Hrmaster Hats Series

Hat 10- The Interpreter of company policy

We, the payroll administrators, need to understand the policy process. Government passes legislation, and we are tasked with implementing that. Management sets company policy, and creates procedures to implement that policy.

The payroll department (among others) is tasked with bringing those policies and procedures to life. We study the rules and make them work. We explain to, and educate all employees regarding these policies. We implement the policy and make sure that the policy is adhered to.

“my heart says yes but my brain says no”

And the biggest challenge…we have to say NO to requests for exceptions.

Refusing these exceptions can cause a lot of pressure to be exerted on the administrator who understands the importance of sticking to policies. While management accepts that we can’t break the law around payroll, they sometimes think that certain circumstances allow one to bend company policy for a few individuals. Their arguments are so persuasive and they come from management, making it very difficult. But be warned, once you have bent the rules, it becomes easier to bend the rules in other situations. Have you noticed that some managers are more inclined to ask you to make exceptions than others?

I am trying to think of a example where bending the policies can be justified. I am finding it very difficult to come up with anything but here are two that may prove the point.
* We can’t give the employee more leave , but we can approve leave and process the leave outside of policy.
* We can’t change the rule on advancing an employee money from next week’s salary, but we can bend that rule, depending on the circumstances.

Tell us about the time you bent the rule, or the time you stood firm. And how did it turn out? Tell us in the comments below.

How to avoid compromising policy procedure:

  1. Make sure you understand the policy that management wants implemented. The payroll administrators are the people who interpret what needs to be done. So read it carefully, discuss it and make sure everyone in the department understands it. Make notes of what possible exceptions might be requested, and work out in advance the reasons why you can’t compromise.

  2. Make sure that you all (management team included) agree that there will be no exceptions. You need to know that your standing firm on this issue will be supported by management.
  3. Build a reputation for sticking to the rules. While you need to be considerate and aware of the issues, policy is policy, and the firmer you are, the less you will be challenged. It must be clearly understood “Payroll will never deviate from policy, so don’t even ask!”

  4. On the rare occasion, you need to make an exception, be sure that it is for a very good reason and ONLY under management’s authority. Have something in writing that allows you to deviate. (You do not want to end up being a scapegoat).
  5. Education, education, education is the key. Do everything you can to make sure line managers understand what the policy and procedures are. Use books, diagrams, videos and blogs to keep managers up to date. Make them your friends, your first line of defence and your supporters when you implement policy strictly.

Policy adherence is essential in a well-run, compliant business. And the payroll department plays a vital role in making this happen. Prepare to make a stand to always do the right thing and stick to the rules.

Hrmaster Hats Series

Hat 9- The Payroll Professional as the moral compass

The litmus test

Moral duty

It often starts with a small decision. We agree to something that falls within a “grey” area, legally or ethically. Decisions that may be marginally legal, but are in principle, unethical. Then it is easier to choose the decision with least resistance. And before we know it, we have “crossed the line”, and it is too late to turn around and change the course of events.
To compound matters, we might become silent accomplices, if we don’t speak up and challenge management on these types of decisions. The Payroll professional cannot stay quiet on moral and ethical matters. Our position as moral compass, and trusted professional, is at stake.

Crossing that line

Once the line has been crossed, it is very difficult to rebuild our purity and reputation.
Please note; I am not referring to obvious, and blatant fraud, or other illegal actions. I mean those decisions that evoke the faintest feeling of unease or unhappiness inside us. It is these issues (categorized as grey areas) that demand of us an ethical assessment of the situation.Your opinion matters

This way we can know what the right decision ought to be. It is here that the Payroll professional’s job comes to the fore. We are called to provide up-front ethical leadership. To serve as a litmus test on borderline, grey areas.

Legally right, or morally right

A decision that is legal, is not necessarily morally right. For the Payroll professional, this is often the most demanding aspect of decision-making. Sometimes the easiest option is not the right option. And decisions like these cannot be ignored. Here we as Payroll professionals are required to stand firm, knowing that while the decision being considered might be legal, it is not morally right at all. Here we are obligated to listen to our conscience and apply the “litmus” test to help with the decision.

