Payroll outsourcing takes place when a business specialises in the delivery of payroll and manages your payroll processing to ultimately ensure that employees are paid accurately and on time.

There is a growing trend toward employers electing to outsource payroll for a variety of reasons. In fact, the Global Payroll Benchmarking Report showed that 73% of respondents (globally) outsource some aspects of their payroll – with the most cited areas for this move to be due to improved compliance, accuracy and self-service capabilities.

But which one should you pick for your business? If you’re looking for a breakdown on outsourcing your payroll, this article is for you.


Cost Efficiency

Running a payroll in-house requires the costs of many resources, such as:

  • Employing someone to process payroll
  • Ongoing training for payroll staff
  • Payroll Software
  • Time and Attendance software, if it’s not contained in the payroll system
  • Professional Membership to a payroll organisation that provides assistance

Due to the nature of payroll legislative requirements, this may result in impromptu costs to a business such as attending training courses, allocating additional time or resources to conduct payroll calculation audits, engaging a third party to review your payroll software and legal consultancy for compliance.

By electing to outsource your payroll, this can provide an all-inclusive package where the price of the service encompasses all of the above items, and can be a cost-efficient solution to delivering payroll for your organisation. Providers often offer fixed prices for a standard delivery of payroll services, and may sometimes have additional fees for ad hoc tasks – However, this enables you to budget effectively for your payroll operations.


Payroll Compliance

The Fair Work Ombudsman regularly publishes media releases on legal action against non-compliant businesses and the penalties associated with breaches in Modern Award calculations. It is apparent payroll compliance is a key element when considering your payroll process, and non-compliance can incur large costs to your business.

Processing payroll in-house often involves one individual or a small team handling your payroll process. At times, the person responsible for payroll may also be involved in other areas of the business leaving only a short amount of time allocated to ensuring payroll is processed in line with the correct requirements or Modern Award your employees may fall under.

Outsourcing your payroll means that you have a dedicated Payroll Partner that manages the payroll service for your organisation, backed up by an experienced team. An effective payroll provider will also have professional memberships with other organisations or access to legal advice that can ensure that your payroll is run in compliance with relevant legislation that affects the way you pay your employees.


Better Utilisation of Technology

Businesses are often finding themselves using a number of different solutions for accounting, time and attendance, HR and payroll – or perhaps only using the basic payroll features within their existing accounting suite, and therefore not gaining any additional value from product features that exist today in leading payroll and HR software systems. In fact, the Global Payroll Benchmarking Survey Report found that 20% of respondents use 2 or more payroll systems to perform their payroll function.

Any change in technology also adds to implementation and training costs for your staff if running payroll internally – and the resistance to change is also greater.

Outsourced payroll providers often have all-in-one solutions, with an employee portal for self-service, time and attendance and HR Information Systems (HRIS) built in, which ensure adaptability to change for your existing employees, and therefore a better employee experience. Through understanding your business needs when it comes to technology, the payroll provider will be able to build out your system to meet those needs.


Ongoing Support

Payroll does not start and end with running a pay run for your employees. When outsourcing your payroll, an effective provider understands the different aspects that go into your payroll process such as:

  • Time and Attendance support
  • Assisting with understanding industrial legislation that may affect your business decisions
  • Ad Hoc calculations, such as future leave liability or termination calculations
  • Ongoing communication and adherence to changes in legislation

Oftentimes when payroll is run in-house, especially within small organisations, if there is one individual responsible for the payroll processing then any absences may have an impact on the ability to process payroll. This may result in delays to the process, or allocating another resource to be trained up to perform the role – and this can take them away from their regular day to day tasks. The individual responsible for your payroll may also be the one specialist within your organisation that has knowledge of all systems and processes involved with the entire payroll process.


At Employment Innovations, we understand that both in-house or outsourcing have their pros and cons, and it really depends on a business’s goals and objectives. When navigating through such a decision, some questions you should consider when assessing your Payroll needs that may impact your decision include:

  • Is payroll taking time away from other company activities?
  • Is your company presently experiencing growth, or in the future?
  • Are you utilising time and attendance efficiently?
  • What controls are in place for payroll compliance?
  • Would outsourcing payroll be beneficial?

When considering outsourcing payroll, partnering with a provider that has a proven track record can add exponential value to your business. Having your payroll outsourced by experts in their field holds the potential for reducing risks, providing a better experience for employees, and reducing the overall cost for the payroll operations your company requires.

Access your free Expert Guide to Outsourcing Payroll eBook and start using it within your business


If you’re interested in learning more about outsourced payroll, or how Employment Innovations can help you improve your current payroll processes, please feel free to get in touch and we’ll be happy to help.



About Employment Innovations

Employment Innovations is one of Australia’s leading providers of employment services designed to increase productivity and ensure compliance. Its services and solutions include all the tools that every Australian small to medium sized employer needs – including workplace advice, legal services, payroll solutions, migration, human resource management and HR software.



The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.