Over the past few years, we’ve seen a few massive shifts in the ways most companies operate.
First, increased globalisation, remote working and improvements to cloud communications technologies have made it easier than ever to work together across borders. While hiring internationally used to be the domain of only the largest corporations, now even small businesses can have their piece of the pie.
Second, businesses have had to adapt to challenging market conditions and rapidly evolving worker expectations. That means we’re seeing more and more companies adopting new working patterns and turning to different types of workers to combat talent shortages.
All of this means that the way companies handle payroll has radically changed since 2020. In this article, we’ll share seven of the top payroll trends for 2024, so you can adapt your operations to today’s business landscape.
7 key payroll trends that will shape 2024
New technologies, non-traditional hiring strategies and unrestricted flows of information, people and ideas across borders mean that payroll today looks very different than it did just a few years ago.
Here are our top payroll trends for 2024:
- AI-enhanced payroll
AI has made waves in almost every business function over the last year — and payroll is no exception. In 2024, more and more companies will begin incorporating AI into their payroll practices by investing in AI-enabled solutions.
This software allows payroll and HR professionals to automate key tasks like performing compliance checks, analysing payroll data and spotting pay discrepancies.
As the power of AI grows, larger organisations will also implement AI chatbots that can help their employees resolve simple payroll questions without HR having to get involved.
Ultimately, it’s all about using AI to enhance the work of your HR and payroll team — leaving them with more time to focus on the parts of their job that require a human touch.
- The rise of on-demand pay
With many employees feeling the squeeze of the rising cost of living, employers around the world are looking for ways to help them manage their finances and stretch their pay packet further.
On-demand pay (also known as earned wage access or instant pay) is a financial perk that allows employees to access the wages they’ve already earned before their next payday. This gives them more control over their finances, essentially acting as a safety net that helps them manage any unexpected expenses.
In a challenging labour market, offering financial wellness perks like on-demand pay can be a key competitive advantage for an employer — especially as 76% of employees would like to see their employer provide this benefit.
- Data security and privacy
Handling payroll inherently means managing a lot of data. And the more companies engage and pay workers internationally, the more they increase their risk of data breaches. That means that businesses will likely have an increased focus on cross-border data security in 2024.
In fact, a recent survey by IBM revealed that more than 50% of businesses are planning to increase their investments in security. This includes forking out for things like incident response planning, employee training and threat detection.
Of course, not all companies have these kinds of resources. If you want to avoid putting your business at risk in 2024, the best solution is to partner with a global payroll provider that takes data security seriously — like CXC.
This way, you’ll ensure that your sensitive payroll data is kept safe and handled in compliance with any relevant state, national or international data security regulations.
- Increased demand for pay transparency
One of the biggest payroll trends we’ve seen over the past few years is the rising demand for pay transparency — both in terms of legislation and employee expectations.
In the US, ten states currently have pay transparency laws on the books, with many more planning to follow suit. And over in Europe, a new EU directive that came into force last year will require employers to provide much more transparency on their internal pay practices.
In 2024, employers all over the world will have to devote resources to complying with these new regulations or face hefty fines and penalties. Navigating the laws will be especially tricky for those companies that have workers across multiple states or jurisdictions since they’ll have to comply with the rules in all of them.
Again, working with a dedicated payroll partner who understands the rules could save you a lot of time.
- Adapting payroll for the gig economy
In 2023, there were an estimated 73.3 million freelancers in the US — an increase of over 20% since 2017. And this number is projected to rise to over 90 million by 2028.
This rise in freelance work means that many companies have had to adapt their payroll systems to handle new payment terms and processes — which we’ll see continue into 2024 and beyond.
For example, freelancers typically expect to be paid on project completion and don’t want to wait until the end of your normal pay cycle. This will likely contribute to the expansion of the on-demand pay platform market, which is predicted to grow at a CAGR of 14.9% from 2023 to 2033.
There are also tax implications to hiring independent workers instead of employees, which are different in each country. In the US, for example, employers don’t have to withhold or pay taxes for off-payroll workers, but they do need to report contractor earnings over $600 in a calendar year to the IRS.
- Use of external payroll providers to facilitate international engagements
Just a few years ago, hiring overseas was only really possible for large corporations. But technological advances and changes to the way we work mean that even small businesses can now benefit from the flexibility, cost savings and new perspectives that hiring international workers can bring them.
The problem is, operating payroll across borders is a tricky business. You need to be aware of a vast range of national and international tax and labour laws — and many smaller organisations simply don’t have those resources.
That’s why we predict that 2024 will see more companies turning to providers like CXC, who can provide fast, flexible and friction-free payroll and engagement solutions for international employers — with compliance guaranteed.
- Holistic, integrated HR and payroll systems
In 2024, many HR teams are expected to do more with less. So it’s no surprise that they favour integrated, holistic HR and payroll solutions that make their lives easier.
Look at it this way: your HRIS or HRMS gathers employee data, while pay and time data for those employees sits in your payroll software. By connecting these two functions together (either through one holistic solution or clever integrations), HR teams can save themselves a lot of work.
In fact, more than 50% of respondents to a recent survey said that they expected the integration of payroll, HR and attendance systems to be the primary trend shaping payroll over the next two years. In 2024, consolidated systems that help busy HR and payroll managers handle every aspect of their operations in one place will be a game-changer.
Simplify payroll management with CXC
The rapid technological advancements we’ve seen over the past few years are not slowing down. And, while we’ve somewhat settled into a new style of working in the post-COVID world, employee expectations are constantly evolving too.
That means it’s crucial that your payroll systems and processes are up to date and fit for purpose if you want to survive in today’s business environment.
While you can certainly manage payroll in-house, things can quickly get complicated if you’re engaging multiple worker types across different jurisdictions. And, thanks to increasingly tight regulations around worker misclassification, international tax liability and more, getting it wrong carries a significant risk for your business.
The solution? Engage an experienced workforce solutions partner like CXC to handle global payroll for you, and never have to worry about compliance risks again. Want to learn more? Speak to our team today.