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What Is a Payroll Number?

What is a payroll number?

Key Takeaways

1. A payroll number is a unique and important identifier that enables a company’s payroll department to identify them as an earner.

2. A payroll number is a unique series of numbers and/or letters which an employer assigns to each individual employee to correctly identify them and ensure they are paid correctly. 

3. The payroll number allows a business to track its employees through the use of this unique identifier rather than by their name or other personal information which can lead to payroll errors.

4. The payroll number for each employee is distinct from other reference numbers such as a UK Employer Reference Number (ERN Number) which is also referred to as a PAYE reference number. This is known as a US Employer ID number in the US.

As an employer, it is important to keep a track of employee information and records, especially when it comes to payroll matters. 

A payroll number is an important piece of information that allows an employer to easily identify each employee for payroll purposes. By assigning a unique identifier to each member of staff, employee information and personal data can be easily tracked and accurate and secure payroll records are ensured. 

This article will further discuss payroll numbers, their purpose and importance, as well as the impact of data protection regulations when operating as an employer within the European Union.

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What Is the Meaning Of “Payroll Number”?

A payroll number, known as a “Payroll ID number” in the UK, is a unique series of numbers or letters which will usually vary in length depending on the number of employees there are in a company. The more digits there are the larger the company’s payroll.

Payroll numbers are created by an employer and will vary depending on their practice. They could be generated manually by their HR department, by the person in charge of payroll, outsourced to a payroll provider or generated automatically through payroll software.

Although there is no standard format or specified length of digits for a payroll number, employers in the UK are recommended to assign at least six digits to each employee, to ensure uniqueness. In some cases, employers will use the National Insurance number of their employees as their payroll number. 

A payroll number may look something like this:

  • 012345
  • SMITH456
  • 123-456 

The payroll number for each employee is distinct from other reference numbers that are for employers rather than employees such as a UK Employer Reference Number (ERN Number). This is a unique series of numbers and letters that is assigned to each business that registers as an employer with HMRC. This unique identifier is used by HMRC to process an employer’s payroll information such as income tax and national insurance. The ERN Number can also be referred to as a PAYE reference number for employers in the UK or as a US Employer ID number. 

Find out more about managing essential employee payment information, such as payroll numbers, in What Is Payroll Data and How Is It Useful?

What Is the Importance Of A Payroll Number?

A payroll number is a vital piece of data that helps an employer to correctly identify its employees and ensure their wages are calculated and paid according to their unique payroll number.

Key information about each employee, including their name, contact details, job title, working hours and salary can all be linked to this number making it easier and more efficient for businesses to identify and track their employees. With a single and unique identifier for each employee, there is no need to include unnecessary or potentially private information about each staff member across the organization.

A unique identifier also eliminates the risk of employee records being duplicated or mixed up with another employee with the same or similar name. A payroll number ensures the correct salary and other personal information corresponds to the right employee. It also allows for continuity in payroll records if an employee changes their name, after marriage for instance. 

In addition to easier tracking of employee payments and the reduction of payroll errors, payroll numbers also make it easier for employers when it comes to reporting requirements for HMRC or for generating internal reports regarding payroll matters.

Read our employer’s guide to find out more about What is a Pay Period and Which Type is Best For You?

How to Find a Payroll Number

An employee will usually find their payroll number next to their name on the upper left or right-hand corner of their pay stub. It can also be found on time sheets, official correspondence concerning the employee and by accessing employee payroll details through an online portal.

Video: Managing Payroll Numbers through Payroll Software

In this video, payroll number management through a payroll software system is explained in detail. 

GDPR Compliance And Payroll Numbers

The General Data Protection Regulation, or GDPR, is a European Union privacy and security law that came into effect on May 25, 2018. This new rule applies to any business operating within the EU and imposes stricter data protection measures with significant financial penalties for breach of the regulations.

GDPR is designed to make businesses more transparent regarding the personal data they collect and process and emphasizes the need for this data to be securely stored by them. Its impact extends beyond just the sales department and also requires compliance in any area where a business collects data on its employees, such as payroll.

Whether a business handles their payroll internally or chooses to outsource these duties to a third party, it will still need to comply with its responsibilities under GDPR. It is important to note that a business does not avoid their GDPR obligations by outsourcing their payroll as they still remain the data controller while the third party becomes the data processor, each with their associated responsibilities for GDPR purposes.

The regulations define personal data as ‘information that relates to an identified or identifiable individual.’ This means that the data contains sufficient information to identify an individual. As a payroll number is designed to be a unique identifier of each employee it is, therefore, considered to be personal data under the GDPR regulations.

Payroll numbers are linked to personal information regarding each employee such as their name, home address, salary, bank details and social security number. All of these elements are vulnerable to a data breach, and are often the target of cybercriminals. Employers need to be extra vigilant of such security risks as well as their compliance obligations under GDPR which require them to handle, process and store such data securely.

To become GDPR compliant, payroll processes must be reviewed to ensure controls are in place to keep sensitive payroll data private. This can include taking some or all of the following measures:

  • The use of passwords and encryption for all payroll files shared between parties, internally or externally.
  • The review and limit on the number of staff who have access to company payroll information. 
  • Gaining employee consent to add their details to the company payroll system upon joining the organization.
  • Consolidating payroll data onto one centralized location rather than across several locations.
  • Securely delivering employee pay stubs by introducing methods such as online, password-protected access.

To make sure, you are in compliance, check out our Guide where we set out all the key legal requirements for payroll

How Horizons Can Help You Manage Your Global Payroll 

Horizons manages payroll on behalf of companies in more than 180 countries and regions. Our ability to centralize and coordinate global payroll cycles can help you to streamline your payroll function, ensuring accurate and on-time payments as well as full compliance with local laws for all of your international employees. Contact us today to find out more about our international payroll solutions.

Frequently asked questions

Although most companies assign their employees a payroll number to make the payroll process easier and less prone to mistakes, it is not a legal requirement for them to do so.

Your employer may not use a unique identifier for its employees when it comes to payroll but instead, rely on other information such as your name.

There is no specified format when it comes to payroll numbers. They usually consist of a unique series of numbers or letters, or a combination of both and can vary in length. This is often according to the number of employees that are in an organization with longer payroll numbers indicating a large number of employees. 

In the UK it is generally recommended that payroll numbers be at least six digits long, to ensure they are unique for each employee. In some cases, employers will use the National Insurance number of their employees as their payroll number.