Through our Consulting and Warrant of Fitness work we meet a lot of Payroll Administrators. A LOT.
From all different companies, different industries and different walks of life, running different payrolls and using different processes. Yet they all have something in common. That is they rarely have “The D”.
Now when we say that someone has “The D”, we mean that the final Decision on policy or procedure lies with them.
It’s very common that decisions around payroll and HR policy actually fall under someone else – such as the Financial Controller, Operations Manager, CEO, Owner or some other Manager or Management Team.
And when we unfortunately come across many clients doing things incorrectly – be it undervaluing leave, paying cash-ups when it’s not entitled, not including allowances in leave or super calculations, or even using employee contracts that are illegal we get the response “that’s the way I was told to do it” or…
- In our industry things are a bit different so it’s easier to do it this way and my manager said it’s okay.
- Our management team authorised this
- It’s in our contracts, I have to process it like this
- All our employees are happy with this setup
- But my manager said that we had to do it this way
Thankfully once they understand what’s happening isn’t quite right they are quick to rectify the situation. The reality is the law and none of these responses will cut the mustard if a business finds itself with an employee complaint on their hands. Getting Payroll right is a big responsibility and you need to get it right as ultimately the onus falls on the one processing. So if you are in this position and being advised to do something that you know is not quite right, what do you do?
You need to Manage Up.
In most cases that we come across the Management or Executive team aren’t aware that there is a problem and are very happy to have it bought to their attention and resolved.
So here are a few tips to help you work towards a resolution.
1. Remember that YOU are the PAYROLL expert. They may run the company but you are the one doing this job day in day out. As a Payroll Administrator it is your job to make sure that your payroll is administered correctly and that employees are being paid as they should. This means understanding and being compliant with all legislation, tax rules, employment agreement requirements etc. Management rely on their teams to know their jobs, because they themselves can’t know everything!
2. Do your research on the subject and make sure you understand what your obligations are and what needs to be done.
3. Check websites: In NZ; Ministry of Business Innovation and Employment (MBIE), Employers and Manufacturers Association (EMA), NZ Payroll Practitioners Association (NZPPA), IRD In AU; Australian Payroll Association (APA), The Association for Payroll Specialists (TAPS), to name a few.
5. Get product advice from your payroll vendor about the payroll system setup and how it should be done.
6. Document what is happening at the moment, what should be happening and possible outcomes if a complaint is made by an employee. Could there be fines or penalties? Back payments to multiple employees? We have seen cases where employers have had to pay hundreds of thousands of dollars’ worth of back pays due to processing inconsistencies so take this into consideration as well as the cost of the time taken to work it all out.
7. Talk to your manager and/or request a meeting with the decision makers. Provide them with the information you have gathered above and recommend a solution – whether it is resolving an issue or making a change to company policy. If you are wanting a bit of backup talk to your friendly payroll vendor about being there with you for support and information.
Once you have this meeting there are 2 possible outcomes:
The best and most likely outcome is that your Manager/Management team is in agreement to resolve the issue and/or change the policy – Great Work!
In this case work on a plan to fix the problem. You need to establish a timeline to correct the issues, including correcting your systems if applicable and reviewing the history and making back pays where applicable. Of course it’s also really important to proactively communicate with all affected employees during this process.
If your Manager/Management team opts to carry on with the process as it is, we recommend to follow up on the meeting with an email to thank them for the time and recap on the discussion.
Include a summary of the concerns raised, the risk factors, any action points from the meeting, and the outcome that was decided upon. Include any relevant documentation that you spoke about at the meeting for their future reference. Documented processes are good for everyone, sometimes seeing things in black and white makes it more real!
“Closing off the discussion” with a follow up email means that the decision and liability is out of your hands. Keep this email (and any responses) on file – print it and save it. If this topic is ever raised again you may need this email as confirmation of the decision that was made at the time.
Whilst these circumstances are not easy, it is important as a Payroll professional that you fulfil your duties in compliance with current legislation. The trick is to take the personal and emotional side out of it and deal instead with facts, figures and outcomes to help your Managers understand the situation.
If ultimately the decision is not yours, you are fulfilling your obligations if you document the requirements and processes clearly and accurately.
Most of all be confident in your knowledge, reach out for support from your software vendor (we know a lot about Payroll!) and Go for It!