An example: different salaries, same position.
An excellent example that comes to mind involves discriminatory remuneration practices. Salaries for employees doing the same job often varies. Despite both employees performing the exact same set of tasks and having the same job description. They produce the same (or similar) sets of results, ….yet they earn vastly different salaries!

Example — different salaries, same position?

Ethical LegalAn excellent example that comes to mind involves discriminatory remuneration practices. Salaries for employees occupying the same job role oftentimes varies. Yet, both employees are performing the exact-same set of tasks and job descriptions. They produce the same (or very similar) sets of results, …yet they earn vastly different salaries!

In this case, although this may not be an illegal practice (based on the breach of some or other labour law). However, it certainly does constitute a morally reprehensible practice (based on the simple argument of moral ethics). This, and many other examples, are the kinds of questions that all Payroll administrators would do well to regularly ponder on and/or raise with their superiors.

 

The primary, overriding question

What ought we, the payroll professional, to be doing about this?

Here are some suggestions:

  • Gather all relevant data to support your argument towards making a morally astute decision.
  • Seek to engage with your line manager in a private meeting. Do not openly dispute the merits of the issue or contest the decision with an audience.
  • By carefully explaining the underlying rationale and showing the reasons you think a particular issue is morally and/or ethically challenging, you can calmly state your case.
  • Be ready to clearly present an alternative, suitable solution that you believe to be the right decision.
  • Expect, with positive intention, to receive a revised final outcome that (fairly) takes your positive contribution into account.

Payroll professionals the litmus test

Remember that in Speak out ethicallythese types of situations, management is well within its right to insist upon only that which is legal as the basis for decisions. The job, however, of all proud Payroll professionals, is to be the moral compass, pointing management in the right ethical direction. To make our voices heard, calmy and rationally.

Therefore, the Payroll professional is the litmus test representing the values of an organisation. We are called to be brave and ethical, speaking out when necessary. Building on our reputation as the moral compass.

Coming next…Hat 10: Why the Payroll Department should be appreciated

Hrmaster Hats Series

Hat 8- The Payroll Professional as Problem Solvers

We would like to say “Well done!” – you have often had to sacrifice much, missing out on time with friends and family, to deal with problems not of your own making.
So stand tall and proud and hear from us again “Well done!”
We are committed Payroll Professionals, and always have our client’s best interests at heart.
We stare down and deal with their challenges and problems that come in all shapes and sizes.

Problems come in all shapes and sizes

Some problems creep up on you in the middle of the month: this allows you to lean back in your chair and reflect on the problem. You have time to formulate an ideal solution, based on extensive consultation with all the stakeholders. I love these problems, but sadly, they are exceptionally rare – only coming around about once a year ( a bit like Santa).

UsWe have a problemually, the problems that I deal with are the “Urgent! Have to be solved now!” issues. For example, when a line manager is standing right before you, explaining that he/she forgot to submit the additional hours worked, and as a result, the entire workforce is gathering outside threatening to ‘down tools’ if the company doesn’t remedy the situation – immediately! To compound the problem in this example, it also happens to have been brought to your attention just before closing time on a Friday afternoon!
Disaster. Or Opportunity!

Opportunity

Now is the time to ‘step-up’ and reveal your work ethic and integrity, by efficiently solving the problem. As Payroll Professionals, there are numerous opportunities to build your reputation by gaining the trust of the employees/clients. Find solution As a Payroll Professional, we often perform these mini-miracles. With a calm and steady approach, we confidently take charge of the situation and deliver the perfect solution. This inevitably puts a beaming smile on the faces of our clients. So hear again, “Well done!” Feel good about this!
However, these situations can also lead to actions that damage or destroy relationships. If the Payroll Professional presents solutions that are impractical, or have potentially appalling consequences which may only materialise down the line (say in 6 months’ time), then relationships are certain to be ruined, or at least very strained.

