What is the difference between HR and payroll?

For Employers, Human Resources

Human Resources and Payroll are usually considered as two completely separate functions yet there is often an overlap in terms of the work they do.

This blog will provide you with more information on what the differences are between Human Resources and payroll, and what it is that Thrive can help with.  

What is the difference between HR and payroll?

Payroll refers to the process of compensating employees. This involves a whole host of responsibilities including:

  • Ensuring that every employee receives their payslip and that the money reaches their accounts when they should.
  • Making the necessary statutory deductions (i.e. taking away tax and national insurance contributions))
  • Other functions include: calculating bonuses, handling statutory payments like sick pay and managing more complicated working hour arrangements such as overtime shifts.

Human Resources (HR), put simply is about getting the best out of the employees within the firm and recruiting people that are in line with the culture and embody the values of the organisation. Performance development, employment law and HR policies are all additional examples of activities HR would typically get involved in as well. 

Can HR handle payroll?

The simple answer is no, in most businesses.

HR is involved in hiring new employees and then setting them up on the system. Its then payroll’s responsibility to ensure that all of the aspects of their payment are handled correctly. The key is to ensure that both functions communicate effectively with one another and ultimately work together to make the employees’ experience run as smoothly as possible.

For example, if an employee decides to go on maternity leave, its both HR and payroll’s responsibility to make sure that the transition onto maternity pay is a seamless process.

Should payroll report to HR or accounting?

There is no simple answer that decides whether payroll should report to HR or accounting because there are benefits and challenges linked to both options.

For example, even though there are advantages associated with payroll reporting to Human Resources, these professionals may not have the appropriate financial or accounting knowledge. If we look at the perspective of the accounting department, they may possess the relevant financial and technical knowledge but they are not equipped to tackle employment or confidentiality-related issues. This means that it could be a major risk factor if an employee were to have a payroll-related problem.

If you are involved in running an organisation, it is really important to avoid violating HR rules and regulations. You don’t want individuals that have not received the appropriate HR training to be speaking with the employees because if the appropriate language is not used, this could result in employment tribunal claims. As the same time, its important that individuals with no accounting experience don’t handle the accounting system.

Ultimately it will depend on the structure of the business or organisation. It is important that the employee’s queries’ regarding payroll are taken into consideration. If they are, this could very well support the argument that payroll should report to HR. With that being said, both departments have to work as a team and collaborate with one another to ensure that the payroll is managed in the best way possible for that particular organisation.

What can Thrive do?

Here at Thrive, we obviously don’t have the required payroll knowledge (although we can refer to experts who do). Where our HR support packages can help are with all the other HR-related matters. Our outsourced HR package means that you will have advice from a solicitor on issues, as well as bespoke contracts and employment contracts.

Why should you outsource your HR services to solicitors? Getting your HR services from a solicitor means, should a case ever proceed to tribunal everything we have ever discussed is protected by legal privilege meaning all conversations are protected. Whereas if you were to use an HR consultant, all conversations and documentation regarding that employee would be disclosable in a tribunal.

Get in touch today to invest in your business and make your HR stress free. Email Jodie.hill@thrivelaw.co.uk


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