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04:05 GLOBAL PAYROLL

Selecting

ISSUE 1 I 2024

CANADIAN FIASCO ConseneLes nobis es eaque pra ne que dictatumquae aut lam et faciis maiores.

BEYOND NUMBERS: Empowering People

GLOBAL PAYROLL AND HR Essential Guidelines for Selecting your Perfect Partner

AFRICAN PAYROLL TRENDS Payroll Trends in Key African Markets

Through Payroll Transformation

GLOBAL PAYROLL MAGAZINE

Foreword

Welcome to the debut issue of 04:05 and the start of an exciting new chapter for the GPA.

04:05 is Global Payroll Day and 04:05 is an online magazine that uplifts global payroll industry voices. The wizardry of payroll often happens behind the scenes, it’s so important that we champion the achievements of our community and the remarkable individuals within it. Every month industry leaders and respected payroll professionals will offer their perspectives on contemporary payroll issues and share their wins, advice and challenges to give us a window into their region of the world. We will include pieces from writers from across the globe to make this a truly inclusive publication that represents us all. Following the success of the GPA’s six-part Phoenixed podcast series documenting the Canadian government’s botched payroll transformation project and its ongoing impact, our debut centres articles about getting payroll right. From selecting a great partner to protecting employee data and - wherever you are - compliance, compliance, compliance.

In this month’s cover story Beyond Numbers: Empowering People Through Payroll Transformation , Victoria Thatcher gets behind the headline-grabbing payroll system failures of recent years to focus on the humans beyond the payslips, while Ayşe Nazmiye Uça guides us through The Birth of the Turkish Payroll Association . Features to look for include our monthly columns: Jeni Morris’s straight-talking and informative NMW Agony Aunt and the witty Diary of an HR Manager plus articles with regional insights from all over the global payroll community. 04:05 is not an ordinary name for a magazine, however, it is the perfect name for THIS magazine where we will showcase the wealth of knowledge that global payroll professionals have and discover the huge range of experiences that happen under the payroll umbrella. 04:05 is not an ordinary name because we intend to be extraordinary, just like the people of payroll!

CEO Global Payroll Association Melanie Pizzey

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08 Phoenixed

Inside Canada’s payroll disaster

12 Beyond numbers

Empowering people through payroll transformation

18 Global payroll and HR

Essential guidelines for selecting your perfect partner

22 Payroll trends in key African markets

Africa’s economic landscape

28 Employment Innovations Protecting sensitive employee data 32 Payroll compliance in the Middle East Understanding the diverse payroll landscape 36 Green Pay Sustainability is no longer a trend or an add-on 40 Cyber Crime What stands between employee data and cybercriminals? 44 Payroll in a globally remote world The increase in globally remote workers since the pandemic 54 Evolution revolution Changing the way we approach in-office working

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GPA Brand Guidelines 01.01.24 CONTENTS 58 Turkish Payroll Association The birth of the Turkish payroll Association 62 Maternity and paternity leave in Nigeria A comprehensive guide for employers 66 Hiring an American U.S. practitioner perspective: Multistate payroll tax considerations 70 UK Payroll Looking towards another turbulent year 74 Off-payroll working What’s changed ALSO IN THIS ISSUE 06 NEWS Interactive global payroll news 26 Agony Aunt Minimum Wage, maximum support 48 The Global Payroll Awards The shortlist! 78 Diary of an HR Manager 80 Webinars The latest global and in-country payroll topics and trends 82 Find a vendor A comprehensive list of suppliers to the global payroll industry Logo Don’ts A strong identity depends on a consistent presentation. Misuse of the logo may cause people in the marketplace to misinterpret or fail to easily recognize the brand. When using the GPA logo avoid the misuse cases that are illustrated on this page. 12 36 70

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AUSTRALIA

AFRICA

Financial impropriety probe into former EAC boss begins

Mining industry SJSP case withdrawn after direct jobs offered

GLOBAL

Mercans triples Global Innovation Center R&D resources

AUSTRALIA

Business groups demand cap on minimum wage increases

USA

Colorado will be first state to enact comprehensive AI legislation

Virgin Atlantic cabin crew sue airline alleging unfair dismissal

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MIDDLE EAST

Paternity Leave (Bereavement) Act passes into law

PAM provides shelter for expat workers and incentives for young nationals

Click on the interactive map to view other world news

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6 Less from t Pay Di

There’s much for business leaders to learn from the Canadian payroll system’s failings.

When the Phoenix Pay system was rushed to launch in 2016, tens of thousands of Canadian civil servants were paid incorrectly — or not at all. Eight years later, the costs have reached more than $3 billion, and the system still hasn’t been fixed. Because the payroll client was the Canadian government, much of the discussion and investigation around Phoenix pay is in the public domain, offering a rare opportunity to get inside a payroll transformation project that went off the rails. Phoenixed - the investigative podcast from the Global Payroll Association and Storythings about the Canadian government’s botched payroll transformation project gets into the

Author: Grace Dobush

GLOBAL PAYROLL MAGAZINE

Listen to the podcast

sons Learned the Phoenix isaster

details of how and why it didn’t go as expected. Here are the biggest lessons learned for the payroll community:

the enterprise pay coordinator for the Government of Canada.

