Common Payroll Problems

Payroll issues can cause dissatisfaction in an organisation when employees aren’t paid on time. Employees may become frustrated when a holiday delays their payments or when they aren’t paid before debit orders start to go off their account – putting them in possible overdraft and exposing them to expensive bank charges for ‘bounce back’ funds.

Some of the most common payroll problems are as follows:

  • Holiday, termination and other delays:

    Payments made are generally reflected in terms of business working days. Imagine distributing salaries bi-weekly, twice-monthly or monthly in the month of April and neglecting to take note of the South African public holidays that could delay the processing of payroll.

    An organisation’s payroll system should make provision for public holidays that could delay an employee receiving their salary – if the employee was relying on that salary to make it through the holiday or long weekend they will experience extreme frustration and this has a negative impact on company morale.

    According to the South African Basic Conditions of Employment Act, when terminating an employee without a notice period, the employer must pay the employee the amount the employee would have received if they had worked the full duration of the notice period. However, if an employer decides to waive an employee’s notice of termination, and unless other arrangements or agreements have been made between both parties, the employee should receive their remuneration as explained above.

    Ensuring that the employee is paid the correct amount when it is due to them is a payroll issue that needs to be handled carefully to avoid law suits and action taken against the company. The payroll system needs to have accurate information regarding how long the employee worked for the company and the relational amount due to them.

  • Time management:

    Organisations operating on a ‘clock-in, clock-out’ (time and attendance management) system need to ensure that the payroll system receives accurate, indisputable normal and overtime hours worked by employees. If an employee has forgotten to clock-in or out on a specific day – how is this reconciled with the payroll? What procedures are in place to alert payroll to time theft? How does the organisation ensure that each worker is being compensated accurately and fairly for their time worked

  • Leave Management:

    The payroll needs to be updated if an employee takes unauthorised leave. It also needs to be alerted as to whether or not leave the leave that is being taken by the employee is paid or unpaid leave.

  • Benefits Management:

    An organisation may choose to compensate its employees in indirect fringe benefits – these may include insurance benefits, housing benefits, car benefits or leave benefits.

    Thus, the payroll system needs to be able to manage such indirect benefits. For example, employees receiving leave benefits should not have any deductions, as unpaid leave, from their salary.

    An organisation may also choose to motivate their employees with rewards. These rewards may include a salary increase, a financial bonus or even a paid holiday. Such indirect benefits, financial bonuses and commissions also need to be easily managed by the payroll system.

  • The Human Resource Information System:

    Sometimes payroll issues are not always linked to human error. The HRIS system being used to capture employee data may be outdated or unable to cope with the scalability of the organisation.

    The SmartHR HRIS system assures that none of the above payroll issues are experienced because it is a completely configurable solution, SmartHRPayroll contains comprehensive functionality, such as:

  • It accommodates any rule, requirement or calculation, regardless of complexity.
  • It enables organizations to easily define pay periods, deductions, job rules and calculations and to run multiple payrolls with specific payroll rules.
  • All payroll rules are date sensitive to the date of the pay run, executing user-defined logic, as dictated by the payment method.Rule-based calculations simultaneously support multiple labour contracts, making it possible to generate a single payslip for employees with multiple jobs.
  • Payroll adjustments are automatically and accurately computed resulting in cost and time savings, as well as reduced errors.
  • It simplifies employee record setup for complex or changing payroll situations by quickly entering an unlimited number of pay codes, deductions, and benefits when setting up a new employee record.

The SmartHRPayroll is also part of the SmartHR Enterprise suite of systems, incorporating core, talent, pay, time, self-service, document management, analytics and many other features and functions to track, control and increase the productivity of your workforce.
The SmartHRPayroll operates with its own database but is interconnected through synchronised, seamless integration technology to the other components of the SmartHR Enterprise system. Or alternatively it can be integrated to your existing HR or time management legacy systems.

The SmartHR Enterprise systems are fully integrated using the SmartHR Integration Framework:

  • It accommodates any rule, requirement or calculation, regardless of complexity.
  • It enables organizations to easily define pay periods, deductions, job rules and calculations and to run multiple payrolls with specific payroll rules.
  • All payroll rules are date sensitive to the date of the pay run, executing user-defined logic, as dictated by the payment method.Rule-based calculations simultaneously support multiple labour contracts, making it possible to generate a single payslip for employees with multiple jobs.
  • Payroll adjustments are automatically and accurately computed resulting in cost and time savings, as well as reduced errors.
  • It simplifies employee record setup for complex or changing payroll situations by quickly entering an unlimited number of pay codes, deductions, and benefits when setting up a new employee record.
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This integration of critical payroll, human capital and time management functions means that the nirvana of “a single source of truth” for employee master and payroll data becomes a reality with SmartHR Enterprise, without having to spend enormous amounts of money on complex data warehousing solutions.Designed in Microsoft .NET and aligned with Microsoft Technologies, SmartHRPayroll is a world class payroll solution, powered by Xpedia, to address all global labour and income tax regulations, while maintaining the flexibility required by the dynamic business.The SmartHRPayroll application allows for a multi-Country, multi-Location, multi-Currency and multi-Company set-up, a feature unparalleled in today’s payroll market.

The aim of improving any company payroll system is to ensure fair and accurate distribution of wages and salaries which will improve company morale and trust in the company by employees.

Sources:

http://smallbusiness.chron.com/payroll-issues-3572.html
http://www.labour.gov.za/DOL/legislation/acts/basic-guides/basic-guide-to-annual-leave
http://www.labour.gov.za/DOL/legislation/acts/basic-guides/basic-guide-to-family-responsibility-leave
http://www.labour.gov.za/DOL/legislation/acts/basic-guides/basic-guide-to-maternity-leave
http://www.labour.gov.za/DOL/legislation/acts/basic-guides/basic-guide-to-termination
Du Toit, G. S et al. Introduction To Business Management. 9th ed. Print.