Digital Payroll Processes - Mission (Im)Possible

Digitalization in payroll services refers to the process of transitioning from traditional methods of payroll processing and human resource management to the use of digital technology and software solutions to optimize these functions. Popular topics in this area in recent months have been electronic employment records as well as the transition to an electronic payroll. Therefore, we invited Miroslava Misheva, Deputy Team Leader - Payroll from our team, to comment on whether a "digitalization" mission is possible in the reality of the Bulgarian labor market.

1. One of the keywords of our time is digitalization. In which directions can we work on digitalization in Payroll processes?

Mira: First of all, we should note that such a transformation involves several different aspects, the main ones being:

• Electronic payroll processing - Payroll is calculated and distributed through specialized software that automates the process and reduces the risk of human error.
• Electronic management of employee data - Through digital systems, each employee's data is stored and managed, including personal details, training, experience, and performance. This can facilitate analysis and decision-making.
• Process automation - processes related to attraction, hiring, performance appraisal, etc. are automated through software applications, increasing efficiency and speeding up the analysis time.
• Data security - Given the sensitivity of information in payroll processes, digitization must also include enhanced security to protect people and company data.

When taking steps toward digitizing some or all of these processes, an important prerequisite is the creation and maintenance of electronic employment records for all employees. It is these that form the basis of digitizing the overall payroll processes and allow employment contracts to be signed, supplemental agreements to existing employment contracts, termination orders, and leave applications and orders to be made digitally.

2. Are there administrative or regulatory obstacles to this?

Mira: The obstacles so far have been tied to regulations that require some documents to be paper-only, such as employment records. On 26.09.2023 were voted the changes related to the electronic employment book and the electronic employment record, which built on the existing law on electronic documents and electronic certification services.

Digitalization of food vouchers is also being undertaken from 01.01.24. In the next calendar year, they will be on an electronic medium - a plastic or virtual card, and paper vouchers will cease to be used from 30.06.2024.

These are just some of the positive changes that are phasing out administrative and regulatory hurdles in digitalization processes and bringing us closer to the desired level of digitalization.

3. What are the advantages of using electronic employment records?

Mira: Electronic employment records are not a new issue. Already in 2016, it was foreseen that some of the documents in the employment record would be stored in electronic format. The regulation on the type and requirements for the creation and storage of electronic documents in the employee's employment record, adopted in 2018, created a legal possibility to digitalize part of the employment record.

The results or pros of digitalization in the administration of employment records as well as HR processes are:

• Reducing paperwork and freeing up office space occupied by the same paperwork.
• Less paper used and less use of courier services, both reducing the carbon footprint of our administration
• Saving valuable staff and professional time associated with both parties being physically present to sign paper documents

4. Why is there so much talk about an electronic workbook format?

It will be part of an electronic register maintained by the NRA and is intended to facilitate and speed up processes related to employment and improve access to information on the length of service, positions held, professional qualifications, etc. It has been the subject of intense interest and discussion due to several important factors and advantages it brings with it:

1. Digitalization of information:

• Greater efficiency and convenience: facilitates the exchange of information between employees and employers and provides greater transparency and accuracy.
• Optimisation of bureaucracy: Reduces the bureaucracy and administrative costs associated with issuing, storing, and processing physical documents.
• Data for analysis and planning: allows the collection and analysis of data on employees' length of service. This type of information would be useful for social and economic analysis and planning.
• Data security and protection: provides better possibilities for data security and protection, especially if modern encryption and authentication methods are used.
• Social and tax purposes: supports more efficient tax collection and social protection of employees.

2. Advantages of the introduction and use of an electronic employment record:

• Less likely to be lost or destroyed, through no fault of the employee or the employer, than paper documents
• It is expected to increase the control of labour legislation by the supervisory authorities, who will also have access to the electronic employment record
• Reducing the administrative burden for employers
• Structuring and pooling information nationally and improving this information for statistical purposes

The electronic format also solves another practical problem related to the retention of the employment record by the employer upon termination of employment. The Labour Code stipulates that it must be processed and returned to the employee immediately. Interpretative Decision of the SCC No. 1 of 2019 interprets the word "immediately" as the day on which the employee presents the employment book to the employer - on the same day it must be cleared, certified, and returned to the employee.

All this sounds really encouraging and we, for our part, look forward to 01.06.2024, when the Ordinance under Article 62(5) of the Labour Code should be adopted and these theoretical benefits should become practice in our daily lives.