How Does Payroll Work for Legal Secretaries and Support Staff

Understanding Payroll in a Legal Practice

Payroll refers to the process of calculating and distributing employee wages while managing deductions such as Income Tax, National Insurance, and pension contributions. For law firms, payroll covers all employed staff, including:

• Legal secretaries who provide administrative and document support to solicitors.

• Paralegals assisting with case preparation and research.

• Receptionists, clerks, and office administrators.

• IT, HR, and finance staff supporting firm operations.

Payroll is usually processed monthly, but larger firms may operate weekly or fortnightly schedules for certain roles.

The Payroll Process Step by Step

The payroll process for legal secretaries and support staff follows the same principles as any other UK business, but law firms must ensure it integrates with time recording, billing, and compliance systems.

1. Collecting Employee Information
When new staff join, the HR or accounts team collects information such as:

• Full name, address, and National Insurance number.

• Bank account details for salary payment.

• P45 or new starter form for HMRC tax code allocation.

• Pension scheme preferences and emergency contact information.

This data is entered into payroll software to calculate pay and statutory deductions correctly.

2. Recording Hours and Pay Rates
Legal secretaries and support staff may be salaried or paid hourly. Salaried employees receive a fixed amount each pay period, while hourly staff are paid based on recorded hours or overtime.

Accurate time tracking is crucial, particularly in legal firms where staff may bill time indirectly related to client work. Many practices use integrated software that tracks time spent on different cases or administrative tasks, ensuring fair pay and proper cost allocation.

3. Calculating Gross Pay
Gross pay includes an employee’s base salary, overtime, bonuses, or allowances. Some firms also provide additional benefits such as performance bonuses, holiday pay, or car allowances, which are included in gross pay calculations.

4. Applying Statutory Deductions
Once gross pay is calculated, statutory deductions must be applied:

• Income Tax (PAYE): Calculated using HMRC tax codes.

• National Insurance Contributions (NIC): Based on employee earnings and thresholds.

• Pension Contributions: Under auto-enrolment rules, both employer and employee contribute to a workplace pension.

• Student Loan Repayments: Where applicable, these are deducted based on income levels.

Payroll software automatically applies these deductions and calculates net pay the amount employees receive after deductions.

5. Processing Net Pay and Payslips
Once deductions are made, employees are paid by bank transfer on the agreed date. Each employee receives a payslip, either digitally or in print, showing:

• Gross salary.

• All deductions.

• Net pay.

• Employer contributions such as pension and NICs.

Payslips also include details of tax codes, payment periods, and year-to-date totals.

6. Submitting Payroll Information to HMRC
Employers must submit payroll data to HMRC each time they pay staff using Real Time Information (RTI). This ensures accurate and up-to-date tax records for every employee.

The employer then pays HMRC for Income Tax and National Insurance by the 22nd of the following month (or the 19th if paying by cheque).

Payroll Compliance for Law Firms

Law firms must ensure payroll complies with all relevant UK employment and tax laws. Non-compliance can lead to HMRC penalties or reputational damage. Key areas of compliance include:

• National Minimum Wage and National Living Wage: Legal secretaries and support staff must be paid at least the statutory rate based on their age and contract type.

• Auto-Enrolment Pensions: Firms must automatically enrol eligible employees into a workplace pension and contribute at least the minimum percentage.

• Holiday Pay and Sick Pay: Firms must calculate statutory entitlements accurately.

• Equal Pay: All staff must be paid fairly and consistently for similar roles and responsibilities.

• Data Protection: Payroll information must be stored securely and processed in line with GDPR.

For regulated firms, the SRA also expects payroll systems to operate with transparency and fairness, particularly when partner drawings and staff salaries are processed from the same accounts.

Common Payroll Challenges in Law Firms

Payroll in law firms can be more complex than in other sectors because of the mix of fee earners, support staff, and partners. Common challenges include:

• Managing different pay structures for partners, associates, and administrative staff.

• Handling bonus schemes linked to billable hours or firm performance.

• Tracking overtime and time-off-in-lieu for support staff.

• Administering multiple pension schemes or salary sacrifice arrangements.

• Coordinating payroll with case management and billing systems.

Accountants and payroll specialists play an important role in helping law firms address these complexities and maintain accuracy.

The Role of an Accountant in Law Firm Payroll

An accountant or outsourced payroll provider can manage all aspects of payroll for legal secretaries and support staff, ensuring accuracy and compliance. They can:

• Set up payroll systems that integrate with time recording and billing software.

• Calculate wages, deductions, and statutory contributions.

• Manage RTI submissions and payments to HMRC.

• Handle pension administration and auto-enrolment.

• Produce detailed payroll reports for firm management.

• Ensure compliance with SRA rules on handling office and client money.

Accountants also monitor payroll costs and provide management reports to help partners forecast budgets and manage cash flow effectively.

Payroll Software for Law Firms

Modern payroll software simplifies the process of managing legal staff pay while maintaining compliance. Popular systems used in the legal sector include:

• Xero Payroll: Integrated with accounting software for seamless financial management.

• Sage Payroll: Suitable for firms of all sizes with advanced reporting features.

• BrightPay: Easy to use with automatic RTI and pension submission tools.

• IRIS Payroll: Designed for professional services firms with multi-level reporting.

Choosing the right software ensures payroll is efficient, transparent, and aligned with both HMRC and SRA standards.

Payroll Outsourcing vs In-House Management

Some law firms prefer to outsource payroll to accountants, while others manage it internally.

Outsourcing payroll is ideal for small or growing firms without dedicated HR teams. It saves time, reduces compliance risks, and ensures accuracy.
In-house payroll management gives firms more control and may be more cost-effective for larger practices with established finance departments.

An accountant can advise on which approach best suits your firm’s size and needs.

Payroll and Staff Retention

Accurate payroll management is not just about compliance it directly affects staff morale. Late or incorrect payments can damage trust and lead to dissatisfaction among legal secretaries and support staff.

Well-run payroll systems ensure employees are paid correctly and receive clear information about their pay and benefits. This fosters trust, professionalism, and long-term retention within the firm.

How Accountants Ensure Payroll Compliance

Accountants help firms stay compliant by:

• Conducting regular payroll audits.

• Updating systems when employment or tax laws change.

• Ensuring pension and tax submissions are accurate.

• Keeping payroll records for the required six years.

They also provide expert advice on optimising staff costs, managing benefits, and reducing payroll-related risks.

Summary

Payroll for legal secretaries and support staff involves calculating pay, applying statutory deductions, and ensuring compliance with employment and tax laws. Law firms must maintain accurate records, meet HMRC deadlines, and handle pensions, holidays, and bonuses correctly.

An accountant with legal sector experience can manage payroll efficiently, integrate it with your firm’s systems, and ensure compliance with both HMRC and SRA requirements. By investing in accurate payroll management, law firms can maintain financial transparency, support staff satisfaction, and focus on delivering outstanding legal services.