Online payslips: This is why your business should use them

The digitalisation of business processes and of finance operations in particular continues apace. Against this background, a growing number of businesses are moving towards the use of online payslips.

Payroll software allows you to make your business processes more efficient and cost effective.

After all, if you can save money with this type of routine operation, you can invest it in new product development and even acquisitions.

And this is where online payslips come into play.

This article reveals why your business should consider moving away from paper payslips and towards an online approach.

It also highlights why your employees will benefit and how making the move will help you to stay compliant.

Here's what's covered:

What are online payslips?

Online payslips vs paper payslips

Environmental benefits and easy accessibility

How employees benefit with online payslips

Making the move online

Online payslips and GDPR

Keeping payroll in-house vs outsourcing it

Final thoughts on online payslips

What are online payslips?

Sometimes known as electronic payslips or e-payslips, they are, as the name suggests, an electronic version of traditional paper payslips, containing all of the same information in an online format.

However, they include a number of benefits for both your business and your employees.

Online payslips vs paper payslips

Unlike the paper versions, there's no need to print off and post online payslips. Not only does this save on paper and postage but it also reduces labour costs.

According to a survey by the Chartered Institute of Payroll Professionals (CIPP), 83% of those asked saved money by doing payslips online.

"There are so many variables that go into every payroll and it can take a lot of time to manually input, as well as being repetitive," says Julie Rodrigues, finance manager at digital marketing agency Hallam.

"So having a solution that automates this has been hugely beneficial, saving us a lot of time. And as a result, we're much more efficient and nimble now when it comes to payroll.

"All it takes now is for me to approve it."

Obviating the need to print out paper payslips has other advantages too.

Environmental benefits and easy accessibility

As companies of all sizes in all sectors look to improve their green credentials, moving towards electronic means allow them to reduce their paper usage.

This can motivate and inspire staff who want to work in more environmentally friendly companies.

As consumers also take an interest in the green credentials of the organisations that they interact with, it can have a similar effect on the profile of your company.

"Employees' payslips and information are easily accessible," says Rodrigues. "They can access them through emails, or the app, and have all the information they need, not to mention one place to store and keep your payslips.

"No more rummaging around bedside tables or drawers.

"The trend is clear to me; we all seek to replace older ways of running a business with automated solutions. Not to mention the environmental benefits from not printing off payslips and sticking them in envelopes."

Although data breaches and hacking attacks are an ever present threat, online payslips are more secure than their paper predecessors because they won't be left around on desks and neither can they fall out of pockets and files.

As with any aspect of IT, you need to ensure your company's cyber security software and procedures are regularly updated but, assuming that this is the case, you can feel more confident about this aspect of your payroll function.

As with almost all data, payroll information can be saved to the cloud, reducing the need for storage and allowing access from authorised parties, wherever they are and whenever they want the information.

How employees benefit with online payslips

Online payslips also offer benefits to your employees.

While they can feel reassured that it will be more difficult for unauthorised people to see their payslip details, they will, in fact, have more access to this information themselves.

Instead of having to have the physical piece of paper in their hands, just as is the case with almost every other aspect of their work, your staff can check their payslips at any time from desktop computers or handheld devices such as mobile phones and tablets.

This latter option is particularly useful for those employees who frequently work out of the office, are working from home, or who cover roles in warehouses and retail spaces.

"The real issue with written payslips was that our team could be spread out all over the country rather than in an office," says James Carfell. He is the HR manager at Collier Roofing, an installer of roofing, gutters, fascias and soffits in London and Surrey.

He adds: "Therefore by having electronic payslips, it allows for everyone to have an online portal to access in order to see their details and whether they have been paid.

"Staff normally either stash paper payslips into a drawer and they clog up space, or they end up in the bin or going missing when not stored properly.

"The electronic format means there is no worry or issue with one simple login, meaning they can check whenever they need to and they can go back to previous payslips to see any changes."

With no paper, there's no filing. So your business will be freed from having to devote costly physical storage such as filing cabinets space to payslips.

