Built-in payroll or integrated payroll: which does HR actually need?

HR software includes built-in payroll when payroll is a module inside the HR platform rather than a separate product connected to it.

IRIS Cascade is one example, featuring a Payroll Module that works from the same database as core HR.

The alternative is integrated payroll, where two separate systems are connected, such as Staffology HR and Staffology Payroll.

Both work, so there is no single ‘best’ option.

The important factor, which applies to both built-in and integrated, is whether there is a shared employee record.

This blog covers what the two models mean, which suits which type of business, the UK obligations that apply either way and how the two IRIS routes compare.

Key takeaways

• IRIS Cascade is HR software with payroll built in.
• Staffology HR and Staffology Payroll offer integrated HR and payroll.
• A good API connection keeps two separate HR and payroll systems in step, so ask which system does the calculation.
• Selecting based on ownership is a viable route: built-in payroll where HR owns the process and integrated payroll where a separate team, such as payroll or finance, owns the pay run.
• Integration may work best if you don’t need to replace both HR and payroll, as each product stands alone and you can add the half you’re missing.
• HMRC recognition attaches to the payroll product, not the HR system, so check GOV.UK’s published list.

What ‘built-in’ payroll and ‘integrated’ payroll actually mean for HR

Built-in payroll and integrated payroll are easily confused as HR software vendors often describe both options as ‘all-in-one’.

HR software with built-in payroll means payroll is a module directly within the HR platform.

The main differentiator is that you log into one system for both HR and payroll.

With payroll built-in, HR and payroll also share a joint employee record, permissions model and vendor updates.

Additionally, because the settings are shared, a change made for HR reasons automatically reaches payroll without manual configuration.

HR software with integrated payroll means HR and payroll are two separate systems which are connected.

HR and payroll integration could include two systems from different vendors, or two systems from the same vendor.

With integration, each system has its own interface, release cycle and, often, its own support team.

Data should flow between the HR and payroll systems, but how well depends on the level of connection.

Integration via an Application Programming Interface (API) is preferred, as it means the systems share the employee record, so any changes made in HR automatically flow into payroll.

At the other end, some integration is facilitated by exporting and uploading a spreadsheet, which is time-consuming and prone to error.

Both options are described as integration, meaning you have to be diligent when determining how it’s achieved. 

How vendors describe connected HR and payroll

The label on the website often tells you very little, as both models get marketed as one integrated system.

While a payroll module is built into its own platform by definition, an API connection also keeps both HR and payroll records in step, creating a joint employee record.

So, as you can see, defining connected HR and payroll can be challenging, and the label matters less than most people think.

A practical check worth doing is how HR and payroll stay in sync, and the number of manual steps required for a pay run.

Where the employee record lives, and why that matters less than it sounds

HR software with payroll built-in uses one employee record, located in the same system.

Integrated HR and payroll also use one employee record, but this is achieved by connecting the two separate systems via an API.

With an API, integrated HR and payroll stay updated in real-time, sharing data and updates in the same way as a built-in offering.

However, not all integration is created equally, so a useful question to ask, which also helps determine how HR and payroll speak with each other in a built-in offering, is: how well do HR and payroll stay matched, and what happens when they don’t?

There are three checks you can run which tell you the answer:

• How quickly changes show up in both HR and payroll. A shared employee record should update instantly.
• Whether you administer one system or two. One platform means one set of users, permissions and updates. Two products mean two, even when the data moves perfectly between them.
• What happens if the two systems disagree? A single record cannot disagree with itself, but two can, so this needs checking with an integrated setup.

Our guide to choosing HR software covers the importance of having one connected employee record.

How each model handles six month-end events

The difference between built-in and integrated largely depends on how good the connection is.

The below compares the process for HR with built-in payroll and HR connected to payroll via an API.

Check your own payroll cycle against these six events when choosing between the two.

1) A starter joins mid-cycle 

Built-in payroll: the record is created once in HR and is ready for the pay run already open.

Integrated payroll: a live link, facilitated through an API, brings the new starter’s details across to payroll straight away.

2) A leaver whose final pay includes holiday they never took

Built-in payroll: the holiday balance and the pay calculation use the same absence data.

Integrated payroll: HR works out the balance and passes the number across to payroll.

3) A salary change backdated before the last cut-off

Built-in payroll: the effective date is held once and back pay is worked out from it.

Integrated payroll: the date is sent from HR to payroll following the change, but payroll still has to act on it.

4) Absence turning into Statutory Sick Pay

Built-in payroll: the sickness record in HR drives the calculation in the payroll module.

Integrated payroll: absence is recorded in HR and assessed in payroll, with the HR system sending across agreed dates and the first qualifying day.

5) A cost centre or manager change that affects reporting but not pay 

Built-in payroll: updated once and reporting follows.

Integrated payroll: configure the integration to allow cost centre/departments to sync.

6) Sign-off before submission

Built-in: approval sits inside the HR system, using its own permissions.

Integrated payroll: payroll keeps its own approval chain, often the preferred option for a finance team.

Does built-in payroll or integrated payroll suit your organisation?

HR software with built-in payroll tends to suit businesses where HR owns the process from start to finish.

If HR is responsible for all elements of people management, alongside payroll, keeping everything in one system is convenient.