Deliberate over the best, most suitable solution

To prevent this, take time to ponder over the most appropriate solution, and to carefully deliberate over the various options.Ponder a solution Then, when you decide which is the optimal solution to this particular challenge, you ensure that the advice you give, is first-rate, the most fitting you can offer your clients. This is the Payroll Professional displaying their Problem-Solving super power at its best.

NOTE:  Always be legal. Always comply with company policy. Thereafter, within the constraints of these two parameters, you are most welcome to be creative in your problem-solving approach.

Coming next… Hat 9: The Payroll Professional as the moral compass

Hrmaster Hats Series

Hat 7- The Payroll Professional as Counsellor

Payroll administrators handle private, often very sensitive information. For this reason they are usually trusted by the staff of the company. They like to share their serious concerns, and trust us to give wise advice. Sometimes listening is enough. Or we will explain to them what the company policy is, and let them make up their own minds. Other times, when we give them advice , they go away knowing that we have their best interests at heart. We care. We want them to make the right decision. This is one of the roles of a Payroll professional.

Human Resources

On the financial side we might be asked questions like:

  1. What should my travel allowance be?
  2. What about medical aid?
  3. What plan should I choose?
  4. Pension fund decisions are made with advice from the Payroll administrators.
  5. We give advice on budgeting and how to balance a budget.
  6. We give advice on how to deal with garnishee orders.
  7. Advice when the Receiver of Revenue comes knocking? (ITA88 certificate)

Automated payroll

The Payroll professional really is a font of financial information.

So what do you need to know about giving finical advice?

A word of warning:

“To give financial planning advice you need to be a registered financial planner. To give tax planning advice you need to be a registered practitioner.” So please be aware of the regulations, and make sure that you cannot be accused of overstepping the mark. It is good to be helpful, but do so within the boundaries.

In the same way, as we listen to people asking for advice on dealing with garnishee orders, ITA88 certificates, or input on financial issues, make sure you deal with it from a base of Payroll knowledge.

 

5 steps to counselling an employee

  1. Listen carefully to what the employee is saying.
    • Take notes. Show that you are listening by maintaining eye contact, taking notes and above all clarifying your understanding of what is being asked.  Try and separate the facts from opinion. Do not be influenced by emotion.

businessman assessing colleague

  1. Summarise the issue/issues to check your understanding.
    • Briefly summarise the facts and if possible, list the questions or issues that need to be addressed. It is important to reach an agreement that we are all on the same page.
  1. Research the regulations/company policy or the laws of the land.
    • Now present the regulations, company policy or laws that govern the situation. If you know them and have them at hand, do it then. If you don’t, end the meeting and set up another time to continue. It is very important as payroll to base any advice you give on a firm foundation of facts.
  1. Give the employee feedback.
    • Show the employee the feedback and make sure that they understand it and are aware of the foundation that you are basing it on. Clearly explain your recommendations and why you believe the employee should take that route.
  1. Check the employees understanding.
    • Make sure the employee clearly understands what you have told him. We want to avoid the  “I said, you said” situation at all costs. This will seriously impact your credibility.

In all of this, please remember that any advice you give must be defensible when tested, either by management or by another third party. Make sure you keep notes of the interaction – just in case.

Paymaster Payroll software has a section to keep notes on each interaction. You can then upload any supporting documents to the employee’s profile. In this way you, the employee and management, have access to the interaction via the online Payroll platform.

Coming next… Hat 8: The Payroll Professional as Problem Solver

Hrmaster Hats Series

Hat 6- The importance of being TRUSTWORTHY!

Hat 6 — 3 Levels of Trust

When a Payroll professional joins a Payroll department, they will immediately understand – TRUST is vital and TRUST is earned! Your position in this crucial division of the company, and your access to confidential information, should make you realize how important it is that you are 100% trustworthy. However, this trust can also – quickly and easily – be broken because of one small error!

