Scottish Government

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EFFICIENT GOVERNMENT FUND BID
"SHARED PAYROLL SYSTEM"

EFFICIENT GOVERNMENT FUND

Stage 1 application - expression of interest

Part 1: Summary Table

Part 2: Narrative Bid

Background

Each local authority has their own payroll system, individually implemented to suit their own needs. Argyll and Bute, Highland and Western Isles and Orkney Islands Councils all run on ResourceLink but have been implemented separately and in different ways. Orkney Islands Council currently use the Highland Council implementation. Smaller Councils in particular use a disproportionate amount of their resources on systems administration and development work. It is often the case also that the skills to undertake this work are shared between very few staff in an authority and the departure or absence of those staff can cause severe disruption to the smooth running of the system.

Most Councils have staff on a range of inherited conditions of service. While payroll systems can cope with an almost limitless variety of terms and allowances, dealing with numerous payruns for staff paid on different periods is particularly labour intensive within payroll sections. To be simplistic, paying staff on a weekly basis is four to five times more expensive administratively than making the same payments on a monthly basis, in terms of payroll staff, payslip generation and distribution etc. The cost of subsidising the transition for staff on weekly pays in particular has meant that Councils have not on the whole tackled this issue.

Objectives of the Proposal

The objectives of the proposal are to re-implement the payroll systems for four Councils using the existing software package all four are familiar with. At the same time the Councils will begin standardising their terms and conditions by addressing the issue of pay periods within the Councils which is the most administratively expensive.

The proposal impacts on three of the Efficient Government themes;

1. Procurement - The four Councils acting together will be able to negotiate a more favourable licence arrangement with the software vendor. There should also be significant economies in scale from engaging a single consultant to carry out the joint implementation.
2. Support Service Reform (Human Resources) - Although the immediate and significant impact of this proposal in terms of support services will be within the payroll sections the opportunities for genuine reform are with the Human Resources sections of Councils involved. While the shared data set will not give officials access to each other's data it will provide a standard for benchmarking and will give a broader base for any statistical analysis. There will also be opportunities for sharing expertise within the HR sections in different Councils. This will lead to a sharing of best practice and a rationalisation of terms and practices.
3. Transactional Processing - the move to monthly payrolls will result in a substantial saving in transactions processed, both by staff within individual services and staff within payroll. There will also be a reduction in the number of payslips produced and distributed to employees.

Areas for Inclusion in the Project

The project will embrace payroll and human resource functions across the Councils involved.

Project Costs

The overall project cost is estimated to be in the region of £2,150,049

The costs comprise;

• The re-implementation costs of the payroll system
• Subsidising the transition costs of employees from weekly and fortnightly pays to monthly pay.

Estimated Projected Benefits

Conclusion

The project does not rely on unproven technology but instead is based on standardising the use of a system, which is already in operation within each of the partner authorities. By building on the experience each authority has in implementing and using the system the new implementation should be better than the best of the three at present. There is little doubt that the joint system will be more cost effective to administer than the three separate systems currently in use.

By moving to a single monthly pay period the authorities can make substantial savings in the staff administering the payroll system.

APPENDIX 1

CALCULATIONS AND ASSUMPTIONS

COSTS

1. Subsidising the transition of staff from weekly and fortnightly to monthly pay.

This is based on Argyll and Bute Council payroll values, taking one weeks pay for weekly paid staff - with two weeks lying time this should be sufficient to bridge the gap from the last weekly pay to the first monthly pay. For fortnightly paid staff allowance has been made for an additional two weeks pay to bridge the gap until the first month's pay is due.

Normal payroll totals are as follows;

2. The cost of re-implementation of Resourcelink to give standard data sets for the three Councils covering Payroll and HR. This assumes no change in licencing numbers (currently 112 in Argyll and Bute) and no additional hardware costs or server consolidation. The cost estimated is that for consultancy and data migration for the three Councils and is based on forty days consultancy for each Council at £1,000 per day.

£120,000

Benefits

1. By standardising on a monthly pay period for all staff, probably based across two payruns in a month, one for teaching staff and one for all others, the payroll sections involved can make the following savings;

2. Departmental Staff Savings - due to the decentralised collection and administration of timesheets these savings should be classed as time releasing rather than cashable

3. Payroll Generation and Distribution

(50% of Argyll and Bute costs for posting etc)

4. Systems Admin and Development savings are a notional figure representing the minimum the three Councils should be able to save on an annual basis by sharing these functions.