Sandra Crous | Managing Director | Deel Local Payroll | mail me |
Payroll regulations keep pace with a fast-moving and complex world. This keeps payroll professionals on their toes. PwC’s Payroll Complexity Survey highlighted this trend last year. It wrote that “payroll regulations are evolving more rapidly and payroll compliance is coming under increasing scrutiny by government and tax authorities“.
A quick glance reveals many recent adjustments. These include increases in employee benefits in South Africa, contribution limit updates to Kenya’s National Social Security Fund, and new rent relief allowances for employees in Nigeria.
Payroll staff spend substantial time on compliance. Even then, they encounter barriers, calculation errors, and delays. These issues risk penalties and other repercussions. Yet, a solution exists called Compliance-as-a-Service (CaaS). It should be a native part of their payroll software.
CaaS and payroll
Sectors with heavy regulatory obligations, such as healthcare and finance, routinely use compliance services. They use them to reduce compliance workloads.
The general concept describes a third-party service. This service specialises in compliance and regulatory management on behalf of its clients. It charges a fee for the work. But CaaS in payroll is different.
Payroll without reliable regulatory updates is a broken service. Payroll regulations change constantly. These changes have a direct impact on the entire payroll environment. For example, a new allowance changes calculations. It also changes how they apply to different employee groups. So, you can quickly get a cascading effect of errors because one law has changed. Payroll operates monthly, weekly, sometimes daily or ad hoc. This is why we don’t charge for regulatory updates. Instead, we include them as part of the base product.
Applying regulatory changes to a payroll system can be complex. It can also be costly, especially for large companies using ERP systems or local software. Timelines to apply regulatory changes can take months. Often, these updates arrive after regulations take effect. They also arrive after customers request changes.
Modern cloud payroll platforms flip this model. They allow vendors to push updates as they happen. They also do this at no extra cost. As such, payroll compliance drives automation in modern cloud payroll systems.
Compliance teams monitor changes so our customers do not have to. Cloud technologies let us control regulations. They also let us automatically update regulatory changes and affected calculations and processes.
Why bake CaaS into payroll?
In many industries, software vendors offer compliance updates as an upsell. This increases costs for customers. But this approach makes little sense in payroll. Our customers expect a working product. If regulations change, payroll software produces errors. That is not a working product. Compliance updates are not a value-add. They are fundamental to a working and trusted payroll experience. Without compliance updates baked into a system, the system stops doing its job.
This issue affects all companies. Small businesses do not have dedicated compliance staff. These staff would track recent developments. Larger companies manage multiple layers of employment categories. Global businesses would waste significant effort on regulatory updates without native payroll CaaS features.
Payroll compliance is not just about following laws, avoiding fines and ensuring accurate calculations. It also includes securing payroll data, meeting deadlines, producing accurate payslips and conducting audits. Some tasks can be automated. Others require payroll professionals. One regulatory change can disrupt this momentum. This is why CaaS must form part of payroll’s foundation. In other words, payroll compliance drives automation.
You would not buy a car and then pay separately for the gearbox or wheels. Compliance updates pushed by the software vendor should be standard. If you do not have that, you only have half a payroll product. If you do have it, you gain a major time and cost saver.
