Outsource or Keep in House? Two Ways to Run Salary Packaging
Every organisation that offers salary packaging faces the same early decision: do you hand the whole thing to a specialist provider, or keep it in house and run it yourself? Both can work well. The right answer depends on your size, your team and how much control you want. Here is a clear comparison to help you choose from a partner that can support you either way.
Option one:
outsource to a specialist provider
With the
outsourced model, a specialist provider runs your salary packaging program for
you. They handle the tax expertise, the compliance, the FBT reporting, the
employee enquiries and the day-to-day administration. Your payroll team simply
processes the agreed deductions, and the provider takes care of everything else
behind the scenes.
This suits
organisations that want packaging off their plate entirely, that do not have
the internal capacity to manage a compliant program, or that would rather their
people focused on their core work. It is the lowest effort path for your team,
and the compliance risk sits with the specialist.
Option two:
keep it in house with software
With the in-house
model, you run the program yourself using purpose built salary
packaging software. The platform handles payroll integration, applies the
FBT caps correctly, and provides the compliance reporting and audit trails, so
you keep control without taking on the manual burden or the tax risk.
This suits larger
employers that want to keep the employee relationship close, retain full
control and visibility, and keep their data in house, but who still want
provider grade compliance built into the tools they use. It trades a little
more internal ownership for a lot more control.
How to choose
between them
A few questions
usually make the decision clear:
- How much internal capacity do you
have? Larger
organisations with capable payroll teams often lean in house; smaller
teams usually prefer to outsource.
- How much control do you want? If keeping the employee
relationship and your data in house matters, software may suit you better.
- Where do you want the compliance
effort to sit? Both
models deliver compliance, but outsourcing shifts the day to day
responsibility to the provider.
- What is your appetite for
administration? Outsourcing
is the lightest load on your team; in house gives you the most ownership.
A closer look
at the costs
Cost sits on both
sides of this decision, just in different forms. Outsourcing carries a service
fee, but it removes the internal effort, the compliance risk and the need for
specialist knowledge on your team. Running it in house with software carries a licence
cost, but keeps more of the process, the data and the employee relationship
under your control. The right answer depends on how you value effort, control
and risk, not just the invoice.
A useful way to
frame it is total cost, not just price. A cheap option that consumes your
payroll team’s time or exposes you to a compliance error is not really cheap.
Whichever way you lean, make sure you are comparing the whole picture rather
than a single number.
What both
models share
Whichever path you
choose, the fundamentals should be the same. Your people get a compliant, well
run salary packaging program, their pay is handled accurately, and the
organisation stays on the right side of the tax rules. The choice of model
changes who does the work and where the control sits, not whether the program
is done properly. That is why this decision is about fit rather than quality.
You are not
locked in
One of the most
reassuring things about this decision is that it is not permanent.
Organisations grow and change, and the model that suits you today may not be
the one that suits you in three years. Starting outsourced and bringing the
program in house later or starting in house and handing it back to a provider,
are both normal moves. Choosing a partner that offers both means you can change
models without changing vendors, and without starting from scratch.
Common questions
Which model is more compliant?
Both
can be fully compliant. The difference is where the effort sits. Outsourcing
shifts the day to day compliance responsibility to the provider, while in house
software builds the compliance rules into the tools your team uses.
Can we switch models later?
Yes.
With a partner that offers both, you can move between outsourced and in house
as your needs change, and they manage the transition, so your people are not
disrupted.
How do we decide which model to choose?
Start
with three questions: how much capacity your payroll team has, how much control
over the program and the data you want, and where you would rather the day to
day administrative effort sits. Your answers usually point clearly to one
model. If they do not, a partner that offers both can talk you through it
honestly rather than steering you toward the option that suits them.
You do not have to choose alone
The
good news is that you are not locked into one path or forced to work it out on
your own. Eziway offers both models. We can run your salary packaging as your
outsourced provider or give you the software to run it in house, with the same
compliance expertise underpinning either choice. That means the decision is
about what fits your organisation, not about which vendor you are stuck with.
If you are
weighing up the two approaches, we are happy to talk it through honestly and
point you to the model that genuinely suits you, even if that changes over
time. Get in touch and we will help you decide.
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