If you or your employees need to check historical data - this might be for HMRC or for a mortgage lender, for example - the information will be available on screen in seconds.

Meanwhile, your HR and finance staff will not need to find themselves having to search for historical payroll for employees.

"I love the idea of historical payslip data," says James. "This allows you to explain the difference with pay increases or any changes with gym memberships.

"Or if I need to present someone with six months' worth of information, then all they need to do is to press print."

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• The ultimate guide to payroll compliance and legislation
• How to choose a payroll system for your business
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• An ultimate guide to payroll for your small business

Making the move online

Istoria Group, which describes itself as "a collective of creative agencies" and its subsidiary companies, has used payroll software for a number of years.

It currently has five active payrolls, having moved to online access for employees in 2018.

The timing of this coincided with the company's stocks of paper payslips running low as well as a desire to reduce administration and physical paperwork.

"In terms of the move itself, this was a simple exercise once we had ensured all the data, including employee email addresses, was up to date," says Mark Riggott, group head of finance at Istoria.

Once each payroll is finalised, the payslips are uploaded to allow employees to view on the day they receive their pay.

Mark adds: "They're also able to view and download P60s at the end of the tax year.

"For the majority of employees, the online access has proved to be a smooth transition.

"For any businesses not yet to move over to online payslips, I would definitely recommend they do so, if only to avoid the chore of manually printing payslips off and stuffing into envelopes."

Online payslips and GDPR

As a fundamental reform of data security, the General Data Protection Regulation (GDPR) affects every aspect of business (which remains to be the case even though the UK is no longer part of the European Union - the provisions of the GDPR were incorporated into UK law as part of the Data Protection Act 2018).

The significance here is that payslips contain employees' personal data.

Therefore, in order to be GDPR-compliant, your payroll department must ensure that, among other things, it only collects information for the purposes of completing the payroll.

External providers, such as payroll bureaux, must do the same for their clients.

Another requirement is to keep the data secure and ensure it's up to date. Protecting payroll data means being sure it's safe when it's stored but also when it's sent by email, for instance.

Not only is it essential to check the email address that the payroll is being sent to but protecting it by password is more likely to comply with regulation relating to payslips and GDPR.

Each email recipient should have their own password.

The data must only be held for as long as is necessary to process the payroll. External providers must also allow their clients or their clients' employees to access their personal data whenever they request it.

After they've been dispatched, the payslips must be deleted from the server of a payroll software provider. Using a secure portal can help with both security and GDPR compliance.

A payslip portal is increasingly popular among companies - often instead of email - as a safe and convenient way for employees to see their payslips. Other documents such as P60s can also be held here.

Appointing a Data Protection Officer can help to manage concerns about the security and confidentiality of moving payroll information online.

Keeping payroll in-house vs outsourcing it

When your business is starting to migrate its payroll online in order to make the most of the technology and to ensure it complies with regulations, your senior management team, HR department and the finance function needs to consider whether to provide this service in-house or use an external bureau.

Smaller businesses might want to consider external providers for their online payslips and payroll because, unlike larger organisations, they may well not have the necessary resources and technical and legal knowledge.

In other cases, you might take the view that it makes more sense to keep the process in-house. If that's what you opt for, you'll need to arrange training for staff and source the best software for their needs.

But the work doesn't stop here.

It's essential that you ensure that your staff's knowledge and your software are regularly updated (a cloud payroll solution should make this easy for the latter but check with your software provider) and that they comply with the latest regulations.

Final thoughts on online payslips

Online payslips offer businesses of all sizes, especially small and medium-sized companies, the opportunity to cut costs, improve data security and make life easier for employees.

You and your team need to identify whether to carry out your payroll processes in-house or whether to outsource them to a provider.

You also need to ensure that your business complies with data protection regulations and, as with any new development, you'll need to ensure your team communicates effectively with your employees.

This includes explaining the rationale and providing training where necessary in order to gain their buy-in and demonstrate clearly that moving to online payslips offers benefits to all within the business.

Editor's note: This article was first published in August 2019 and has been updated for relevance.

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