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Payroll for education: the ultimate guide for schools

Perfecting payroll in the education sector is something that is commonly sought out but difficult to achieve. In this guide, we address some of the most pressing challenges that schools and Multi-Academy Trusts face when it comes to payroll management, and the strategies they can implement within their establishment to help improve the process.  

We will also define the pros and cons for both an in-house payroll system as well as an outsourced payroll service when it comes to school payroll management, and summarise which option is right for your school based on the resources available and your school’s budget.  

What does payroll management involve in the education sector?

Payroll management in the education sector involves the processing of payroll and pensions for employees working in a school or Multi-Academy Trust. The payroll data is typically exported from the school’s HR system and is then processed in-house by a dedicated payroll team or is collated and sent to an external third-party payroll provider, otherwise known as an outsourced payroll service.   

Once the payroll team have assembled the data required and formatted it, they will then process payments to staff on the agreed upon date. Part of the payroll team’s duties also consist of reporting on the data produced, ensuring they remain complaint, and that payroll is consistently accurate and reliable.  

 

 

What are the biggest payroll challenges in schools and trusts?

The biggest payroll challenges found in schools and Multi-Academy Trusts tend to be unique to the sector. These challenges include:

  • Teacher’s pensions 
  • Teachers pay scales 
  • Pay for temporary/ cover teachers  
  • Staff pensions 
  • Maternity/ paternity leave

Other more general challenges tend to involve a lack of reliable and personal support due to consistent inaccuracies. An absence of flexibility when it comes to key payroll dates is also a key challenge that is often faced in the education sector as data is constantly changing, in addition to a lack of time when it comes to admin and keeping on top of the latest legislation; a key reason why most schools choose to outsource their payroll management. 

To outline the seriousness that some of these challenges pose, they have in the past led to dramatic repercussions for schools, such as underpayments or missed pay cheques which have resulted in strikes, or overpayments which have had to be paid back. These issues not only take valuable time to fix from a payroll perspective but looking at it from the employees' point of view, mistakes like these can significantly reduce job satisfaction and wellbeing, giving you the possibility of a staff retention crisis. 

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3 strategies to improve payroll management in the education sector

We recommend the following to help your school manage payroll more effectively:

1. Sign-up to webinars, newsletters, and emails on payroll best practice  

Keeping up with the latest legislation and sector best practice can often be difficult when you have hours’ worth of admin and meetings. A good way to help stay on top of these without wasting valuable time is by signing up to payroll webinars. These often go more in depth than emails or newsletters and can actually explain the change that has come into effect, why it is important, and the adjustments you need to incorporate to accommodate the change. If you can find an education specific webinar, all the better.  

Here at Access Education, we regularly run webinars on a variety of topics - and we record them so they're always available on-demand. Visit our resources section and use our filtering tool to access our webinars.

2. Employee training 

If you’re running payroll in-house, making sure your employees stay on top of their game is paramount. One way this can be achieved is by registering employees on courses using learning management software. These courses are often sector specific and are typically used to help engage employees in the field you would like them to develop in; you can also track compliance and development within the software. 

Another way to invest in your employees is by providing them with further training on the in-house payroll system as well as finding certifications they can do to help advance their qualifications. Supporting their professional development will not only help them feel valued at work, but it will also ensure your employees are qualified and compliant.  

3. Outsourcing payroll to a third-party provider 

If managing payroll in-house isn’t a feasible option for your school or Multi-Academy Trust, outsourcing your payroll to a third-party provider might be a good way to help improve the reliability and accuracy of your payroll management. By outsourcing this service, you are in-turn gaining valuable expertise from industry professionals. You can even find third-party providers who exclusively work within the education sector, guaranteeing they can handle the niche requirements of schools and Multi-Academy Trusts.  

In-house vs outsourced payroll: What are the differences?

For many schools, it’s not always clear whether an in-house payroll system or an outsourced service is the best option. There are a number of factors to consider when choosing the right payroll management solution for your school, but it’s also important to understand the crucial differences between the two options. Below, we’ve outlined the pros and cons of each solution to give you a more detailed understanding of the requirements each demand.

Should you outsource your school’s payroll?

The decision to outsource payroll depends on your available resources - time, budget, and staff - as well as your long-term goals, such as cost reduction, accuracy, or employee wellbeing.

Here are some key scenarios and considerations:

If you don't have a dedicated payroll team

Whether you're a small school or a large Multi-Academy Trust (MAT), lacking an in-house payroll team usually means outsourcing is the safest option. Payroll is complex and affects salaries and pensions, making accuracy essential. Most UK schools and MATs outsource for this reason.

Things to Consider:

  • Outsourcing may cost more long-term - plan your budget accordingly.
  • Don’t just choose the cheapest provider; focus on quality and sector expertise.
  • Compare providers on per-payslip pricing, education experience, reviews, certifications, and case studies.

If you plan to eventually grow your team, outsourcing now doesn’t prevent you from bringing payroll in-house later.

If you're planning to build an in-house payroll team

If you’re working toward managing payroll internally but aren’t ready yet, outsourcing remains a practical interim step.

Transition tips:

  • Run parallel payroll tests with your in-house team two months before switching.
  • Month one is a trial run—expect mismatches. By month two, figures should align with the provider’s results.
  • If You Have an In-House Payroll Team

If your school or MAT has qualified payroll staff, managing payroll internally offers more control, flexibility, and potential cost savings.

Things to keep in mind:

  • Staff training on payroll software is crucial - consider designating an internal expert to train others.
  • Stay compliant with payroll regulations via courses, webinars, and resources like Personnel Today or HR Grapevine.

Final thought

While in-house payroll offers benefits, it also brings responsibility. Many schools continue outsourcing to reduce risk and workload. Choose what best fits your team's capacity and goals.