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As JobKeeper and other concerns related to COVID-19 add to the complexity of payroll, now’s a good time to review your payroll processes and ensure you’re equipped to manage change and stay compliant.
Navigate change with these 5-steps to achieving best practice payroll
28 July 2020
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5 minute read
Never have leaders of HR and finance functions been forced to juggle as many responsibilities as they have right now, and there’s no sign of that changing anytime soon. That’s because pay matters more than ever. We’re in the midst of a human crisis and business’ need to look after employees’ wellbeing. Paying employees is a part of that, but it comes with new complications.
Some of the primary concerns in payroll right now include managing business continuity planning, maintaining and forecasting cashflow, and managing the administration of JobKeeper. The recent extension of JobKeeper payments is a relief to many, but businesses still need to navigate through the changes and understand the impact.
On top of all this, there is the ongoing background noise surrounding payroll underpayments and the Federal Government discussions on industrial relations reform set to conclude in September. The pace and scale of this change is enough to overwhelm any business, but it is a lot easier to manage if you have the right processes in place. That’s why we’ve created this 5-step guide to help you achieve best practice in payroll and manage change with greater ease.
5-steps to best practice payroll:
1. Evaluate your existing payroll process and recent performance
The current crisis has put most business processes to the test. How did your payroll process perform? Did you have the expertise and flexibility you needed to manage business continuity and act quickly to leverage JobKeeper? If you outsource to a payroll provider, were they able to offer the right guidance and accommodate your new needs? Consider these bigger questions as well as evaluating your process from an operational point of view. For example, how did remote working impact your ability to manage payroll? Did you have the right systems and data security credentials in place?
If a review of the last three to four months exposes serious concerns or gaps in your process, you may find it is time to consider outsourcing or switching providers.
2. Review your policies and procedures
It is all too common to ‘set and forget’ your policies and procedures to the point they may only get a quick glance during the onboarding of new employees. However, your payroll policies and procedures should be reviewed on a continuous basis and be understood by everyone involved in your business’ payroll. Ask yourself the following questions:
- How frequently are your policies and procedures being reviewed?
- Who is responsible for keeping them up to date?
- Are they understood and applied consistently by those responsible for payroll?
- Do they adequately cover current guidelines and regulations on pay?
- When is the last time you sought external feedback or advice on your policies and procedures?
Whether your policies and procedures need a complete overhaul or simple refresh, make this a priority and involve the right stakeholders to not only develop or refine these documents, but test them. Your policies and procedures drive the accuracy of your payroll, so seeking some expert advice is a good idea too. You should also have a thorough process for rolling out and embedding any necessary changes.
3. Conduct a flash audit
Don’t let the idea of an audit discourage you. An audit does not need to be overly complex or time consuming for it to be effective. Put in place a process for independent annual flash audits and kick-off with your first one as soon as possible. These audits can be done internally or externally as long as there is a clear separation of duties between the auditor and payroll owner. Audits should include a review of processes and procedures and include a robust sample of new hires, leavers, and any employee changes where there has been a financial impact.
4. Check your contracts and Modern Awards
Failure to comply with Award-related obligations can lead to investigations, prosecutions, and hefty penalties and rightly so as employees deserve to be treated fairly. Make sure you’re meeting your obligations and doing right by your employees by regularly checking your contracts and Modern Awards. Specific questions you should be asking yourself right now include:
- Have the recent award and other COVID-19 related changes by the Fair Work Ombudsman impacted your employees and are your contracts still compliant?
- How are you managing compliance with regards to redundancies or changes in hours worked?
- Have you confirmed if your business is impacted by the Annualised Wage Changes?
5. Refresh your knowledge
Payroll is hard even without all of the recent complications. Take the time to brush up on the basics and make sure you’re across the latest best practices and regulation. The resources below are a great place to get started:
- What you need to know about notice periods
- Understanding Long Service Leave and entitlements for each state and territory
- Obligations surrounding allowances and deductions
- Determining if someone is an employee or contractor
Make it a journey, not a sprint
Knowing that payroll is a juggle already, our final tip is to focus on these things one at a time and schedule them in over the course of the year. Seek help when you need it. Also, if you’re concerned about payroll regulations or compliance or find that you need additional support with payroll right now, contact ADP to learn how we can help.
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