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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.  

Education Payroll Cluster

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?

The biggest payroll challenges found in schools and Multi-Academy Trusts tend to involve the nuances that are often found in the education sector such as: 

  • 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 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. 

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.  

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.  

Our HR and payroll software is designed exclusively for schools. Find out how it can help solve your payroll problems.

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.

Outsourced payroll for the education sector

An outsourced payroll service, otherwise known as a managed payroll service, is when a school or Multi-Academy Trust delegates the responsibility of payroll management to an accredited third-party provider. 

Typically, this is the preferred option for schools who do not have the resource or capacity to run payroll in-house and choose to focus the resource they do have on more strategic projects. This is not always the case however, with some schools or Multi-Academy Trusts simply choosing to alleviate the burden that payroll and pensions can bring, saving their team valuable time.  




No need for in-house expertise 

Ongoing subscription costs  

No payroll processing burden 

Less flexibility on changes and deadlines 

Saves time 

Less oversight during payroll processing 

Fewer mistakes 


Up to date compliance  



Advantages of outsourcing your school’s payroll: 


  • No need for in-house payroll expertise

    For schools or Multi-Academy Trusts that do not have a dedicated payroll team in place, and do not plan to bring expertise in-house, outsourcing payroll and pensions is typically the best option. By outsourcing payroll management to a trained and qualified third-party provider, you eradicate the need to hire a team of certified payroll professionals. Although managed payroll can therefore seem more expensive, you will need to compare the budget of hiring additional staff members to the cost of outsourcing payroll to form a cost benefit analysis.

  • No payroll processing burden

    Outsourcing your payroll to a third-party provider removes the need to train your staff on a new system and takes away the burden and pressure of managing the school’s payroll. Relieving this pressure from employees can often foster a less stressful work environment and can lead to happier staff. Supporting this notion is a study that found happier staff were 12% more productive, while unhappy workers were 10% less productive. So, not only could your school save time and money by not having to train current and new employees on an in-house system, but they will also have more time to focus on other projects.

  • Saves time

    Outsourcing your payroll gives your team one less thing to focus on, giving them time back to work on more strategic projects. This is becoming an increasingly important subject in schools as a survey found that 44% of teachers in England who took part plan to quit within the next five years, with 55% of them citing an ‘unmanageable’ workload.

    By outsourcing this responsibility, the only tasks your team need to perform are checking and signing off on the payroll on the agreed upon date. Although your team may need to prepare and extract the payroll data from your HR system and provide it to your third-party payroll provider, this can be avoided by looking at providers who have both an outsourced payroll service and a HR system, allowing the payroll team to extract the data themselves.

  • Fewer mistakes

    Choosing a qualified, reliable, and accredited payroll provider who knows the ins and outs of your sector will almost guarantee that fewer mistakes are made during the payroll process. Where an in-house team may have additional responsibilities on top of payroll management, a third-party team will be dedicated to payroll, and as they perform the task day in and day out, they will know the challenges that payroll can bring.

    In order to reduce the likelihood of mistakes, look for providers who solely work in the education sector, giving you the re-assurance that the provider is acutely accustomed to the specific needs and requirements of school payroll management. You should also look for statistics on accuracy rating, how many parallel runs are performed before the payroll hand over date, as well as any commendations and payroll certifications.

  • Up to date compliance

    Legislation is constantly developing and can be difficult to keep track of if payroll management is not your sole duty. Third-party providers are constantly updated on new labour codes and legislations that come into effect and will automatically update this on your behalf, ensuring your school remains compliant.

Disadvantages of outsourcing your school’s payroll:


  • Ongoing subscription costs

    As you are outsourcing the responsibility of payroll to a dedicated third-party provider, it will inevitably come at a cost. Depending on whether you outsource both your payroll and your pensions or only your payroll will also factor into the pricing. Keep in mind, you are getting a service from an accredited, reliable third-party provider that have experience processing payroll and will work alongside your company to ensure your payroll is accurate and that your school remains compliant.

    Using budget planning solutions, we advise you create a scenario in which you hired an expert payroll team and trained them on an in-house system. This will allow you to compare the cost to quotes from third-party companies to see which would provide the most cost beneficial solution for your school.