There are 3 spheres of trust in a company:

1. Management trusts the Payroll Professional

Consider this example: “Please keep this confidential”…said to the Payroll professional who has been summoned to the boardroom. Often this may mean bad news is coming. Maybe the official letter states “the company has decided to downsize, and we need you to calculate a redundancy package for Mr. X , who has been terminated with immediate effect. As a result, Mr. X wants his salary paid out immediately.”
Or maybe, there is good news on the horizon. Perhaps the organization has decided to pay a bonus, and the executive management will ask you to begin calculating facts and figures accordingly. Great news!

Employee trustThis confidential information is your opportunity, as a Payroll professional, to prove your trustworthiness. For instance, you will know to whom management has decided to award a sizeable bonus. Or maybe, who did not qualify for an increase in their salary/remuneration package. And they trust you not to disclose this information to any unauthorised person.
To put it bluntly, management trusts you, as a Payroll professional, to keep your lips sealed!

2. Employees trust the Payroll Professional

Employee trust 2As a Payroll professional, you have more information on any employee, than anyone else in the organization.
Example: 1 – A garnishee order alerts you to the fact that an employee is experiencing financial difficulties.
Example 2 – Or a divorce summons arrives at the office, and you as Payroll professional are immediately aware that an employee is undergoing personal problems. This might mean a possible change in marital status for that employee to deal with.

As a Payroll professional, you are privy to many secrets (say someone is having a baby, or they’re having an affair). Or someone might be considering a massive credit purchase, and you know because the retailer contacted your Payroll department to verify the employment and salary details of that employee.
Employees of a company expect the Payroll professional NOT to divulge their private issues, whether personal or related to their job.

3. External service providers trust the Payroll Professional

As a Payroll professional, you will be required to submit regular documents and reports to various government departments or private institutions. You have to report on taxation matters, divulge medical aid details, and even emolument (or garnishee) orders that will be deducted from an employee’s salary, and paid over to a creditor.
These institutions trust the Payroll professional to send the correct information, in the correct format,Employee trust 3 at the right time.
And remember, you as Payroll professional will often be contacted by financial institutions (such as banks and credit providers), to verify the employment and remuneration details of an employee.

In all 3 spheres mentioned above, you as Payroll professional will be trusted to be 100% truthful and honest. This develops your reputation as someone who is trustworthy!

So let me implore you to do everything in your power to retain the trust you have worked so hard to build up in your organization. One careless mistake…a word spoken out of turn…and trust will be broken in an instant!
Do everything you can to be 100% truthful and honest, so that all who deal with you can depend on you to be trustworthy. A Payroll professional who safeguards the confidential information you have access to, (and is entrusted to you), whether from management, employees or outside institutions.

Some useful tips to keep in mind:

  • Don’t be tempted to talk out of turn
  • Never divulge someone’s sensitive, private information (without their permission)
  • Never say “yes” when you know the right answer is “no”
  • Never be underhand in your words or behaviour (especially if it’s against the law, or a breach of company policy)
  • Be mindful of what you post on social media
  • Guard confidential documents carefully – don’t leave them open for prying eyes to see

As a Payroll professional, take pride in the trust your company puts in you, Trusted employeeand always act with integrity! This is an essential part of your job. Don’t let one careless mistake destroy all you have worked for. Remember, trust is EARNED, and very hard to restore once lost!

Coming next… Hat 7: The Payroll Professional as Counsellor

Hat 5 – The responsibility of “What if”

When management wants to know how changes will affect staffing costs, or staff expenses, the Payroll department is their “go-to” for these answers. We are trusted to give accurate information, so they know they can rely on our reports, projections and opinions to make decisions. Decisions which could have far-reaching consequences for the company. Therefore a great responsibility rests on us to provide accurate historical reports ( usually a print out from Payroll) or even to offer a projection. And on these management will base their decisions. This is Payroll’s chance to shine, to make their mark…and be sure to get it right!
When asked for a projection, it’s Payroll’s opportunity to be centre-stage. You may be asked to “run the numbers, maybe run 5 different scenarios, with 3 different minimum wage options. We would like to see how it all works out.” What if?

