Many companies stay with a payroll provider they’re not happy with for one reason: fear of the transition. What if something goes wrong in the first close? What if data gets lost? The good news is that switching payroll providers doesn’t have to be a leap into the unknown if it’s done methodically.

Recurring errors, late responses, collective agreement changes nobody warns you about, or systems that don’t talk to each other. When payroll management becomes a source of incidents, the cost of staying is usually higher than the cost of switching. In this guide we explain how to migrate your payroll to a new provider in an orderly way, what data you need, which deadlines to watch and what to demand from your new partner.

Signs that the time has come

If you recognize two or more of these, it isn’t bad luck: it’s the service model. And the longer it goes on, the more last-minute corrections pile up and the more your HR team wears down.

The migration plan in 6 steps

1. Starting-point diagnosticBefore moving anything, review how payroll is being managed today: collective agreements applied, salary components, recurring incidents and any errors carried over. Migrating an error just perpetuates it.
2. Collecting data and historyWorkforce data, contracts, components and, above all, the year-to-date totals: contribution bases, personal income tax (IRPF) withholdings, wage garnishments, advances or pending vacation. Without year-to-date totals there is no correct adjustment.
3. Authorizations and accessThe new provider must be authorized to manage your contribution account codes in the Social Security RED System and to file withholding returns with the Spanish Tax Agency. It’s advisable to coordinate the dates with the outgoing provider.
4. Parallel payrollIn the first month, payroll is calculated in parallel and the results are compared line by line with those of the previous provider. Any difference is explained and corrected before the real close.
5. Communication to the workforceEmployees need to know if the payslip format changes, the portal where they can check it, or who to contact with questions. A well-communicated change creates no noise.
6. Supported first closeThe first close with the new provider is done with reinforced review and close follow-up. From then on, day-to-day deadlines and service level are set.

When is it best to switch?

You can change providers at any time of the year, but some moments make it easier. The start of the calendar year is the most convenient, because there are no year-to-date totals to transfer for the annual withholding summary or the IRPF adjustment. If the change is made mid-year, it is essential to receive all of the year’s year-to-date totals from the outgoing provider.

In any case, it’s advisable for the change to coincide with the start of a month and not with a close week, and to avoid, if possible, months with extra pay or major salary updates.

Checklist: what to ask for and what to demand

More than switching: connecting

Switching providers is the perfect opportunity to leave behind the “I send you the data and you send back the payslips” model. With Connected Labor Outsourcing, payroll is integrated with time tracking, HCM and ERP, regulatory changes are applied on time and technology helps detect incidents before the close, with specialists who know your company.

For informational purposes only. Specific deadlines and procedures depend on each company and its situation with the Social Security and the Tax Agency.