Built-in payroll also suits businesses with a complex organisation, such as those with several entities and a lot of moving parts, who want one system to cover everything rather than joining separate products together.

HR software with integrated payroll suits businesses where payroll sits outside HR.

Where a different department, such as a dedicated payroll team or finance, owns the pay calendar, a separate payroll product better matches how the business already runs.

However, while a split setup is often treated as a compromise, it simply isn’t one.

It’s very scenario-dependent and often comes down to preference.

For example, even if HR owns payroll, some businesses prefer to keep the two separate, providing data connects between the two.

Another common scenario which dictates the best option is your existing tech stack.

Plenty of businesses already have one side working well, whether that’s HR or payroll, and only want the other added.

If your HR software is fine and payroll is the problem, or the other way round, you don’t need to replace both when integration is an option.

Integration enables you to bridge the gap and add what you’re missing.

When deciding between built-in or integration, consider who owns the process, what’s actually needed and the current software already in place.

UK obligations that apply either way

Neither built-in payroll nor integrated payroll changes what you owe HMRC or The Pensions Regulator.

Whichever option you choose, you must:

• Send a Full Payment Submission (FPS) on or before each payday.
• Assess every employee for pension auto-enrolment each pay period, and re-enrol eligible staff every three years.
• Calculate statutory payments correctly, including Statutory Sick Pay (SSP), which became a day one right from 6 April 2026.
• Calculate holiday pay correctly, including for irregular hours and part-year workers, and keep holiday records for six years under the Regulation 16B duty.
• Use HMRC-recognised payroll software.

Regarding the last point in this list.

HMRC recognition relates to the payroll product, not to the HR system.

An HR platform cannot be HMRC-recognised, because recognition covers RTI filing.

Our Definitive Guide to UK Payroll and Workforce Compliance covers each of these obligations in depth, and the 2026 employment law update covers what changed this year.

How this works across the IRIS products

IRIS offers both HR software with payroll built in and HR software that integrates with payroll.

IRIS Cascade is the payroll built-in route, offering a Payroll Module that works from the same database as core HR.

For example, with IRIS Cascade:

• A change to bank details reaches payroll without being entered twice
• Entitlements recorded in HR, such as SSP and statutory maternity pay, are paid from that record

The IRIS Cascade Payroll Module handles weekly, bi-weekly, lunar and monthly pay cycles.

Additionally, you can configure custom approval paths, setting which checks apply, who sees what and which changes need sign-off.

IRIS Cascade Payroll is also on HMRC’s recognised software list.

As for HR software with integrated payroll, IRIS offers Staffology HR with Staffology Payroll. 

The two systems are connected via an API, so any HR changes in Staffology HR automatically reach payroll in Staffology Payroll.

For example, a new starter, pay rise or change of hours entered in Staffology HR reaches Staffology Payroll without an export.

Both Staffology HR and Staffology Payroll stand on their own, so you can start with either and add the other later, or connect a third-party system.

Staffology Payroll is also on HMRC’s list.

In terms of business size, Staffology HR suits organisations with more straightforward HR processes – typically those with 50 to 250 employees.

Cascade is better suited for businesses with complex HR processes – typically those with 250+ employees.

What to ask before you buy

Take these questions into every demo to determine the HR and payroll functionality:

1. If a change is entered in HR, does it reach payroll on its own, and how quickly?
2. Which system does the calculation, HR or payroll?
3. Which named product holds HMRC recognition?
4. Can payroll keep its own sign-off and permissions, and who can see pay data?
5. Who works out the back pay on a change backdated before the last cut-off?
6. Am I administering one system or two, and what does that mean for users and updates?

The second question is great for unpicking functionality.

Plenty of products move data well, but far fewer will tell you which side the sums happen on.

Question four is also worth asking, even if you want one shared system.

The answer tells you whether the software can suit the needs of a finance team that requires its own sign-off.

Data permission is also a key requirement as data protection is an obligation, not just a preference.

Built-in payroll or integrated payroll

Frequently asked questions (FAQs)

What HR software includes payroll built in?

HR platforms with payroll as a module, rather than integrated into a separate payroll product, are classified as payroll built-in. IRIS Cascade is one, offering a Payroll Module that works from the same database as core HR. IRIS also offers an integrated alternative: Staffology HR with Staffology Payroll.

What is the difference between built-in payroll and integrated payroll?

Built-in payroll is a module inside the HR system, whereas integrated payroll is two separate products which are connected. With a good integration, facilitated via an API, the data moves either way.

Is built-in payroll better than integrated payroll?

Neither is a better option, as it depends on your requirements. Built-in suits businesses that want HR and payroll in one location. Integration suits businesses where payroll sits outside HR, businesses that are happy having two systems, or businesses that have an existing system in place that they want to connect.

Do HR and payroll have to be in one system?

No, HR and payroll don’t have to be in one system. An integrated HR and payroll system works well when data is connected via an API. What causes problems is not one system or two, but a manual connection relying on data exports.

Can you run UK payroll from an HR system?

Yes, you can run UK payroll from an HR system, provided the built-in payroll product is recognised by HMRC for RTI filing. HMRC recognition attaches to the payroll product, not the HR system, so check the named product on HMRC’s published list. The same obligations apply whether payroll sits inside your HR system or is integrated to it.