What if we introduced a pension fund…. What would it cost at 5% ,7% or 9%?

What if the government increases the minimum wage? To R 4500 or R 5000 or R5500?
Could we survive?

What if we gave everyone an extra day of leave…. what would it cost?

The payroll department are the “go-to people” to answer all the” what if” questions.
We do the forecasting and scenario planning. We take the data from the payroll and manipulate, and number crunch, before presenting management with a couple of scenarios to work with. If we are respected, we may even be asked to venture an opinion as to what we think the best option is.

 

How to live up to this responsibility

 

Make sure you have a payroll system that can extract data in a format that you can use. It is great when you can get the report in excel, and then work from there. If the payroll software can do the analysis and “what if” planning, even better.
Make sure your payroll data is up to date, and that you are working in the right month.
Make sure the software can provide you with the right base information so that you do the projections using the correct data.
Test your understanding of what is required. Stop, plan and then act.
Test the data before the “what if” analysis begins. Make sure you have taken into account all the variables.
Test the final conclusions for reasonableness.
Present the results in an easy-to-understand format. For instance, graphs work well. Perhaps consider a “bottom line” summary, then one can dig down if necessary.

 

And what to do if you are not asked…?

 

BE PROACTIVE! Analyse your Payroll, and look for trends. Look out for possible savings. Watch the news, so that you are up-to-date with new legislation. Do reports and present them to management, even before they ask.
Do a monthly analysis of what’s happening that could impact your payroll. Then include these in your monthly reports. Maybe add a small “Heads up” section.
For example, consider the changes in retirement funding in this country. How will it impact your payroll? Will you communicate to management the change in taxation? How will the payslip look now, since the provident fund contribution is no longer taxable?

There is a huge responsibility for us in these “ What if” scenarios. But also a huge opportunity to enhance the reputation of your payroll department. Grab them with both hands!

Hrmaster Hats Series

Hat 4 – Communicators of change

Th 5 effective strategies –

The payroll department is often tasked with the responsibility to communicate the changes agreed on by management and the unions regarding conditions of employment or changes to legislation, that impact employees. This usually means interpreting the changes and making them real and meaningful to all customers. (This may also include sending out the actual notices announcing the changes.)

Payroll is the only department able to explain how the changes will affect the employees’ take-home pay, or their benefits (eg. leave days or pension deductions). We have a unique opportunity to interact with the employees, and make sure there is a complete understanding of how the changes will impact each one personally. What a privilege!

Here is an example. In March 2016, changes in retirement legislation were announced in South Africa. If you were including life insurance or disability in your one tax-free deduction, this could change, and now become tax deductable. This would reduce the employee’s take-home pay. And of course, the payroll department is the first stop when explanations are needed around this.

Change

Five strategies to communicate change effectively

1. Use face-to-face meetings 

Nothing is as powerful as sitting across the table from your employees (or customers), and explaining in detail how the changes will impact them. Use a dummy payslip (and alternative if you have them) as a visual example of the changes, and their impact. And be ready, and patient, to answer questions and concerns. This way they will be prepared for their changed payslip.

2. Identify champions

One champion has the power to convert many. Identify a leader ( shop steward, supervisor, line manager or senior manager), and make sure they have a thorough understanding of the changes. They can be the first line of explainers, and answer the basic questions. A detailed and clear question-and-answer sheet will be very useful. Speak to management for advice, if necessary, to approach these leaders, or be proactive and cultivate relationships with the leaders in the company.

 3. Language and medium of communication

Important (and obvious), is the fact that home language is much more powerful for effective communication, compared to a 2nd language. Visual aids (eg. pictures) and simple explanations are always better than long, complicated and wordy descriptions. Ensure any hand-out pamphlets/documents are concise, and clear, and that the information is correct. Communicating the wrong facts is difficult to undo, and will negatively affect the organization and your reputation.

