The retail sector is undergoing lots of change. Retail M&A (mergers and acquisitions) abound as the landscape of trading companies shifts. These bring up complex payroll and employment issues.

Six thousand shops have closed over the last five years and many retailers are cautious about opening new ones. “Crippling” business rates and the impact of lockdowns played a major part, according to Helen Dickinson, chief executive of the British Retail Consortium.

As a result, the store vacancy rate on the UK high street currently stands at 13.9%. This difficult situation is, unsurprisingly, leading to sector consolidation.

In fact, retail M&A levels are at the highest for five years, research by international law firm RPC reveals. The number of M&A transactions taking place has jumped by 23% from 31 to 38 in the year ending March 2023.

This situation has at least partially been driven by falling demand as consumers cut back on their discretionary spending due to the ongoing cost-of-living crisis. Some retailers also misjudged the impact of interest rate rises, leading to sell-offs and the disposal of non-core assets. The aim here is to raise capital, strengthen balance sheets and improve inventory management.

How does retail M&A impact payroll?

During times of industry consolidation like this, it’s important not to forget the implications of such activity on HR and payroll functions.

Any business sold as a going concern or moved into a new subsidiary becomes subject to Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). TUPE transfer means the new owners are legally obliged to honour contractual employee entitlements, including salary, holiday, and notice period.

As such, these kinds of TUPE transfer arrangements have an inevitable knock-on effect payroll as well as HR. Ensuring compliance can be complex.

Another key consideration is the potential difficulty involved in integrating two separate payroll systems. Transferring sensitive employee data from one to another in a secure and effective fashion can be equally problematic.

How can retailers streamline TUPE transfer and payroll?

Outsourcing to a managed payroll service is one way to mitigate risk, streamline processes, minimise costs, and maintain compliance in a shifting landscape.

At Zellis, our managed service offerings go beyond the usual run-of-the-mill outsourcing services. Here’s how:

  • Every customer has a dedicated Customer Success Manager, who is focused on building and nurturing a strategic relationship. A structured approach to governance, customer engagement, and satisfaction also supports the creation of a close and trusted partnership.
  • Our highly-experienced payroll assistance team can review your end-to-end business processes. Our exceptional delivery teams will then deploy our payroll software to proactively optimise them. This enables us to create measurable and meaningful value for your organisation.
  • We offer unprecedented levels of flexibility based on your specific organisational needs. For example, our partially-managed payroll service enables you to keep your in-house payroll team but outsource critical processing activities, such as gross-to-net calculations. We also provide emergency payroll services to help you cope with unforeseen circumstances or an unexpected loss of in-house team capacity.
  • Our optimal mix of onshore and offshore services offers the scale required to ensure your payroll operations remain resilient, secure, and cost-effective – always.
  • The size and scale of our managed services division, which caters to the needs of more than 600,000 employees, enables us to minimise costly management overheads. It also means we can avoid the inefficient periods of downtime in-house teams inevitably experience due to the nature of the payroll cycle.
  • Our award-winning software has built-in compliance checks to ensure payroll activities comply with all the necessary legislation around the world. We likewise handle all your reporting for audit and compliance purposes. Business intelligence and analytics tools also enable you to harness crucial insights from your payroll data.
Follow the link to learn more about our managed payroll services, or discover our expertise in payroll for retail.