'Shambles' | Asda bosses knew payroll switch would lead to wages crisis

Asda bosses knew payroll switch would lead to wages crisis

Asda bosses were warned that a large IT update could result in major payroll errors, but pressed on with the system migration regardless, new reports claim.

According to The Telegraph, senior figures at the Supermarket, including the billionaire co-owner Mohsin Issa, had been advised of technical problems that would result in employees being paid incorrectly, before the error occurred.

The bug resulted in approximately 30,000 Asda employees receiving erroneous payslips, with some missing up to a fortnight’s pay.

An internal memo sent to the supermarket giant’s senior staff, disclosing that thousands of workers, who are paid by the hour rather than salaried, had been impacted by the mishap.

The letter from Asda bosses to store managers said: “During our payroll checks, we have currently identified around 9,500 hourly paid colleagues who are impacted by incorrect pay, due to what we believe is an issue with a specific holiday calculation as we have moved to our new systems.

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“Colleagues’ payslips may not show correctly so please reassure colleagues that we are aware of this and are making the relevant adjustments to ensure that colleagues receive payment by Friday payday.”

Such was the financial toll on employees that some store managers had to top up their wages with petty cash.

The national newspaper spoke to one anonymous Asda source who said there had been “thousands and thousands of complaints”, and that “we knew it was going to happen.”

A spokesperson for the GMB union said: “GMB reps have been meeting with Asda management consistently over this issue.

“We have asked for simple things to protect colleagues – for example, adequate levels of petty cash to cover any underpayments. We have also asked for a public apology from Mohsin Issa who had overseen what is fast becoming a shambles.

“Asda knew how problematic these pay rounds were going to be but continued regardless – Mohsin Issa must bear responsibility for the stress and anguish this is causing hard-working Asda colleagues.”

As reported by The Telegraph, an Asda spokesperson said: “The first payroll run with a large-scale systems migration rarely passes without any issues in any industry.

“For Asda colleagues, we unreservedly apologise to those impacted and continue to work with colleague representatives, including our unions, to rectify any outstanding issues – as a top priority.

“For the April payroll, Asda can confirm that the number of payroll queries was significantly reduced.”

At the time of the payroll errors, the supermarket explained: “We recently launched a new HR system and conducted pre-emptive checks to identify any potential issues before colleagues were paid this month.

“These checks found a potential problem with holiday pay that could have resulted in a pay discrepancy for some hourly paid colleagues.

“We have taken immediate and proactive steps to correct this – to help ensure there will be no shortfall in pay for these colleagues this month. Project Future will give Asda a world-class IT platform.”

Payroll issues blighting UK firms

It’s not just at Asda that payroll issues are causing money worries for employees. Earlier this year, it was reported that Surrey County Council employees have been left facing ‘catastrophic’ mental health concerns amid ongoing payroll system errors resulting in months of incorrect wages.

The local authority has been plagued by issues relating to its payroll system, which was introduced in June 2023 to replace a previous system that was more than 20 years old, according to the Local Democracy Reporting (LDR) service.

But the new system, which reportedly cost £30m to get up and running, has resulted in pay errors ever since, with many public sector staff such as teachers and firefighters being paid either too much or too little each month – both of which have had “dire reverberations”, according to union figures.

The unions aiding staff warned that the issues have seen some staff missing payments on their mortgages, rent and household bills.

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Furthermore, a recent study from Rippling found that HR leaders in the UK are grappling with stress, burnout, and hindered strategic work due to outdated payroll technology and inefficient processes.

The research, based on a OnePoll survey of 250 UK-based payroll managers across businesses of varying sizes, sheds light on the challenges faced by HR professionals tasked with managing payroll.

Notably, around 32% of payroll managers invest over seven days per month into the payroll process, a task that often detracts from their ability to engage in more strategic responsibilities.

Medium to large businesses, employing 500 to 999 people, appear to be disproportionately impacted by antiquated payroll practices.

A staggering 90% of payroll managers in this segment report manually inputting data into spreadsheets on a monthly basis to ensure timely employee payments.

Consequently, a significant majority, 77%, of respondents from medium to large businesses feel that payroll management contributes to stress and burnout.

Moreover, 78% of those surveyed express frustration at being impeded from focusing on strategic initiatives due to the inefficiencies within their organisation's payroll processes.

A further 71% acknowledge the need for a change in their payroll provider, while 78% express a desire to overhaul their payroll system, albeit with apprehensions about the arduousness and duration of the process.

The study also delves into the practice of outsourcing payroll operations. Approximately 24% of businesses across all sizes resort to outsourcing, incurring an average monthly cost of £3.69 per employee.

For a company employing 2,000 individuals, this translates to nearly £90,000 annually.

This financial burden, coupled with the considerable internal resources required to navigate the intricate process, underscores the financial and operational toll of inefficient payroll management.

The importance of deploying modern technology to alleviate the administrative burdens associated with payroll management cannot be overstated.

By integrating technology that connects applications, systems, and databases, HR teams can free themselves from repetitive tasks, enabling them to contribute more strategically to their organisations' growth and success.

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