NAA Member News: Mercury Hampton – Could a Different Payroll Solution Save Your Business Time and Money?
Managing workforce costs in the UK automotive sector is an ongoing challenge. Orders fluctuate with market signals, regulatory deadlines shift, and production schedules change quickly.
For many UK businesses, maintaining both agility and compliance is difficult, especially as regulations evolve (most notably with rising NI costs) and traditional payroll systems are not designed for flexibility.
Why Payroll Flexibility Matters
Automotive businesses, from manufacturers to component suppliers, often need to scale headcount up and down. Permanent contracts provide stability but offer little room for flexibility during quieter periods. This can lead to high fixed costs, underused staff, and pressure on cash flow. Add in complex UK regulations and the risk of non-compliance, and the challenge is clear: how do you keep costs variable and risks under control?
Considering the Changing NI Landscape
From April 2025, employer NI contributions increased from 13.8% to 15%, and the threshold at which employers must start paying dropped from £9100 to £5000 annually. This means many businesses face significantly higher employment costs, including for lower paid staff. While the employment allowance increased from £5000 to £10,500, only smaller employers benefit fully. Most businesses will have noticed a significant rise in their NI bills, making flexible workforce management and cost control more critical than ever.
Could Outsourced Payroll Be the Answer?
Specialist UK outsourced payroll providers enable companies to engage contractors, temporary workers, or project teams as business needs evolve. This approach makes workforce costs more variable and reduces burdens during quieter periods. Key benefits include:
- Cost reduction
Outsourcing payroll reduces administrative workloads and overhead costs. Providers handle employer contributions such as NI and pensions, so businesses pay only for the labour they actually use. Additionally, by using payroll solutions, businesses save money as they do not need to employ dedicated payroll staff, invest in expensive software, or pay for ongoing training.
- Administrative relief
Dedicated payroll teams take on the full payroll administration, including calculations, compliance checks, and reporting. This means in-house teams are freed from time-consuming payroll tasks and can focus on their core business priorities.
- Improved cash flow management
Businesses benefit from receiving a single monthly invoice covering all payroll services. This simplifies finances by removing the need to manage multiple payments and receipts for individual workers, making cash flow more predictable and easier to manage.
- Compliance built in
The UK payroll regulatory environment is complex and frequently updated. Working with a specialist provider who keeps up to date with legislation helps reduce errors and minimise audit risk. - On demand scalability
Recruitment, onboarding, and payments for surge hiring, such as during a new model launch or a supply chain peak, are centralised and streamlined. Staff levels can be adjusted quickly and easily without long-term commitments or disruption.
What Does This Look Like in Practice?
Consider a parts supplier whose order volumes and workforce needs vary weekly. Traditionally, this business might struggle to balance keeping enough permanent staff to meet peak demand with the cost and complexity of running payroll for underused employees during quieter times.
By adopting an outsourced payroll solution, the business maintains a lean core of permanent staff while quickly bringing in contractors or temporary workers as needed. Payroll specialists handle all wage administration, NI contributions, and pension requirements, ensuring full compliance and accurate reporting.
Rather than multiple payments and payroll runs, the supplier receives a single monthly invoice covering all labour costs, significantly simplifying cash flow management. This consolidated billing reduces the administrative burden on finance teams and improves budgeting visibility. Also, employees and contractors can access payslips and payment records through self-service portals, reducing payroll queries.
Another real-world example comes from a car manufacturer facing seasonal surges due to new model launches. Using outsourced payroll, they swiftly onboard project teams without long-term commitments or burdening internal HR and payroll functions. This flexibility helps avoid bottlenecks and costly overtime while assuring regulatory compliance, even as external costs and taxes rise.
Across the UK automotive sector, companies using outsourced payroll consistently report more reliable pay runs, reduced internal administration, and improved workforce flexibility: key factors in maintaining competitiveness amid ongoing industry change.
The Business Case for Outsourcing Payroll
The latest Automotive Labour Market Briefings by the Institute of the Motor Industry in 2025 highlight persistent labour shortages and skills mismatches, especially in technical roles critical for the industry’s competitiveness. Efficient payroll management helps address these challenges by freeing up resources and improving workforce flexibility.
With over 860,000 people employed across more than 100,000 UK automotive businesses, and a £37 billion annual contribution to the economy, payroll efficiency and adaptability directly influence performance and profitability.
In a sector where change is constant, would a different payroll solution help your business adapt and grow with greater efficiency and financial control?
For more information about how payroll solutions could benefit your business, contact:
Matthew Cunliffe
Contract Director, MHC: Mercury Hampton Contract
Email matthew.cunliffe@mercuryhampton.com
Phone 01925 906 640
