COMPLIANCE
Getting payroll right first time
Helen Hargreaves MSc ChFCIPPdip, head of payroll, MBKB, provides an insight into why it’s so important to ensure payroll is right first time, every time
W hen I started writing this article, a line from a classic Gerry Rafferty song I loved in my teenage years was going round in my head, “If you get it wrong, you’ll get it right next time”. After all, nobody’s perfect, everyone makes mistakes, don’t they? But in payroll, getting it wrong can have consequences, often big consequences, which is why we must strive to get it right first time, every time. Payroll is complicated. And people’s livelihoods and business reputations are at stake if you get it wrong. So, it’s important that we, as payroll professionals, understand the implications if we don’t get it right first time. From an employer perspective, payroll errors can cost businesses a fortune in fines and penalties, on top of the reputational damage they may suffer. Never is this truer than when the Department for Business and Trade (DBT) publishes its national minimum wage (NMW) ‘name and shame’ list. The clue is in the title; the DBT is well aware of the embarrassment caused to businesses named on that list. 202 employers, including several household names, were on the latest list published in June this year, including Marks and Spencer (M&S) and Argos. An M&S statement said, “Like many other organisations, M&S is only named in the list because of an unintentional technical issue from over four years ago. This happened simply because temporary colleagues were not paid within the strict time periods specified in the NMW Regulations and was remedied as soon as we became aware of the issue.” A similar statement was issued by Sainsbury’s, which now owns Argos. Their
spokesperson said, “Back in 2018, a payroll error was identified which affected some Argos store colleagues and drivers and dated back to 2012, before Sainsbury’s’ acquisition of Argos. We launched an immediate investigation, working alongside HM Revenue and Customs (HMRC), and put this right at the time. Since then, we have completed the integration of Argos
research went on to reveal that, of those respondents who experienced incorrect or late pay in the previous 12 months, 61% had been financially impacted in multiple ways. A quarter of those impacted found they couldn’t pay essential bills and one fifth said they could barely afford to pay for food. If that doesn’t strike home the need to get payroll right first time, I don’t know what will. Common payroll mistakes include: l not tracking employee hours, shifts and overtime l using the wrong tax code l overpaying those off sick or on parental leave, or underpaying if payroll isn’t aware they’ve returned l relying on payroll software without checking its accuracy, or ensuring those using it understand how it works l not keeping up to date with frequent legislative changes l being unaware of the intricacies of NMW legislation, especially understanding when it is and isn’t permissible to deduct for elements such as uniform, food and even salary sacrifice. Payroll is such a complex profession, there’s so much that can go wrong, and just one small mistake can leave staff overpaid or underpaid. The best way to avoid these errors is through careful planning, good record-keeping and knowledge of the latest legislation, along with properly documented procedures and well trained, knowledgeable staff who keep their continuing professional development (CPD) up to date. I’m not sure Gerry Rafferty’s song would have been as successful if the words had been, “Never get it wrong, just get it right first time”, but it certainly works as a payroll mantra. n
onto Sainsbury’s’ systems which will prevent this from happening again.”
Both organisations identified and corrected these mistakes, yet still their reputation has now been tarnished because of a mistake made years ago. But even more critically, it’s important to remember that alongside the corporate embarrassment and financial penalties suffered by the businesses, there are employees who have been underpaid every time the NMW rules were broken. In 2022, payroll software provider MHR published research which found that 91% of UK and Ireland businesses make payroll errors each month. This can have a direct impact on employees, especially during the current cost-of-living crisis. The “But in payroll, getting it wrong can have consequences, often big consequences, which is why we must strive to get it right first time, every time”
| Professional in Payroll, Pensions and Reward | September 2023 | Issue 93 30
Made with FlippingBook - Online magazine maker