“In 2006, Snowdrop carried out a survey on the relationship between HR and payroll after it witnessed first-hand some of the difficulties that can arise if the two don’t work together.
It revealed that information delivery is often at the heart of the problem: more than 60% of payroll professionals believe HR doesn’t give them accurate information, while 54% think HR doesn’t keep them up to date. That said, the survey found both sides willing to work more closely together (96% in payroll and 85% in HR)." (Source: PersonnelToday.com)
Given such a landscape, we thought it prudent to put out there a few practical tips or best practices that would help you - the HR professional - to ensure that you keep up your end of the bargain; that is, essentially, to pass on the right information with regard to various aspects of payroll to your payroll team.
The following tips should help you achieve two goals: segregate the role of HR and payroll in the various areas mentioned as well as ensure that best practices are being followed by you, the HR, when collaborating with the payroll team.
1. Send the right employee list to payroll
You need to be aware of whether all relevant employees are in fact on the payroll of your organization and that the payout has been made to all of them. Along with the question “Have I paid everyone?”, another that needs to be asked is, “If not, why was an employee missed out/paid inadvertently?”. A common reason for rolling out an erroneous payroll is that the resignations for the month have not been considered and the payout has been made here accidentally.
Another common scenario is HR having passed on the wrong employee ID to payroll. In such cases, the employee in question may get removed from the list and not receive a payout.
The best teams avoid this by having more checks in place, wherein one individual enters the values and another verifies them for accuracy. This needs to be ensured between HR and payroll and can take care of a large chunk of human errors that creep into a company’s payroll.
2. Define a policy and process for arrears
Technically, arrears refers to “money that is owed and should have been paid earlier”.
Say a new employee joins towards the end of a month. Let’s assume his/her joining date to be the 29th and salary payout date to be 31st. Here, a decision is required to be taken by the HR as to whether this employee will be paid for the 3 days worked in the current month at the end of the current month or the next month, along with the salary for the next month.
If the decision is in favor of the latter, then care has to be taken to put in place a notification to alert you, the HR, about this payment when the payroll for the next month is being processed. In case you go with the former option, then arrangements have to be made to add the new employee to the current month’s payroll without fail.
This decision then needs to be included in the policy and a process created around it to execute it smoothly.
3. Calculate deducations accurately
If an employee takes a loan or salary advance from the company or has a recovery due for a damaged asset, the responsibility for collecting the amount rests on the concerned HR. Commonly seen are scenarios where it slips the HR’s mind to do this. The result is that the payroll team may decide to deduct the entire amount due from a single month’s salary. This affects the employee due to the possibly heavy impact on his/her net salary. The HR is required to provide the necessary details, including the recovery period, to the payroll team.
Also to be borne in mind while making recoveries is that statutory deductions have to be made even if the employer is able to make only partial recoveries in a given month. In other words, recoveries cannot affect statutory deductions/contributions.
Every employee hates to see discrepancies in the take-home pay. So, it is the role of the HR to ensure that all employees in the organization receive the right/sufficient take-home pay even after making all the necessary deductions.
4. Complete salary revisions 10 days before the due date
Different companies may opt for different salary revision cycles. Sometimes this coincides with the work anniversary of the employee, at other times it may follow the financial year or vary based on the level or grade of the employee in question. Whatever the case, you need to plan to complete the process of arriving at the revisions, for eligible employees, around 10 days before the due date.
This time will be utilized to get budget sanctions, the necessary approvals from the employees’ business managers, and then to work with the payroll team to compute arrears, the impact on taxation and statutory contributions, recoveries, etc. The effective dates are also to be accounted for here if arrears are present.
Following this, the salary revisions (usually based on CTC) need to be translated to the salary structure of employees and the changes uploaded into the system. All this requires at the very least a week’s notice.
Apart from annual salary revisions, salaries may change in another scenario - with the confirmation of an employee. You need to be cognizant of this change and track it proactively with the help of the employee’s business manager. The effective date of salary change here may be the exact joining date of the employee. This information is to be collected by you and the necessary advice passed on to the payroll team.
5. Pick the software that's right for you
Every organisation has core HR functions in some form or another. But the fact remains that there are tasks that are repetitive and time-consuming. The challenge of every HR is to infuse simplicity, speed and efficiency into their operations wherever possible.
A cloud-based HR software can help streamline HR operations and free up time for high-value work. When you choose a multi-functional software, you get to realize its benefits across an employee's lifecycle in the organisation. Besides a paperless-onboarding function, the platform should be able to handle all the essential core HR tasks. Payroll, leave and attendance management modules are indispensable. Employee communication, reminders and alerts are some of the nifty add-ons that add greater value to any HRMS.
Employees need to be offered the power to help themselves. An employee self-service (ESS) portal does just that. The portal allows any time, anywhere access to features and data. Repetitive tasks like marking attendance, applying for leave and generating salary slips should become a breeze for the employees. A mobile app complements the portal by offering employees the facility to perform the aforesaid tasks remotely and instantly from their mobile devices.
Last but not least, the software must have the option to display/generate all the useful and mandatory reports for HR and the leadership.
