scaled up and down as needed, supporting growth and periods of change without the overheads and constraints of recruitment. Growing with your institution, managed payroll can handle increasing volumes of payslips without causing disruption.

Is managed payroll the future for academies?

Managed payroll can offer academies dedicated support, robust security, accuracy, reliability and scalability, all within an end-to-end process. Academies can leverage this option long term to maintain efficiency and keep processes ticking over in an ever-changing educational landscape.

Learn more about Access Education’s managed payroll service, which has a 99.9% accuracy rating and a 100% pass mark from the Chartered Institute of Payroll Professionals’ Payroll Assurance Scheme.