Payroll Security: The Importance of Securing Your Payroll Data

Payroll software encompasses critical information relating to employees and compensation. Payroll data focuses on financial aspects, including base salaries, bonuses, benefits, taxes, etc. People or HR data is broader workforce information like recruitment statistics, performance evaluations, attrition rates, and employee demographics. These data sets enable effective workforce management, fair compensation practices, and strategic organisational decision-making.

What Is Payroll Security?

Critical elements of payroll security include robust data encryption, secure network protocols, strict user access controls, regular data backups, employee training on data protection, company security policies and staying updated on the latest cybersecurity threats and mitigation techniques. Implementing multi-factor authentication and conducting regular security audits to mitigate potential risks are also essential for payroll security. Some cybersecurity threats to payroll data include:

• Phishing attacks - employees tricked into revealing sensitive information using fraudulent emails or messages.

• Ransomware attacks - data hackers encrypt data and demand a ransom from the owner to release it.

• Data breaches - individuals access sensitive data that they are not authorised to see either through company systems or other means.

Why Is Payroll Data Security Important?

A payroll data breach could result in financial loss for employees due to identity theft or unauthorised access to their personal information. It may also result in loss of reputation, distrust from stakeholders and employees, legal consequences, such as lawsuits and regulatory penalties, and disruption of business operations. Employees not sharing sensitive information can also break communication and trust.

Understanding payroll data security threats helps organisations protect sensitive payroll information.

Payroll data can be protected in several ways, including:

• Implement a robust and unique password requirement for payroll software users.

• Employees should have access to their details online, time and attendance records, and personal records online via an authenticated account, as well as a secure work-related mobile app.

• Data loss or corruption can be prevented by investing in secure cloud payroll solutions, multi-factor authentication, and real-time backups.

• Regularly audit payroll data to ensure it is secure at rest and in transit.

• Train employees on data security policies and implement strict access controls and permissions to prevent unauthorised access.

Implementing Secure Employee Login Systems

Ensuring employees have a secure login to apps and online systems is vital. Using strong passwords, two-factor authentication (2FA), and regular password refreshes are key measures businesses should take to reduce the risk of unauthorised access to payroll data. Multi-factor authentication adds an extra layer of security as users have to use multiple forms of identification to access a system and data. Examples of identifiers are unique passwords and temporary codes sent to a mobile device. 2FA protects against unauthorised access to employee data, as a physical token is needed to access the data.

Educate Employees on Data Security

Educate employees on protecting your company and payroll data to build a security-conscious workforce. Education needs to cover what a phishing email looks like, what to do when you get an email that does not look right, what social engineering is, and the importance of data confidentiality. This learning is imperative for security today as we have a growing remote work trend.

How to Educate Your Employees About Data Security:

1. Training - Develop and deliver data security training and company policies. Most employers incorporate security training at the onboarding of a new employee.

2. Guidelines and policies - Provide clear guidelines and policies on handling sensitive payroll data. Cover topics like password security policies, how to report phishing emails and using secure networks.

3. Education - Provide external education opportunities, such as workshops from cybersecurity experts covering data integrity best practices, creating strong passwords, and recognising suspicious emails and websites.

4. Inform - Inform employees about updates to security threat measures and reiterate their role in maintaining data security.

5. Testing - Test the employees occasionally with phishing-type emails to see how they interact.

3 proven options to ensure payroll data security

1. Move to online real-time payroll software for data security

Cloud-based payroll software offers advanced security and reliability. In the cloud, your data is stored on a server in a data centre. The data is encrypted, making it difficult for unauthorised people to access it.

How cloud-based payroll software protects your data.

• Real-time backups: Cloud payroll automatically backs data up to remote servers, and multiple backups are conducted to protect payroll data. Remote servers provide increased scalability and flexibility when adding new payroll data, like new employees. 

• Data encryption: Due to the nature of the payroll data encryption is essential to ensure it is unreadable, even if it is intercepted. Encryption protects employees and businesses against potential financial and reputational damage.
• Role-based permissions: Role-based permissions allow you to define access rights based on job roles or responsibilities. Each user is assigned a specific role (such as employee, manager, HR admin, etc.), and their permissions are tailored accordingly. Typical roles include employees, managers, payroll administrators, and HR personnel.

  • Benefits of role-based permissions: 

    • Security - ensuring sensitive data is only accessible to authorised personnel.

    • Compliance - Limiting access helps meet legal and ethical obligations related to data privacy. 

    • Audits - Tracking access to modified payroll data means you can streamline the auditing process. 

• Two-Factor Authentication: Two-factor authentication adds an extra layer of protection and requires users to provide two forms of identification before granting access to sensitive information.
  
  

2. Switch to an all-in-one workforce management solution

One way to help ensure payroll data security is implementing an all-in-one workforce management (WFM) solution like Access Definitiv. 

All-in-one WFM solutions benefit businesses in many ways, including increased efficiency, improved accuracy, and enhanced security. By using an all-in-one workforce management solution to manage all aspects of workforce management, businesses reduce the risk of security breaches and improve their overall payroll data security. Learn more about the difference between Workforce Management – Separate Applications vs All-in-One Platform. 

3. Outsourcing payroll processing

Outsourcing payroll processing to a payroll services provider reduces payroll processing risks and improves payroll data security.

If you’re wondering if outsourcing payroll is right for your business, read our blog that answers 5 simple questions, and you'll likely have your answer.

Key benefits of outsourcing payroll processing for payroll data security: 

Reduced risk of data breach

Payroll processing firms have the latest payroll security systems and measures. Outsourced service providers use encryption, firewalls, and other security technologies to prevent unauthorised access to employee data. Regular security audits are conducted to address any vulnerabilities. 

Compliance with data protection regulations

The payroll outsourcing industry is well-versed in data protection laws. Outsourcing payroll processing to a service provider ensures compliance with data protection regulations. 

Secure, timely and accurate payroll processing

Outsourcing payroll processing helps improve the security, accuracy and timeliness of payroll processing. Payroll outsourcing providers use advanced software to automate payroll processes, reducing the risk of errors and ensuring that employees are paid accurately and on time and the data is secure.