  • Less flexibility

    Third-party payroll providers will often have strict cut-off dates for payroll, and although this date is agreed between the school and the provider, it can at times seem inflexible.

    When outsourcing, if there is a last-minute change that needs to be made to payroll, you will typically need to telephone or email your third-party provider and then await their response. With an in-house payroll team however, you could in theory just walk up to your employees’ desk and let them know about the change, making communication much faster. So, when looking into a managed payroll service, you should consider how many last-minute urgent changes have been noted and if the lack of flexibility or time taken for a response is going to be an issue.

  • Less oversight during payroll processing

    Outsourcing your payroll means you no longer have the responsibility of managing your payroll processing as this will be delegated to a third-party supplier. Due to this, you will not typically see your payroll data until it is sent to you by your payroll executive for review. This therefore puts a limit on the level of visibility you have over your own school payroll. 

In-house payroll for the education sector

An in-house payroll system allows certified and experienced employees that are employed by the school or Multi-Academy Trust to process payroll and pensions in-house. This option is typically selected by schools that have an established existing payroll team and want to increase their control and visibility.




Lower long-term costs

In-house expertise required

Increased oversight during payroll processing

Training requirements

Deadline flexibility

Legislation development

Co-ordination between back-office teams

Maintenance costs

Greater accuracy due to school knowledge


Advantages of in-house payroll for schools:


  • Lower long-term costs

    Although there are factors to consider such as the initial cost to implementing a new system, hiring certified and experienced employees, training, as well as an annual fee for the system, it is often cheaper to bring payroll in house in the long-term than it is to subscribe to a service.

    With a managed payroll service, you will often be paying per employee per month when it comes to payroll processing, average price per payslip? In contrast to this, for an in-house payroll system, you will be paying a much lower annual fee as you are only purchasing the system; not the service itself.

    Due to this, although hiring a dedicated staff member for payroll will not come cheap, nor will the system itself, you may find it is cheaper in the long-term than outsourcing it and paying a high monthly fee.

  • Increased oversight during payroll processing

    Bringing your payroll management in-house allows you to have more visibility over the entire payroll process end-to end. Where in a managed payroll service you only have access to the data you are given during a specific time frame, with an in-house system, you can easily go in and access the data you require within minutes.

    This ease of access allows you to create more detailed and tailored reports, ensuring you always have the information you need to hand.

    Though this could raise questions on security and confidentiality, there is no need to worry. If you have different hierarchies within your team that need different levels of visibility or access, you can easily configure this within your in-house system. This visibility hierarchy ensures privacy and confidentiality are maintained, keeping your school compliant.

  • Deadline flexibility

    Having a dedicated in-house payroll team can help you become more flexible when it comes to payroll deadlines due to faster communication and increased adaptability. This can therefore relieve the pressure fixed deadlines can bring to finance and HR teams who are on a time crunch to produce ever-changing data.
    If a last-minute change should occur, the finance team could simply send the payroll team a Teams message, email, call or even drop by their desk to let them know about the amendment.

  • Co-ordination between back-office teams

    By bringing all of your processes in-house and managing them at a school or trust level, you are opening the doors for integration and communication between your teams and software. As each process can have an impact on the other, it follows suit that data from one system must be entered into another. Let’s take the school budget software and the school HR system for example, though HR impacts payroll, it also affects the school’s budget. Any starters, leavers or changes made in HR will therefore also have to be inputted into the school’s budget. The payroll itself will also need to be uploaded into the school finance teams software to ensure their information is updated.

    A study showed that the leading cause of stress in schools was due to administrative tasks which take away valuable time from more strategic projects. Therefore, with so much data crossover it’s imperative to find systems that integrate with one another to reduce the amount of admin your central teams spend time on.

  • Greater accuracy due to school knowledge

    Although an experienced and certified third-party payroll provider will know payroll like the back of their hand, they’re only as good as the information supplied to them from the HR system. After all, no one knows your school or its employees like you do, and it will be more obvious to you if something has been inputted incorrectly into the HR system or some crucial information has been missed than it will be to a supplier who processes multiple payslips from multiple companies daily.

