Payroll is a complex beast, regardless of company size and structure. Whether you have 1 employee or 10,000, staying abreast of tax legislation, regulatory reporting, pension administration, as well as shifting national minimum wage rates, and other complexities, can be a challenge. It is, however, vitally important that your employees are properly compensated at month-end, at the right rate, and compliant with local legislation.
At Qualitas Payroll Services, we talk to businesses large and small who are taking the leap from manual in-house processes to payroll automation with us. Not only are these businesses creating productivity gains and allowing their team to leave laborious admin in the past, they’re also protecting the business from the risks associated with the some of the most common mistakes manual in-house payroll teams can make.
These payroll errors can be highly detrimental to your organisation’s reputation and bottom line. After all, your teams have worked hard all month, correct pay is one of the most basic ways of showing them that they’re an important part of the business.
Here are the most common mistakes in-house payroll providers can make:
1 – Incorrectly classifying employees
Incorrectly classifying your employees can impact their pay packet in the form or over-payments or under-payments. While this of course can create reputational damage and cause mistrust and employee dissatisfaction, there are also wider implications too. Failure to classify your employees properly can also leave the organisation open to discrimination claims or in trouble with HMRC or other regulatory bodies.
2 – Not paying wages on time.
All of our lives are set up around our pay dates. Direct Debits, standing orders and savings pots are all set up to deduct after payday to ensure our financial lives are in order. Missing a pay run and failure to pay your team on time creates employee dissatisfaction and financial upset, and can get you in trouble with the regulators too.
3 – Wage miscalculations
Even more prudent today with the ordinary worker’s disposable income and ability to save compromised by the cost-of-living crisis, wage discrepancies can impact your employee’s ability to meet the costs of their essential bills like mortgage or credit agreements. This can increase life administration and, in some cases, lead to fines. This is before we consider the impact to the business as payroll services attempt to repair the error(s).
Some of the wage miscalculation errors in-house payroll teams make include;
- Paying the wrong amount (over-payment or under-payment)
- Not including new starts in the pay run and missing their first wage
- Miscalculating or wrongly attributing payroll deductions
- Not paying correct holiday pay, maternity pay or sick leave.
- Failure to track hours worked and overtime entitlement properly
4 – Failure to track hours worked and
Failure to track hours worked and overtime hours can lead to overpayments or underpayments, and open a can of worms for corrections. Like points 1-3, these can be costly to the company in terms of time and resources to repair the errors, it can also damage employee relations and cause a lot of emotional and financial upset for the impacted worker.
5 – Not reporting taxable benefits and expenses.
As every payroll professional knows, employee compensation is complex, and extends beyond base salary and any overtime or bonuses paid. To keep the business and your employee compliant with the taxman, be sure to report all other financial benefits in the form of company vehicle, stock options and gift cards.
6 – Dysfunctional record keeping
We’ve left this to last, as it’s the precursor to all of the mistakes covered above.
Dysfunctional record keeping in payroll – like most other business functions – is a huge red flag. With so many SaaS solutions and low cost per head outsourced payroll providers there’s no reason for any business for relying on manual processes, clunky spreadsheets and paper record keeping. Dysfunctional record keeping leads to the mistakes covered in this article, and makes uncovering mistakes all but impossible.
7 – Inaccurate wage slips
Accurate wage slips are vital for employees to manage their finance and tax obligations correctly. The smallest of errors can have big impact, incur penalties and damage good employee relations.
Get payroll right, ever time by outsourcing to a payroll provider
To save time on payroll processing and prevent the risk of human error, why not automate and outsource payroll services to a to a third-party specialist, who manages the entire process for you?
Considering outsourced payroll? why not get in touch with the team at Qualitas today for a no-obligation quote and explore a bespoke package around your specific requirements and get you started on a transformational outsourced payroll service today.