4. Honestly explain the benefits and downsides

It always pays to be 100% truthful, and convey ALL the facts, even if this might mean anger and outrage ( not your fault, you are only the conveyor of the facts). When explaining the benefits, do it in detail, and be sure NOT to oversell the upside. Be realistic. And in the same vein, don’t minimize the downsides.

5. Have an Action Plan

Make sure you have a clear action plan before starting the communication process. Decide WHO will communicate WHAT, and WHEN. Who will be available to answer questions, and when? Make sure everyone is up to date, and in the loop on what is to be implemented, and when. And what documents need to be signed, and by whom…

Change 2

Remember: this is an opportunity to grow relationships, and enhance the reputation of the payroll department. So, be available to answer all questions. And go out of your way, if possible, to personalize every answer, and explain how this will affect the employee.

Coming next… Hat 5: The responsibility of What if?

Hrmaster Hats Series

Hat 3 – The Gatekeeper of compliance

In a previous article, the importance of record keeping, and the access of these records, was unpacked. It is vital that the company employees know WHAT is stored, and WHERE. In this article, we will look at the importance of Compliance, and the fundamental impact this has on a business. Of course, understanding the company’s standards around compliance is important. They must also know what is expected of them regarding maintaining this compliance, and how they will be held accountable for their role in doing so.

compliance

The two parts of Company Compliance

Compliance is defined as “obedience to a request or command”.
To ensure maximum acceptance of the need for , and importance of, compliance, it is essential that everyone in the company knows what to comply with.

This is 2-fold:

  1. Compliance with Company Laws and Policies
  2. Compliance with Company Procedures.

To avoid being REACTIVE around issues of Compliance, it is important to educate all employees on this subject, and what is expected of them.

Be Proactive – and Stay Ahead.

By keeping your employees INFORMED and UP-TO-DATE, you increase the success of company compliance. Don’t rely on other people and departments, but take the lead, and consider this motto “ the education of your line managers and staff promotes high standards of compliance, leading to the reduction of deviation requests.”

7 Ways to educate/inform line managers and staff

1. Training sessions

Article - is payroll on international best-practiceKeep these sessions short and informative. Perhaps on a monthly basis, with ad hoc sessions to discuss changes and new developements. This should keep line managers and staff updated. If they understand the consequences of non-compliance, it will motivate them to complete all documentation accurately and timeously.

2. Booklets, Flyers and Notices

The Payroll professional should play a big role in the writing and regular revision of the company’s Policy and Procedure documents. These should be the foundation for any education around compliance. One way to create awareness is to deal with critical aspects of compliance. Infographics, which visually communicate the details around key areas of compliance in that specific workplace, is a useful tool. And example forms and screenshots are an innovative way of getting the employee’s attention around essential areas of compliance.

3. One-on-one Sessions

Chatting informally over coffee might help you understand why some staff are unwilling, or unable, to comply. In this way, you can explain the essential reasons for workplace compliance, and the consequences, for them and the company, of non-compliance. This is an opportunity to warn serial transgressors, that their continuous non-compliance could lead to disciplinary action.

4. Host a Payroll Webpage

Payroll webpageThis is an easy option. In a few minutes, a webpage can be created and hosted on a company intranet or secure server. A Payroll webpage allows employees to access information as they need it. This webpage content could include How-to videos, easy-to-read PDFs and Policy and Procedures updates.

Next week: Accurate keeper of information (we cover your butt)

5. Social Media

Nowadays, everyone has a cellphone, with access to Facebook, Twitter, Whatsapp and many other fun Social Media options. These Social Media apps are fantastic communication tools. For example, specific topics can be shared on Whatsapp groups created for this purpose. A Twitter account can aid employees with direct answers to questions. And Facebook is useful for hosting discussions, and passing on information. Educating your staff will be fun and accessable, if you make use of these options. Of course, the result of all this should be improved compliance levels in the company.

6. Monthly Newsletter

Consider publishing a monthly newsletter (or adding a section to an existing company newsletter) that discusses compliance-related topics. This will help spread the concept and details of compliance, across the company.