    In addition to this, if any employees have queries regarding their payslip for that month, it will be a much quicker resolution if you have an in-house payroll team to manage it. Employees will feel like they are getting a more personable service and won’t have to wait on a third-party supplier’s response.

  • Increased sector knowledge

    As your payroll executive will be responsible for processing payroll and pensions across the school, they will be familiar with the nuances that come with school payroll. Each sector works differently, and no two schools are alike- a SEN primary school in Woking may have different payroll requirements to a secondary school in Birmingham for example. By solely processing payroll for a school or Multi-Academy Trust, sector specific details such as teachers’ pensions will be second nature.

Disadvantages of in-house payroll for schools

  • In-house expertise required

    Before making the decision to bring your payroll management in-house, you first need to consider whether you have the resources to perform the task successfully and reliably. With an outsourced payroll service, the third-party supplier will often perform two parallel runs alongside your previous provider to ensure payroll payments are accurate and timely, so why should your in-house service be any different?

    In order to have a reliable in-house payroll service, you will need a fully operational and experienced payroll team who are certified and qualified to do the job. In theory, hiring one payroll executive to manage your pensions and payroll would be the most beneficial when considering costs, however you also need to future proof and reflect on some ‘what if’ scenarios. What if your payroll executive were to go on maternity or long-term sick leave for example? To avoid this situation, you should hire a dedicated in-house payroll team of at least two people, so that if someone ever did leave for whichever reason, your payroll will not be affected and there will be no significant repercussions. Afterall, paid employees are engaged employees.

  • Training requirements

    When implementing a new system, it follows that employees will need to be trained on how to effectively use the software, whether that’s your HR portal or your payroll platform. They may be certified in payroll management, but all systems differ one way or another so they may be unfamiliar with the payroll system unless they have previously used it in a separate role.

    Training can become costly, so ensure that once the training during the implementation period has been completed, that at least one member of your payroll team becomes a certified expert and is able to train new employees as your team expands. If your team are not able to train new starters during their onboarding process, you may have to go back to the software supplier and request further training which can often be costly.

  • Legislation development

    Legislation is constantly developing and can often be difficult to keep track of, even if payroll management is your sole responsibility. If you have an in-house payroll team, you will need to ensure they remain up to date on all codes and legislation as, if they don’t, the issue of compliance will fall on your school and could have serious consequences. If you are looking at brining payroll management in-house, in addition to the benefits listed above, ensure you are also prepared to shoulder the responsibility and possible consequences of the process.

  • Maintenance costs

    When looking for an in-house payroll system, you will be presented with two options: a cloud-based system, or a server. If you choose to go down the server route, note that this may require regular maintenance which will add to your costs. The supplier may also charge you to upgrade onto their latest version of the system if the solution develops in the future. So, although an in-house payroll system can be cheaper in the long run, note that there may be additional costs to consider should you implement a server.

Should you outsource your school’s payroll?

Whether you should outsource your school’s payroll is entirely dependent on the resources available to your school. The, these include time, money, and personnel. You should also consider what your school’s goals are for the long-term; are you looking to save money and allocate it elsewhere, or are you trying to improve accuracy or enhance employee wellbeing? These are factors which should be considered in your decision, and although the choice is yours, we’ve made some recommendations below based on the resources available to your school.

If you don’t have a dedicated payroll team

Whether you are a small, single site school or a large Multi-Academy Trust, if you do not have a dedicated payroll team in place, then you should look to outsource your payroll processing to a third-party provider. Payroll is a complex process and must be managed as such as it will impact your employees’ pensions and pay. In fact, the responsibility of payroll management is so large, the majority of schools and Multi-Academy Trusts across the UK prefer to outsource their payroll.  

Things to consider when outsourcing your school’s payroll  

Outsourcing your payroll, in the long-term, will likely come at a higher price, so make sure this is factored into your school’s budget. Something to consider is that it’s not always best to go with the cheapest solution. Though it may be more cost effective, you will need to ensure the supplier you select will be able to perform the duties of payroll management to a high standard.  

