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Business models undergo rapid change and growth during a recession. Things that were slowing the company down tend to be jettisoned while the more critical components are streamlined. COVID-19 was an unusual recession, but it had a major impact on business operations.

With most recessions, companies have a bit of a lead time to plan for the possible damage and fallout. The COVID-19 pandemic sent companies scrambling to find solutions, accelerate innovation, promote change, and alleviate financial stress and burden from their employees.

A major worry for companies heading into the pandemic was maintaining employee trust and motivation. At its core was ensuring that people were paid on time no matter where they were working. Equally important for payroll professionals was to remain compliant with the legislative changes introduced by many governments to deal with the impact of COVID-19.

It is still unclear when the pandemic response will finally end. What is clear is that the nature of work has changed drastically. Many companies have been forced to adapt to employee demands for greater flexibility and introduce work-from-home (WFH) policies. Of course, payroll is running to catch up.

Flexible and remote work

The idea of working from home isn’t new. Reports show that teleworking has increased by 173% since 2005 due to advances in communication technology.

At the height of COVID-19, employees had to make their own arrangements to stay productive and healthy while working from home. Some organisations were happy to accommodate flexible working, but many weren’t able (or willing) to support the changes. Employees expected the same instant access to their work technology as they had with their personal technology.

For the first time, employees had to learn how to work remotely and manage others from home. It was a difficult learning curve for all, and it had a significant impact on payroll managers. Talented payroll staff are in particularly high demand because of this additional complexity.

Many payroll professionals were required to work remotely as well. This meant they were unable to use physical files or forms, sign and distribute, or print mass quantities of paperwork. This was an especially frustrating situation because, even in 2020, many companies were still using manual filings and lodgements. Working from home also meant it was impossible to use on-premises payroll software.

As the world got deeper into the crisis, more and more organisations had to create infrastructure and operating structures that allowed a greater percentage of their workforce to work remotely — even after the pandemic was over.

One of the key adaptations by payroll teams was to introduce on-demand pay structures. Pay on demand makes it so employees can withdraw earned pay whenever they need to, without waiting for the next pay day.

Payroll and HR at the board table

While we often talk about the rise of payroll as an integral cog in the corporate machine, it’s important to remember that HR is just as important. HR departments played a crucial role during the worst moments of the pandemic.

Both HR and payroll provided the workforce with data and analytics that business leaders needed to guide their employees through uncharted waters. Although they are two very different functions, when payroll and HR work together they can offer businesses a complete picture of their workforce.

Worried employees wanted to know how lockdowns and vaccination mandates would affect their livelihoods, and HR provided that clarity. Many companies had to track how many employees were absent due to sickness or determine if it was economically feasible to keep their workplaces open. On top of this, payroll and HR worked in tandem to claim wages from government job-retention programmes and monitor the distribution of emergency funds.

This increased visibility is bound to boost the profile of both HR and payroll among the decision-makers of various businesses, and even across sectors. Both roles will surely be invited to planning sessions, especially where preparation for dealing with unforeseen events is on the agenda.

Adapting to digital

Payroll has rapidly evolved over the past few years. Employers want more access to real-time data, and they expect even more flexibility around work. Companies have adapted by allowing employees to choose how much and when they get their monthly salary, and they no longer need to stick to fixed dates or receive complete payments.

The expectations of what payroll should and can offer are higher now than ever before. To satisfy tax obligations and accommodate changing work environments in a post-COVID world, it will be necessary for payroll to rethink their operations. Payroll is the common thread that connects everyone and affects almost everything. Nevertheless, payroll teams won’t be able to keep everyone happy if they don’t have strong technology and robust digital processes.

Another consequence of COVID-19 is the increased comfort in outsourcing payroll and other functions to external organisations who do this best. This allows company employees to focus more on their core business activities such as recruitment and benefits administration.

There has never been a greater need to digitise payroll and workflow processes. Organisations can reap the benefits of digital payroll platforms in both the short and long-term.

Cloud computing has been a key factor in enabling businesses to quickly respond to crises and maintain continuity. Payroll has found huge value in adopting cloud technology. Online payroll services are now much easier to use, offer incredible automation, and provide insight on staff costs and health.

Finally, COVID-19 has accelerated the use of automated payments allowing companies to centralise and dematerialise their payroll flows while letting employees view their own payslips and book leave remotely. The data generated from these systems can be used to make more accurate decisions that boost the growth of the wider company. Additionally, payroll software allows entities to make timely payments regardless of current working conditions.

Payroll will continue to uncover hidden and unexpected effects of COVID-19 for years to come. Payroll managers must learn to adapt to an ever-changing world and re-imagine their processes if they are to stay ahead.



For over thirty years, Affinity has been a trusted partner for mid-market and enterprise businesses in Australia and New Zealand, empowering them to transform their payroll operations. With a focus on turning payroll from a cost into an asset, we have established ourselves as industry leaders in delivering innovative cloud-based payroll software and exceptional payroll services.