What does a payroll administrator do? (Duties and skills)

Updated 28 August 2023

Working in payroll administration is a fast-paced and constantly changing job. There are different skills and duties that go into working as a payroll administrator, each bringing new opportunities. Learning about what a payroll administrator does may help you decide if pursuing this field is right for you. In this article, we answer 'what does a payroll administrator do?' and consider what training is required.

What does a payroll administrator do?

To understand 'What does a payroll administrator do?', it might be beneficial to first know what a payroll administrator is. This is a person who manages the employment records of an organisation, including the preparation of paychecks and other documents used to calculate employees' wages and benefits. Typically, they handle the day-to-day tasks of processing employees' wages, such as filling out forms, making payments and issuing tax forms. In addition, many payroll administrators also work with human resources professionals to process new hires and terminations. They may also work with accountants and attorneys to prepare tax returns for employees.

Payroll administrators are responsible for processing payments and tax records. Their role is expanding as more businesses seek to automate their payroll processes. Payroll administrators work in a variety of industries, including manufacturing and retail. They are also called payroll clerks or payroll managers. The work is sometimes highly complex, especially when it involves paying employees who work overseas or have complex benefits packages. Payroll administrators have excellent numerical skills and attention to detail. A payroll administrator's duties include:

processing new hires and terminations
calculating salaries and wages
calculating taxes and deductions
completing statutory forms for the Her Majesty's Revenue & Customs (HMRC)
processing employee timesheets to calculate hours worked and calculate pay rates for each employee
preparing payment vouchers for direct deposit or paper checks issued by the company's bank account
working with human resources staff to ensure all taxes are correct based on government laws
maintaining records of garnishments, garnished wages and other withholdings such as child support payments or alimony payments
preparing payroll reports for management review, such as total hours worked by each employee by week or month, total gross wages paid and total net pay amounts

Payroll administrator responsibilities

The duties and responsibilities of a payroll administrator vary depending on the size and nature of the business. There are certain duties that are common to all payroll administrators. These include:

Calculating wages and salaries

Payroll administrators are able to calculate basic salary rates. They do this using factors such as job grade or length of service, plus any additional payments such as overtime or bonuses. They also keep track of any changes in employee status, such as promotions, that affect their basic salary rate.

Maintaining employee records

Payroll administrators keep up-to-date records of each employee's salary, pay rate, hours worked and other relevant information. They also make sure these records are accurate and up to date at all times. This is so that they're able to calculate the correct amount of tax owed by the company or individual.

Processing payments

Payroll administrators are responsible for ensuring all payments are processed correctly and on time. This is to meet any legal requirements regarding the payment of wages or salaries. This includes making sure employees receive their correct paychecks every month or week and making sure tax payments are accurate.

Preparing and filing payroll taxes

Payroll administrators are responsible for processing payslips and submitting them to HMRC on time every month. Payroll administrators prepare all the necessary tax returns, including quarterly filings and annual returns. They also keep up-to-date records of payments made to employees. They also ensure employees' tax details are up to date, so they receive the correct amount of tax back when they file their annual returns.

Ensuring compliance with employment law

Payroll administrators ensure their employer complies with employment law, including equal pay legislation, redundancy procedures and maternity leave regulations. They do so because the employment law is complex and constantly changing. Payroll administrators are up to date with the latest legislation, including changes in national minimum wage levels and tax regulations.

Computing holiday pay and sick pay allowances

This involves calculating how much holiday an employee has earned under their employment contract. It also concerns how much sick pay they receive if they're off work temporarily due to illness or injury while employed at the company they work for. This often requires a good understanding of company hour-keeping.

Reconciling payroll accounts each month

This involves entering all hours worked by each employee into the payroll system and comparing that information with their timesheets or other records of hours worked. They also make sure all deductions from paychecks are accurate and consistent every time an employee gets paid. Rather than leaving money on the table due to human error.

Manage bespoke company payroll systems

A payroll administrator is able to effectively manage the payroll system, so it runs smoothly without any errors. This involves setting up new employees and updating existing ones with information such as addresses, phone numbers and social security numbers so HMRC is able to send out tax forms each year on time. Payroll administrators also keep track of deductions from employees' paychecks, such as income tax withholding amounts or national insurance contributions.

Qualifications for payroll administrator jobs

The exact qualifications required vary depending on the role, but it's usually expected that candidates have GCSEs and A-levels or NVQ levels 3 or 4 (equivalent to A-level). Many employers require chartered certified accountants (CCAs) or chartered accountants (CAs). Although this isn't necessary unless you want to become a senior payroll administrator or manage your own team at some point.

Payroll administrator skills

Payroll administrators have excellent communication and organisational skills as they are required to work with people from all levels of the company. Below are some vital skills for payroll administrators:

Proficient in Microsoft Office

Payroll administrators have at least basic proficiency in Microsoft Office applications like Word, Excel and Access. These programs help them create documents such as pay stubs and other reports. Payroll administrators often use these documents as proof of employment when it's time for their employees to file their taxes.

Familiar with payroll laws

Government agencies, such as HMRC and insurance agencies, typically regulate payroll administration. So, it's important for payroll administrators to understand the laws that govern their industry. For example, they are familiar with tax withholding requirements so they can calculate withholdings properly on each employee's paycheck.

Ability to multitask effectively

Payroll administrators are able to handle multiple tasks at once and prioritise accordingly. Some of these responsibilities include processing employee timesheets, calculating taxes, creating payroll reports and completing payroll tax filings. These duties tend to change day-to-day.

Excellent written and verbal communication skills

Payroll administrators often communicate with employees, managers and other payroll staff members on a regular basis. They are able to clearly explain their actions when faced with questions from employees or managers regarding their paychecks or deductions made from them. They are able to write clearly when communicating with third-party vendors about issues pertaining to processing employee paychecks.

Detail-oriented

Payroll administrators carefully review all documentation related to payroll processing before making any changes or announcements related to payroll processing for the company's employees. For example, an employee has a question about their paycheck amount. The payroll administrator ensures all the information provided by this employee is accurate before answering their question.

Ability to work independently

A payroll administrator requires self-motivation to work independently. They have a responsibility to get people's wages right, so being confident in their own abilities is necessary. If a payroll administrator needs constant supervision and guidance, it's difficult for them to take on the responsibility of managing the payroll department.

Good analytical skills

Payroll administrators require strong analytical skills to understand how various parts of the payroll system work together and how they affect each other. They often work with a lot of new information at once, which requires them to be able to process data in a productive manner. These skills also help when it comes time to troubleshoot problems or make adjustments.

Strong organisational skills

This is so that payroll administrators can keep track of everything that goes on in their office at all times. This includes keeping up with paperwork and files, handling any issues that arise during the course of business and communicating effectively with employees, clients and other stakeholders who may have questions about their paychecks or other matters related to the office in general, like benefits.

Please note that none of the companies, institutions or organisations mentioned in this article are affiliated with Indeed.

What does a payroll administrator do? (Duties and skills)