Most providers you speak to will quote you on a per payslip, per month basis, so this should be standard across all suppliers. Some additional factors you’ll want to consider are whether they specialise in the education sector and are familiar with the niche requirements of school and Multi-Academy Trust payroll. You should also be mindful of customer reviews, case studies, parallel runs, commendations, and any certificates they may hold that prove their reliability and accuracy ratings.  

If you were set on bringing your school’s payroll in-house but fit into this category, don’t worry. Although you will need to outsource your payroll at this time, if you do plan to grow and expand your school or Multi-Academy Trust in the future, it is possible to bring your payroll in-house once you have a dedicated team in place.

If you are planning to implement a payroll team in-house

If you are making plans to expand and implement a payroll team in your school or Multi-Academy Trust but are not quite there yet, you should look to outsource your payroll processing to a third-party provider for the time being. While you will initially need to outsource your payroll, you can begin making the necessary preparations to move from a managed service to an in-house system. 

Things to consider when moving from an outsourced payroll service to an in-house payroll system

Making the transition can be daunting in the initial stages, but just like an external provider would run parallel payroll checks to ensure data accuracy, you should do the same before making the switch.  

Two months before you are due to leave your third-party provider and run payroll in-house, we recommend asking your dedicated payroll team to start running a mock payroll alongside your existing provider. This is because each school’s payroll is different- where some may round up, others may round down, affecting the accuracy of the payroll.  

That first month’s payroll check will act as a dummy run and a learning opportunity; at this stage, you shouldn’t expect the figures to match that of your external providers. The second month however is where your payroll team will have made adjustments from the first run and should now match the third-party supplier’s payroll data. You are then ready to make the switch, knowing that there will be minimal disruptions to the school’s payroll.

If you have an operational in-house payroll team

Regardless of the size of your school or Multi-Academy Trust, if you have an operational in-house payroll team that are qualified and experienced, then you can bring your payroll and pension management in-house. Although this option often comes with more risk and responsibility, it also offers a higher level of flexibility, control, and visibility for your school.  

Looking at the long-term benefits, an in-house payroll system will often be more cost effective as you will not be paying for a specialist monthly service while employees still need to sign off and review the payroll data. Instead, you can manage everything in-house and have full control over the data, ensuring security and privacy are maintained.

Things to consider when bringing your school’s payroll in-house

When implementing a payroll system at your school or Multi-Academy Trust, keep in mind that your staff will need to be trained on the software, and that any additional training required after implementation will likely result in a fee. If possible, designate a key member of your payroll team to learn the system inside and out so that when new starters are onboarded, they can train them in the system themselves, saving your school money,  

You will also need to ensure that your payroll team are up to date on all legislative codes and compliance to avoid discrepancies and fines. Consider signing up to external webinars, newsletters and emails on payroll changes and encourage development in the form of online courses. Personnel Today and HR Grapevine are two websites with lots of informative payroll resources.  

Remember, just because you can, doesn’t always mean you should. Though it can often be beneficial to bring your payroll in-house, it does not mean you have to. The majority of schools and Multi-Academy Trusts across the UK choose to outsource their payroll in order to relive the burden payroll processing can bring. If you are seriously considering bringing your payroll in-house, just ensure your employees are well qualified and prepared for the pressure payroll can bring.  


What next?

In conclusion, there are arguments for implementing both an outsourced (managed) payroll service, and an in-house payroll system. In the end however, the key consideration will be what type of resource and capacity is available to your school.  

Access Education understands that more often than not, schools will choose to outsource their payroll management, with over 90% of our education customers electing to choose our managed payroll and pensions service. However, we also realise that schools and Multi-Academy Trusts expand over time and need software that will adapt and grow alongside them, hence why we also offer an in-house payroll system. Our HR and payroll software for schools is designed to meet your needs, so whether you are a small school or a large Multi-Academy Trust, we have the solution that’s right for you. We also understand that a Trust is made up of more than just a HR and payroll team and that integration is a key focus across the education sector at the moment. That’s why we offer a range of integrated solutions to help streamline your processes.  

Book a demo, or get in touch to explore our payroll offering – whether it’s our managed payroll service which boasts a 99.9% first-time accuracy rating and a 100% pass mark from the CIPP, or our in-house payroll software for experienced payroll employees.  

Find out more about our managed payroll service or our in-house payroll software