What Is The Difference Between Payroll And HR?

Running a business can be a huge affair. Sometimes, it may feel as though you become bogged down with various terms and departments. Understandably, you may find yourself feeling overwhelmed and even confused over all these terms mean.

Two such terms are payroll and HR – but what exactly do they entail? Do their responsibilities overlap, or are they entirely separate? Let’s find out.

Companies that offer effective HR software include:

  1. Rippling
  2. Deel
  3. BrightHR
  4. Factorial

Is Payroll and HR The Same?

In short, payroll and HR are not the same thing. However, while they serve distinct functions, there can be some overlap between them.

Human Resources, or HR, is broadly responsible for an organisation’s beating heart: Its employees. Think of this department as a bridge between an organisation’s management and its workers.

The size of the organisation dictates the scale of its HR department, which may consist of a large team of specialists, a small team, or even just one person working as an HR generalist – particularly in startups.

On the other hand, payroll specifically deals with employee pay. Again, depending on the size of an organisation, there may be a team or individual handling payroll. However, as payroll is typically only distributed monthly and entails a manageable workload, it can be integrated into the HR department to streamline operations.

Is HR Responsible For Payroll?

As payroll is an employee-facing responsibility, some companies feel as though it belongs in the repertoire of HR. Ultimately, this is the choice of the company.

Bigger companies that have the resources to house bigger teams may have the resources to set up a separate team to deal with payroll, allowing HR to focus on other fundamental aspects of HR such as hiring and training new employees and dealing with internal disputes.

What Are The Responsibilities of HR and Payroll?

Having touched on the separate responsibilities of HR and payroll, let’s delve a little deeper.

Although payroll may sound simple (after all, isn’t this just deploying pay into employee bank accounts?) there’s a little more to it than completing monthly bank transfers:

  • Processing Salary: Payroll is responsible for calculating and processing employee salaries. This will include taking into account not only employee wage rate, but also any bonuses, holiday pay, commissions, and so on. Failure to do this correctly could lead to lots of disgruntled employees.
  • Record Keeping: As payroll dishes out employee pay, so too must it keep a diligent record of its operations. This includes keeping track of employee attendance, time worked, holiday time, sick leave, and other time-off benefits. This is needed to accurately calculate payroll.
  • Tax Deductions: Something nobody likes but HR must ensure is properly carried out: Tax. Tax is deducted from every employee’s pay cheques once they are earning over the threshold. So, these must be deducted and remitted to the HMRC.
  • Benefits and Deductions: Besides tax, other factors can influence pay. For example, an employee may be able to claim certain benefits or their pay may be directed into other deductions such as health insurance plans, retirement plans, and other voluntary deductions.
  • Reporting: It will be essential for payroll to generate reports detailing their activities so that accurate records may be kept and the company notified that all requirements and regulations are being consistently kept.

On the other hand, let’s dig a little deeper into HR responsibilities. This will help to differentiate HR from payroll responsibilities.

  • Payroll, maybe: Speaking of HR and payroll, let’s begin by stating that this can indeed be a responsibility of HR. Members of the HR department may undertake this role and include the subsequent record-keeping and organisation into their other responsibilities.
  • Recruitment and Hiring: Overseeing the recruitment process will include undertaking tasks such as crafting job descriptions, posting job ads, screening and even vetting candidates, analysing CVs and conducting interviews.
  • Onboarding Process: Once an employee is hired, HR’s job is not yet finished. They will then be responsible for the subsequent onboarding process for new employees, which may include paperwork, training, and taking them through the ropes of their new organisation.
  • Training and Development: Employee training will be a key part of HR, and will help ensure the professional and personal development of employees as they enhance their industry skills and knowledge.
  • Compliance: HR must ensure its organisation sticks firmly to legal requirements and regulations, such as employment laws and other legal matters related to employment.
  • Conflict Resolution: HR manages employee relations, including conflict resolution, disciplinary actions, and fostering a positive work environment.