7. Remuneration Contracts

To foster increased compliance, it helps to manage expectations. For instance, it helps to print pro-forma payslips, to be signed by the employee, if a new set of conditions of employment is agreed on. And be sure to add an updated contract to this.

In summary

Do all you can, as a Payroll professional, to educate and inform employees around the fundamental importance of compliance with the company’s Policy and Procedures. High levels of compliance in an organisation, result in a positive impact on everyone.

Coming next… Hat 4: Communicators of Change – 5 effective strategies

Hrmaster Hats Series

Hat 2 – Accurate Keeper of Records

FUN FACT: Your reputation as a trustworthy Payroll professional is based on your ability to quickly, and efficiently, find requested documents or information. Even if they go back a few years, you are expected to locate the expense claim, leave application or overtime sheet.

Payroll administrators are expected to have all the answers (and they usually do).

We are the backbone of the company when it comes to reliable retrieval of documentation, and the accurate, speedy conveying of information (supported by policy).
From the senior manager, Human Resources, general management, to other employees, we in the Payroll department, are expected to have all the answers. (We are the company Super heroes, with accurate, timeous information as our superpower.)
We keep the records, and have to know exactly where to find them when asked. Quickly! And we are expected to answer even the most obscure questions regarding these records.

Examples of Questions Payroll professionals should be able to answer…

…how many overtime hours did my staff team work, from last year December, to this year – ordered by department and by week – and please calculate the difference in money paid out for this period?

…how many total leave days are still owing, and what must my department budget for?

…when is the company’s Employment Equity report due. And who earns what, and what promotions and separations have happened?

…please send me the monthly payroll reconciliation, clearly detailing all new employees, staff resignations, salary increases and net salaries paid.

…send all employee budget information for the next 12 months.

It is obvious to see the importance of the Payroll professional’s reputation to deliver accurate, up-to-date information. And this should be done as efficiently as possible.

To achieve this, the following facts must be considered:

Know what must be kept, and for how long

According to the Basic Conditions of Employment Act, the following must be kept for at least 5 years; employment contracts, time sheets and pay slips. Included in this are records submitted to South African Revenue Services (SARS) and Unemployment Insurance Fund(UIF). AND not forgetting all the leave records, leave balances and many other instructions sent to the Payroll department. This also includes salary increases, pension fund deductions, medical aid etc.

NOTE: since companies generally prefer paperless record keeping today, resulting in payroll administration being electronic, you must make sure there are policies in place regarding the evaluation and destruction of outdated data.

Correctly file/save Information

It is essential you know where everything is. Rummaging through filing cabinets or scrabbling through computer hard drives, will surely tarnish your reputation. The Payroll professional’s ability to retrieve information from online payroll system archives ( including the ability to extract information from historical databases without restoring backups) is a convenient way to extract historical reports, for instance. And if you quickly and accurately supply the requested information, you will enhance your position as an essential part of the team.

So ask yourself; have I backed up all correspondence? Is old data easily accessible? Are employment contracts and other vital documents backed up, and stored in the cloud?

Know where to locate important information (even with staff shortages)

It really helps if your administrative system is understood by everyone. And that they know where, and how to find restored backups. Do you have handover procedures that ensure the transfer of knowledge can happen efficiently? And an automated online payroll system, with easy-to-find information, will trump paper notes anytime. The ideal is accessible, convenient procedures that enhance the business process.

Know what to present, when, and in what format

Reports need to be submitted for every month, every quarter, and every year. The Payroll professional knows what is required, and when. For example, in South Africa, tax returns are to be submitted by the 7th of every month. They would also be aware that management requires reconciliation reports by the 9th of the month, and the HR manager checks leave reports by the 15th of the month.
To do this, you need to set up the automatic report-generating process on the payroll system. Then the system can electronically distribute all reports, on time! This is a sure-fire way of building your reputation as a trustworthy payroll professional.

