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The importance of integrating payroll and HCM


Every organisation has a solution for payroll. Even the smallest companies will outsource payroll to save the time and worry it takes to ensure its accurate and compliant with today’s complicated tax systems.

Though payroll-processing services help the back office, they also impact the front office. Employees are hired to help sustain and grow your business, and of course they want to get paid.

But there’s more to it than that. Employees want to be sure they’re paid correctly, to understand what taxes are applied, how much their benefits cost them, the details around leave time, sick days, and much more. Whatever the case, employees are going to come into direct contact with your payroll system, either online or through enquiries to HR.

But still they want more. So how can you keep your employees happy?


Everything starts with pay

Since payroll is the basis for employee information about pay, benefits, time tracking, etc., it makes sense that everything else to do with employee engagement is part of the same solution.

So how can HCM meet the expectations of today’s employees?

Definitions of HCM have varied over the years but it’s generally agreed that it includes three key areas:

1. People Administration
HCM provides an array of human resource functions that help manage core employee data and employee teams, and help to connect employees with HR staff. HCM can manage your teams’ organisational structures, while helping to improve compensation consistency. It can help inspire managers, improve structures and maximise employee productivity. On the administrative side, it will keep accurate records of employee attendance, help improve morale, avoid confusion, and save time. Built-in workflows help make it easy to quickly initiate, approve, and track time off across your entire organisation. Efficient people admin is better for employers and employees alike.

2. Talent Management
Another set of HCM functions related to hiring, developing, compensating, and succession planning. These can be a critical part of employee engagement and participation and can be used to communicate expectations and raise productivity. Talent management can also help to ensure that the best candidates are hired for each position. A powerful HCM solution will do all this easily and give you control and visibility.  

3. Payroll & Time Tracking
In order to pay a global workforce accurately and on time, a payroll system must be localised for each region and country. It must take into account variations in rules, regional laws, and local requirements, and allow for various benefits, pensions and absences. It may need to accept contractors entering daily or weekly time. The best time-tracking solutions help enhance employee experience as they are more responsive, intuitive and flexible.


Other considerations

Of course all these HCM functions should be mobile enabled, so that employees can interact with their data quickly and easily. HR departments will also want to make sure that they’re localised for different countries, and they’ll need reporting and analytics capabilities for compliance and better decision making.

The tighter the connect between payroll and the rest of the HCM solution the better. After all, each employee has only one system of record, so it should be shared across the entire HCM spectrum.

There are a number of approaches to connecting payroll with HCM. Here are the pros and cons:

1. Manual connections
You could run payroll separately from HCM, even using two separate products from two separate vendors. The connection between them would have to be managed manually or by using complicated tools to ensure that common employee data is consistent in both systems. Even if the connection works, however, this approach can create possible confusion and a poor experience for your employees.
2. Data Integrated
You could have two applications sharing the same database. This solves the data integrity issue for HR, but it doesn’t necessarily solve the poor user experience. It also means that workflow between payroll and other HCM functions is disconnected.
3. Unified
Ideally, your payroll and HCM should be part of one unified system. This means that all HCM functions (including payroll) come from the same vendor, and are designed to work as a single coherent solution. Not only is accurate data then fully shared across the solution in real time, but the workflow is streamlined, improving productivity, reducing mistakes, and enabling you to focus on employee expectations and engagement.

Today’s employees expect a smoother, more connected work experience. Companies that offer a better experience will be able to attract and retain the best talent.

ADP® iHCM 2 is a complete cloud-based human capital management system—including ADP Payroll—that offers a better experience for everyone.


Download the ADP® iHCM 2 Brochure

Easier | Smarter | Better HCM


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