Payroll literacy is crucial but time-consuming; modern payroll platforms and AI can help.
At face value, the transaction between an employee and their company is simple. They put in the time, and the company compensates them with a salary. But there is a lot hidden in the details for both employees and payroll administrators.
A salary is the outcome of several calculations and considerations. Taxes and other deductions, contributions, allowances, bonuses, overtime, pro-rata calculations, pay frequency: determining an accurate salary can be intensive. Many payroll administrators enjoy this level of diligence, but it’s still complicated, says Warren van Wyk, Director at Deel Local Payroll.
“One reason I enjoy payroll is the satisfaction from doing everything correctly. But that requires a lot of effort, moving from gross pay to an accurate net sum. It’s intensive for payroll administrators, and many people outside of payroll don’t know about those nuances. Misunderstandings and mistakes happen, and that’s where gaps in payroll knowledge can become a burden for everyone,” says Van Wyk.
Payroll literacy challenges
This gap in knowledge matters more than one might think. According to a report compiled by Deel Australia, 35% of employees are more aware of the cost of their streaming subscriptions than the details of their salary, 16% understand their gym contract better than their payslip, and over half are more aware of their bank balance than pay.
Yet, despite these figures, employees notice salary mistakes, with a fifth saying they had quit jobs because of payroll errors, reported the UK’s Chartered Institute of Payroll Professionals. While most employees won’t quit over errors, a quarter are still affected by them, and misunderstandings about salary calculations make it worse.
Payroll literacy is often not regarded as an issue, but payroll staff would disagree, says Van Wyk.
“A lot of a payroll employee’s time goes towards answering questions. Why has this figure changed? What is that deduction? Sometimes, they are very basic but fundamental questions, such as what is PAYE? And these questions don’t just come from the person receiving the salary. They also come from departments, managers, and others whom the employees approach about their concerns.”
Common questions include:
- What is the difference between gross and net income?
- Why is my tax higher?
- What is being deducted from my salary?
- What are PAYE and UIF?
- How much paid leave do I have?
- Where can I get a copy of my payslip?
These questions are not naïve. For example, deductions vary between pre-tax and post-tax. Concepts such as PAYE (Pay As You Earn) are not always apparent. Needing a payslip is often ad hoc and unexpected. These questions reflect frequent frustrations for employees and a time drain for payroll staff.
Can AI make a difference?
An answer is emerging through artificial intelligence features, powered by modern payroll platforms. Deel Local Payroll is leading a new generation of payroll systems that incorporate various self-service channels to support employee engagement.
Pacey, one of its flagship services, is a WhatsApp feature that serves basic payroll functions. It integrates securely with a company’s payroll information, giving employees direct access to payroll services such as downloading payslips or applying for leave. Building on this success, Deel Local Payroll has launched a new AI service that uses modern language models.
Employees will use this new service, called AI Assist, to ask more specific questions about their salary in plain and elaborate language. AI Assist also supports payroll professionals, answering questions about their payroll setup details and processes such as which components are linked to a package or listing components that aren’t linked to GL codes.
Language is another advantage. In South Africa’s multilingual society, questions come in different dialects. While payroll staff might lack that range, AI Assist can detect what language a person is using and converse in multiple dialects, including but not limited to South Africa’s 11 official languages.
“Every person has different questions about their salary. Some are simple, such as the definition behind a deduction, and others are personal, such as how their overtime was calculated. Using large language models, we can interpret elaborate questions and create answers using the payroll platform’s calculations and data. And since we build those answers within the scope of a payroll environment, we can place down guardrails to prevent issues like hallucinations or the chatbot branching off into irrelevant topics,” says Van Wyk.
Employees are already turning to AI
AI can improve payroll literacy by giving employees direct access to services and answering their most pressing questions. For payroll teams, it saves time, enables them to query specifics about their payroll systems, and helps others understand the nuances behind salaries and complex company setups.
More employees and payroll administrators are turning to third-party tools such as ChatGPT and Gemini to answer salary questions, even uploading their payslips and other documents to these ungoverned services. Yet, there is no guarantee that the answers they receive will be accurate or contextual. Companies already have the foundation to give them answers, says Van Wyk.
“The business has all the payroll data, and with a modern payroll platform it has the embedded calculations and automation to produce accurate answers. Add the right AI feature, and it’s a game changer for culture, morale, and payroll transparency.”
