Agenda item

The Audit Committee considered a report of the Assistant Director of Workforce and Organisational Culture, which was designed to provide background and insight into the current context for the Payroll Services at Oldham Council. It also provided details on the recently agreed HR and OD ReBuild Recovery Plan and aspects designed to support improved quality, governance and resilience of Payroll services over the medium to long term. The report gave members an update on progress against actions as included in the Payroll Audit Report 24/25.

The Council’s Payroll Service had several, long-standing identified issues, which has led to it being classified as “Inadequate” by Internal Audit for several years. The service provides a wide ranging and complex service across the borough. It provided a full range of Payroll and Pension service to Oldham Council. It also provides Payroll services to several schools and additional providers in the area, including Miocare Limited.

In total it provides 27 Payrolls monthly, across two monthly pay dates (15^th and 20^th) across a staffing headcount of almost 8,500. This was a significant headcount, spanning several organisations, pay-scales and sets of T&Cs.

The service had seen significant challenges in recent years. Structures were changed following transfer in-house from Unity Partnership. In addition, there had been turnover of established staff within the team, and difficulties recruiting and retaining team members. Payroll specialists are often considered “hard to fill” roles due to the specialist knowledge involved.

There had also been recent turnover at senior level, including the HR Employment Services Manager, the Systems Lead, the Head of HR and the Assistant Director of HR & OD (as previously known). Structural changes, budget restrictions and significant change within the team and in their senior structure has led to a lack of investment in the system (iTrent), a lack of specialist knowledge in the team and a lack of capacity to focus on required improvements.

A permanent Assistant Director of Workforce & Organisational Culture had commenced at the end of July 2025, providing consistent leadership to the HR & OD team. Subsequently, HR & OD ReBuild Recovery Plan had been drafted in partnership with the senior HR & OD team. This was a 12-month plan focused on ensuring compliant and resilient services across the HR team. It is acknowledged that improvements will take longer than 12 months to develop and embed, so further plans will need to be developed.

The ReBuild plan structures improvements into 5 pillars – strategy, systems and infrastructures, structures, team development and engagement and governance, legal and audit. A breakdown of intended actions for Payroll services as included in the plan is outlined in Appendix 1, note that some actions span the whole HR & OD team. The HR & OD ReBuild Plan spans wider than Payroll services, therefore Appendix 1 focuses specifically on actions relevant to this Payroll Audit.

The plan progress and achievements/risks was to be overseen through HR & OD DMT and also through regular reports to the Resources Scrutiny Board, currently in formation. Progress would also be reported through to the Management Board.

This plan was launched on 1^st September 2025, with key short-term achievements so far being as follows:

·       Appointment of permanent HR Employment Services Manager and recruitment process underway for a permanent Head of Operational HR.

·       Launch of a monthly Payroll Reconciliation Working Group, inaugural meeting September 2025, consisting of HR, payroll and Finance. Initial analysis was able to highlight cause of imbalance between ledger and payroll, which was due to a specific LGPS element. This is being investigated.

·       Seeking and obtaining approval for a programme of work to optimise the iTrent system, with a 12-month programme of work to improve specialist understanding of the system and to create processes which will create capacity e.g. batch uploading of 27 payrolls rather than individual uploading.

·       Launch of monthly reminders to manager on new starters, absence and expenses deadlines via Viva Engage and HR DMT reports.

·       Appointment of temporary 6-month Payroll resource which will – once trained – free up capacity for Payroll senior team to create Standard Operating Procedures.

·       Provisional identifying of Payroll colleagues to undertake the Chartered Institute of Payroll, Pensions and Reward qualification or similar, to support greater specialist knowledge in the team.

·       Appointment and launch of 6-month resource to undertake a full HR file audit and create standards/training for the wider team.

·       Implementation of stricter approvals for CHAPs payments, now approved by the Assistant Director of Workforce & Organisational Culture.

In considering the report Members commented upon the welcome progress that was being made to implement the recommendations for improvement in the Payroll Service. In addition. Members also requested that regular progress reports be presented to future meetings of the Committee (in addition to the planned reports that are planned for presentation to the Governance, Strategy and Resources Scrutiny Board). It was also requested that the Portfolio Holder for Finance, Corporate Services and Sustainability be asked to attend future meetings of the Audit Committee to explain the actions being taken in relation to this matter.

Resolved:

1.    That the report be noted.

2.    That the Committee receive update reports at all future meetings of the Audit Committee regarding progress being made in relation to the Improvement Plan for the Council’s Payroll Service.

3.    That the Cabinet Member for Finance, Corporate Services and Sustainability be asked to attend future meetings of the Audit Committee to explain the actions being taken in relation to this matter.