Payroll data is a rich source of insights into what makes an organisation tick, forewarning where improvement is needed and revealing how to chart a successful future course. Yet many companies remain locked into the habits of the past; relying on time-consuming, unreliable, manual processes rather than leveraging the latest payroll processing solutions and technologies. Such shortsightedness can be costly.
Alight’s 2024 Company Payroll Complexity Report shows that time spent on manual repetitive activities is the biggest pain point for businesses today with 15% of respondents seeing resources needlessly squandered here. The second stumbling block in current payroll processes was inconsistent data quality, at 13%. With ready access to platform technologies such as the cloud and integration with other systems through transformation, as viable options, businesses have a blueprint for how to do better. Now is the time to enact change.
The price of poor data
Inconsistent data quality has become a particularly pertinent issue with the advent of new legislation that prioritises pay transparency and penalises companies that do not pay their employees fairly. On June 7, 2023, the Council of the European Union adopted new rules on pay transparency intended to combat pay discrimination and help close the gender pay gap in the EU. Union members were granted up to three years to “transpose” the directive by adapting their national legislation around the new rules.
Under the pay transparency directive, companies within the EU are compelled to disclose information on how much they pay men and women for work of equal value. They must address their gender pay gap if it exceeds 5%. Provisions on compensation for victims of pay discrimination and penalties - including fines for employers - are also included within the legislation. European organisations lacking a clear picture of their workforce will be at a serious disadvantage.
Alight ranked the top 40 countries based on payroll complexity out of the nearly 200 countries it processes payroll in for its 2023 Global Payroll Complexity Index Report (GPCI). The four most complex countries for payroll - France, Germany, Switzerland and Italy - are all EU members and must fall into line with the new reporting obligation. And, in total, eight of the Top 10 are in the European Union with another, Turkey, in negotiations to become a member state.
Reporting obligation
The pay transparency directive requires companies with more than 250 employees to report annually on the gender pay gap in their organisation to the relevant national authority. Companies must perform a joint pay assessment in cooperation with workers’ representatives where a pay gap of more than 5% exists that can´t be justified by objective, gender-neutral criteria.
With women in the EU earning on average 13% less than their male counterparts, according to the European Council, pay transparency is an absolute necessity. Unequal pay increases the risk of poverty for women and is a big contributing factor to the EU’s pension pay gap. The Council stated that this gap was around 30% in 2018. Data insights from payroll are essential to progress.
Alight´s research sparks hope that things are moving in the right direction. The report found that in the next twelve months, 34% of respondents plan to make changes which will affect their payroll calculations. Employee data analytics formed part of that evolution for 13% of organisations. This is an encouraging move for compliance with the new directive. However, as an industry we can make greater strides by remaining open to innovation; allowing payroll data to work for us.
Share your perspective by participating in Alight’s EU Pay Transparency Directive Survey
Payroll data is a rich source of insights into what makes an organisation tick, forewarning where improvement is needed and revealing how to chart a successful future course. Yet many companies remain locked into the habits of the past; relying on time-consuming, unreliable, manual processes rather than leveraging the latest payroll processing solutions and technologies. Such shortsightedness can be costly.
Alight’s 2024 Company Payroll Complexity Report shows that time spent on manual repetitive activities is the biggest pain point for businesses today with 15% of respondents seeing resources needlessly squandered here. The second stumbling block in current payroll processes was inconsistent data quality, at 13%. With ready access to platform technologies such as the cloud and integration with other systems through transformation, as viable options, businesses have a blueprint for how to do better. Now is the time to enact change.
The price of poor data
Inconsistent data quality has become a particularly pertinent issue with the advent of new legislation that prioritises pay transparency and penalises companies that do not pay their employees fairly. On June 7, 2023, the Council of the European Union adopted new rules on pay transparency intended to combat pay discrimination and help close the gender pay gap in the EU. Union members were granted up to three years to “transpose” the directive by adapting their national legislation around the new rules.
Under the pay transparency directive, companies within the EU are compelled to disclose information on how much they pay men and women for work of equal value. They must address their gender pay gap if it exceeds 5%. Provisions on compensation for victims of pay discrimination and penalties - including fines for employers - are also included within the legislation. European organisations lacking a clear picture of their workforce will be at a serious disadvantage.
Alight ranked the top 40 countries based on payroll complexity out of the nearly 200 countries it processes payroll in for its 2023 Global Payroll Complexity Index Report (GPCI). The four most complex countries for payroll - France, Germany, Switzerland and Italy - are all EU members and must fall into line with the new reporting obligation. And, in total, eight of the Top 10 are in the European Union with another, Turkey, in negotiations to become a member state.
Reporting obligation
The pay transparency directive requires companies with more than 250 employees to report annually on the gender pay gap in their organisation to the relevant national authority. Companies must perform a joint pay assessment in cooperation with workers’ representatives where a pay gap of more than 5% exists that can´t be justified by objective, gender-neutral criteria.
With women in the EU earning on average 13% less than their male counterparts, according to the European Council, pay transparency is an absolute necessity. Unequal pay increases the risk of poverty for women and is a big contributing factor to the EU’s pension pay gap. The Council stated that this gap was around 30% in 2018. Data insights from payroll are essential to progress.
Alight´s research sparks hope that things are moving in the right direction. The report found that in the next twelve months, 34% of respondents plan to make changes which will affect their payroll calculations. Employee data analytics formed part of that evolution for 13% of organisations. This is an encouraging move for compliance with the new directive. However, as an industry we can make greater strides by remaining open to innovation; allowing payroll data to work for us.
Share your perspective by participating in Alight’s EU Pay Transparency Directive Survey