Are you getting the most from your payroll system?
Have you ever taken your vehicle in for a warrant of fitness only to be told that it had failed and that there were several issues that needed some urgent attention? You were certain that everything was fine and that the vehicle would pass the toughest of inspections.
Just like a vehicle, your business can have areas that you take for granted that may actually require your attention.
Payroll is a business-critical function that often gets over-relied on and under-invested in. A payroll health check can reveal issues that need addressing, as can a warrant on your vehicle.
So what sort of things can be lurking in your payroll?
The major issue I find when undertaking payroll health checks is the underpayment of Bereavement, Alternative and Sick Leave as well as payment for a Public Holiday not worked.
The payment for these types of days, must be paid at the employees Relevant Daily Pay, if that can be calculated, or the Average Daily Pay, if Relevant Daily Pay cannot be calculated.
The Relevant Daily Pay, is the amount the employee would have earned if they were at work on that day. This payment includes taxable allowances that the employee would have received, had they worked on that day.
The Average Daily Pay, is the amount the employee earns on average. It looks at the previous 52 weeks and divides the gross earnings by the days on which those earnings were earned.
In all cases the payment amount must be looked at on a case-by case. Each time an employee takes one of these leave types, a payroll operator must test whether Relevant Daily Pay can be calculated, if not then Average Daily Pay can be used.
Other issues, include non-compliance due to incorrect annual leave entitlements, incorrect sick leave entitlements, or employees not being awarded an alternative holiday for working on a public holiday, when that day is the employees ordinary working day.
If you want an assurance that your software and payroll systems are correct, then please give me a call.