Understand the consequences of Incorrect Information

Make sure you’re aware of the consequences of sending out incorrect information. This should motivate you to be ABSOLUTELY sure that what you send out, is 100% correct. Where consequences are serious, put in a checking system. For example;

-inaccurate reports to management lead to a breakdown in trust.
– inaccurate records mean wrong payments on termination.
– inaccurate EMP201 reports mean tax penalties.
-inaccurate interpretation of policy could result in incorrect payments.

penalty-assessment
penalty-assessment

Please read Paymaster’s article “POPI and Payroll”, to ensure that you are compliant with all 8 areas of the POPI Act. Shortcut to the article – POPI article

Coming next… Hat 3: The Gatekeeper of Compliance

Hat 1- The payroll administrator as implementer of Legislation

The Payroll Professional is driven by Legislation.

Accountable Payroll professionals do nothing unless it is prescribed by LAW. Based on Legislative prescriptions, they will calculate basic pay, overtime and sick leave. Everything they do should be guided by legislation.

Increasing Automation

As the world increases its’ reliance on Automation Software, it is touted as the solution to all our problems. And this is largely true. Modern Payroll Software programs “hard code” what legislation requires. Such as tax deductions tables and many other statutory deductions.

BUT…Exceptions!

While good software is essential to an efficient payroll department, there are exceptions where automation is unable to solve the problem. In this instance, a Payroll professional needs to interpret and implement delicate nuances embedded in legislation. For this reason, we strongly promote the skill and knowledge of the Payroll professional, who can make all the difference.
For example, when legislation requires an exception, resulting in a change to the payroll, the Payroll professional needs to check, and double check the new calculations being used. After this, they should explain the changes to their management team. They are now better prepared to implement and create earnings-and-deductions calculations. These must be in line with the most accurate interpretations of the legislation governing these calculations. Now the payroll is ready to be signed off, at the end of each month.

Conclusion

Payroll professionals are rightly held accountable for accurate interpretation and implementation of legislation relating to the employer/employee relationship.

6  Laws that Govern the Employment Relationship

In South Africa, there are 6 laws that govern the employment relationship, and more than 700 Department of Labour (DOL) inspectors that visit businesses to ensure full compliance with every aspect of these laws. When a DOL inspector arrives at a business premises, they are most likely to visit the payroll department first. Payroll administrators will be asked to produce the following records:

  1. that show the company complies with the Basic Condition of Employment Act (ie. leave days, working and lunch hours, overtime, notice pay, etc.)…
  2. that prove they comply with Industrial Council Agreements (ie. minimum wages, provident/pension funds and medical aid deductions).
  3. that the company has records of the prescribed monetary deductions for UIF, and that these deductions are submitted, on time, to the Receiver of Revenue (SARS). And not forgetting the monthly report that the DOL requires.
  4. that the company produces and keeps records of all employees’ work contracts, and that payments to all workers are accurate. The company must also produce records of required authorisations and instructions relevant to the processing of these employee salaries.
  5. that the company double checks relevant Skills Development Levy (SDL) deductions.
  6. that the company is fully compliant with all provisions of the Employment Equity Act (and that these records are kept by the Payroll department).

South African Receiver of Revenue (SARS)

In this country, SARS requires the following:

  1. All Emp201 submissions are accurately calculated and processed – ON TIME!
  2. There must be records that show the company’s bi-annual and annual submissions, that prove to SARS that they are adhering to, and implementing all relevant laws that govern tax deduction.
  3. The accurate interpretation and implementation of all laws relevant to car allowancespension fundsmedical aid tax credits, and employment tax incentives.

Payroll Professionals – the Implementors of Legislation!

The Payroll professional carries the responsibility to ensure that the payroll is set up, and managed correctly. If called upon by management, or outside organisations, they should be able to prove that their company is “legal” and complies with all aspects of SARS and other relevant employment legislation. Non-compliance CANNOT be blamed on Automation Payroll Software. The onus is on the Payroll professional to ensure that by using all their expert knowledge and experience, the payroll they manage is fully compliant with the laws of the land.

Coming next… Hat 2: Accurate keeper of records.