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Lindsay Philips, head of product engineering at Sage, last month had to scramble a development team quickly to create a module to support the firm’s customers that wanted to make use of the UK government’s Job Retention Scheme.
The scheme, whereby the government pays 80% of the wages of workers – up to a maximum of £2,500 a month – of companies that have decided to furlough them during the Covid-19 crisis, is now under review by the chancellor, Rishi Sunak, and could be extended from the end of June to September at 60% of wages, according to a report in The Telegraph.
The scheme was an emergency measure put in place rapidly by HM Revenue & Customs (HMRC), and the response of the Sage software engineers, on behalf of their customers, also had to be fast and furious.
The scheme was, and is, unprecedented. Roughly half of the privately employed UK workforce – about eight million people – is being paid using Sage payroll software. The tool that Philips’ team develop enables Sage’s customers to pay their impacted employees accurately and on time, as well as to calculate the information required to make claims under the Job Retention Scheme.
Sage also has more than 800 payroll specialists in its UK-based customer service team, so this story is not all about software developers.
“We have some very tired developers,” said Philips. “The team has been phenomenal – their passion for this was amazing.
“I cannot recall a time like this. The most similar situation was auto-enrolment [into pension schemes], but then we were able to develop and release the solution in a controlled manner – and we knew about it for some time in advance.
“This has very much been at pace, with limited information to get something out there fast. We also had a late Budget to contend with this year, so payroll has been a rollercoaster in 2020.”
Philips added: “There is an emotional side to this, too, in that it is about making sure people get paid, especially if they have been furloughed and times are uncertain. And I know the word ‘unprecedented’ is used a lot at the moment, but it really is.”
The team identified seven variables, permuting into 5,040 ways to calculate the grant. These include whether the employee is opted out for auto-enrolment pension contributions, their daily earning rate, the employer’s national insurance contributions, and the calculation of pay from the same period last year.
The Sage Job Retention Scheme module, which enables the firm’s customers to make reclaims from HMRC without the need to manually assess and notify their affected employees, packages up the information required at the end of a series of process steps.
On day one of applications for the furlough scheme – 20 April – 140,00 employers made claims in respect of about one million workers, and HMRC reported a smooth launch.
So what was the project experience like for Philips and his team?
“We’ve got long-standing relationships with HMRC, so in the early stages, we worked closely with them to understand what they were expecting employers to submit to them, and what the underlying bases for the calculations would be to determine the furlough pay,” he said. “We then put that in a piece of software for our customers.”
The scheme itself was announced on 27 March, and the Sage team started working on the module in early April. They scrambled a team of 10 people – a mix of developers, testers and payroll subject matter experts.
They first looked at the process itself, from a customer point of view, and built up some wireframe models to visualise what the process would look like. They then got the software developers together, virtually, to work through how to embody the process in code and automate the creation of the report for HMRC.
“The payroll subject matter experts are critical in this, because they keep us right in terms of the interpretation of how we have manifested the solution in code and ensure alignment with the guidance we had from HMRC,” said Philips.
They built a prototype, tested and iterated it, and then got feedback from customers drawn from the Sage customer advisory board, before releasing to market. Altogether, the module embodies over 1,000 hours of work, all done virtually, with Microsoft Teams as the team’s collaboration software.
“There has been loads of collaboration in this project, across the business and with HMRC,” said Philips. “Normally, we’d throw people in a room, the pizzas would come in at 7pm and we’d work through the night to get it done. It does take its toll in that people were tired, but they were committed to this.
“And, you know, payroll is complex.”
As for Sage customer take-up, Philips said: “It’s hard for us to tell how many of our customers are using the tool because the claims are independent of our payroll software, but we have seen significant uptake of the module within our installed base, and we’ve had significant demand in the form of calls to our call centres for guidance.”
Payroll has arguably been the cinderella of HR software in recent years, with much of the fashionable focus being on talent management and continuous performance management. But in this Covid-19 public health emergency, it has had to prove its mettle in getting furloughed employees paid under the most testing circumstances.