There is a lot written about best practice in business but not a lot about payroll best practice.
Having spent over 25 years working in the payroll space we have seen a lot of “bad practice”, much of which is the result of a lack of knowledge and understanding rather than doing something intentionally badly.
Here are a few quick tips which may help you:
- Make sure (don’t assume) you are compliant with all legislation such as the Holiday Act. As we have mentioned previously there is a lot of myth and misinformation around payroll related legislation. Just because your cousin Bob once had a business doesn’t mean he knows the law. If you are unsure get advice from someone such as employment.govt.nz or www.ema.co.nz or nzppa.co.nz
- Make sure you are capturing and keeping as much data as you can. This will ensure you can always answer a question from an employee or a labour inspector. We talked at length in an earlier blog post. While it may seem like a waste of time to keep detailed records it is the best way to protect yourself.
- Make sure you can verify the data your payroll is giving you. If you can’t drill in and interrogate the data how can you sure it is correct. Trust is a wonderful thing but when it comes to payroll having blind faith in your payroll data and how your payroll is calculating key values is a disaster waiting to happen. There could be a time when you need to explain or justify the figures in your payroll so make sure you have access to this data. A good payroll should let you drill into the figures, look at detailed history and if need be adjust for errors. This is particularly important if your payroll wasn’t developed in NZ for our legislation.
- Make sure your payroll can provide you with the information you need so that you are not doing any manual analysis of payroll data for systems such as Accounting or Government agencies. We know how much some people love their Excel spreadsheets but when it comes to payroll data the fewer times the information is touched the less chance there will be data integrity issues. The basically functionality for reporting to IRD, Statistics Department, MBIE etc should be integral functions in your payroll and when it comes to exporting to GL this is something most NZ developed payroll will handle out of the box.
- As much as you can, automate the capture and delivery of data. Again the fewer times someone has to touch (key) the data the less chance there is of error. Also with a good Time and Attendance system, all your contract rules will be able to be applied automatically which will again reduce errors while speeding up the payroll process.
- Payroll is a profession. Make sure your payroll person is valued and well trained. “Hand me down” knowledge leads to errors. For a long time payroll has been a “hand me down” role when the reality is that it is a profession managed by professionals. There is too much at stake to have it left to chance. It is also critical that your payroll person is given the opportunity to upskill, especially when there are changes in the law. Alos it pays to check with your payroll person before you make changes in contract conditions to ensure your payroll can handle the change.
- You shouldn’t have to do manual workarounds to meet the law. Hopefully, you will have covered this off when you did your due diligence prior to implementing your payroll but your payroll should allow you to meet all your obligations under NZ Law without having to jump through hoops. This is particularly true if the payroll wasn’t developed is NZ or specifically for the NZ market.
These are just some of the things you need to keep in mind if you want to get the most out of your payroll and more importantly ensure your staff are paid correctly. If you would like any tips handling any of these areas feel free to drop an email to email@example.com.