RTI means an up-to-date HR system is critical for all firms

Charles Cotton
Thursday, October 4, 2012

Real Time Information (RTI) will be the biggest shake-up to Pay As You Earn (PAYE) since it was first set up back in 1944. Under RTI, employers will give tax and national insurance information (as well as details on any deductions) before or at the same time as they pay their employees, rather than at the end of the financial year as they do now.

The short-term implication of this is that HR, payroll and finance teams need to work together to ensure that the payroll software will meet the new requirements. They also need to make certain that information about their employees is accurate, up-to-date and in the right format.

In some organisations, with lots of worksites, HR will need to ensure that managers check their team’s records to make certain that they contain the correct information about the people they employ, otherwise workers will end up paying the incorrect tax.

In addition, because earnings payment is in real time, there is little opportunity for payroll to sort out mistakes once the wages have been paid. Once the data has gone it has gone. So employers will need to get it right first time.

The change will also require HR, payroll and finance to communicate the changes to employees in terms of what is now required from them, either in terms of providing accurate information or checking that it is correct on an ongoing basis, as well as putting in place the appropriate policies and procedures (including training) to ensure that this happens.

However, I think that rather than regarding RTI as another burden or cost of doing business, employers should take the opportunity to review their pay and HR information systems. Many companies already use sophisticated data collection and analysis technology that is able to give them crucial customer data instantaneously, as well as allowing them to use the data over time to make predictions as to how their customers may react in real time to various initiatives, such as if the price or the colour of the product is changed.

Yet while many successful organisations have invested heavily in systems that facilitate greater customer intimacy and that allow them to anticipate client needs, few have tried to make similar investments that allow them to get to know their employees better. RTI gives payroll and HR teams the opportunity to make the business case for IT systems that can provide crucial people management data such as the number of employees, the total cash spend, the typical rate of employee pension contribution, male and female pay data, the number of sick days, the average age of the workforce, how many employees will retire in the next three years, benefit take-up, trends in overtime and shift pay, etc. All this key information, and more, can be available to the organisation on a real-time basis.

If print is going to meet the coming economic, political, environmental, demographic and technological challenges then it not only needs to get to know its clients better, it needs to know its employees better so that they can encourage and reward them for developing deep insights into consumer requirements.

Charles Cotton, Reward adviser, Chartered Institute of Personnel and Development

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