2. Payroll professionals need to be involved in every transformation process : The procurement process in large institutions often involves people selecting a solution without a comprehensive understanding of what’s really needed. “Executives, as intuitive and smart as they are, often have the view that this — paying people — just happens and everything reaches the payroll department ready to press a button and calculate. And they grossly underestimate the complexity of getting that data to payroll,” says Graham Jenkins, a global payroll consultant based in the U.K.

1. Payroll isn’t just about cutting cheques: Upstream and

downstream processes have to work in perfect synchrony to make perfect payroll possible. So any changes to a payroll system need to involve every department providing or receiving information in the development of new strategies and change management to ensure the right information reaches the right people at the right time. “It’s not just a pay problem. It’s an HR problem. It’s a data problem. It’s a management problem. So this situation of ours has multiple facets that we’re going to have to address,” says Alex Benay,

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“Members of the payroll community around the world have countless examples of how payroll transformations went wrong or just barely avoided disaster.”

3. Testing is non-negotiable : Despite high error rates during testing, the Phoenix executives pushed the system live in early 2016, due to political pressures or the misconception that fixing issues after launch would be cheaper than waiting. In reality, taking time to get the payroll system right before a launch is almost certainly going to save money down the road. To wit: The Next Gen HR and Pay solution is carefully being tested in select departments before moving ahead. “So the last six months for us have been about working with seven departments to actually be in a room and start standardising processes,” Benay says. “I’ve approached this personally in the mindset of ‘we will not do another big bang, and we will do this incrementally.’” 4. Don’t discount institutional knowledge : When the Phoenix pay executives pushed the system to launch in early 2016, it was partly because they were trying to achieve cost savings from anticipated workforce adjustments. In 2012, the Canadian government’s payroll workforce was composed of 2,000

compensation advisors working in more than 100 government departments and agencies. Over four years, about 1,200 of those positions were eliminated, and 460 pay advisor positions were created in Miramichi, a move that had politica l reasons. Previously, compensation advisors spent about 18 to 24 months in training. But some pay advisers in the new payroll centre in Miramichi received only a few days of training before getting to work. That was a recipe for disaster. When the pay problems started piling up in 2016, the government had to open satellite pay offices and re-hire some of the laid-off compensation advisers to manage the workload. 5. Configurations, not customizations : Building out custom solutions is a dangerous game when it comes to long- term support for a payroll system. As the Canadian government is working on the NextGen HR and Pay project, its partners are taking the lessons from Phoenix in stride. “Customization is when you take software and you manipulate it specifically for one customer, and then that customer is responsible for

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maintaining those customizations. And that can be very, very complex and difficult,” explains Justine Janssen, Chief Strategy Officer of Dayforce. “In the case of Dayforce, it is a single application where you’re doing configuration. You’re going in and you’re using dropdowns and choices in the solution to build out the rules that ultimately drive the configuration or the management of the CBAs. So we, Dayforce, maintain our solution, and it’s not up to the Government of Canada to maintain their individual customizations.” 6. Remember the people receiving the pay : The Phoenix debacle underscores the importance of trust between organisations and workers. This $3 billion problem only accounts for the cost to the government — tens of thousands of public servants experienced real losses and stress from underpayments and overpayments. “My longest period of no payment was 68 days, and that’s including government pay and disability,” recalls Jennifer Carr. “I was a single mom — I still am — of three children, single income, you know, make over $100,000 as a public servant, and, you know, I am crying in my living room, trying to get anybody just to give me something so that I could pay my bills.” In this time of talent shortages, organisations need to do everything they can to build trust and foster engagement with their associates. Getting pay right is the No. 1 item on that list.

Sadly, the failure of the Phoenix pay system and its ongoing effects are not an isolated event. Governments, businesses and organisations in Australia, San Francisco, the U.K. and Papua New Guinea have all recently experienced pay scandals. Members of the payroll community around the world have countless examples of how payroll transformations went wrong or just barely avoided disaster. In the end, the Phoenix pay story underscores the importance of taking payroll seriously and making sure that payroll leaders are at the table when making big decisions. All episodes of Phoenixed: Inside Canada’s Payroll Disaster are available to download now wherever you subscribe to podcasts. The GPA welcomes your feedback on the series to ensure that the story of this payroll scandal effects change.

Author: Grace Dobush

Grace is the managing editor at Storythings, which co-produced the Phoenixed podcast. Her journalism career has included

work for Fortune, Handelsblatt, Wired, Quartz and the Economist, plus custom content for organizations including Cisco and the Urban Land Institute. She’s a proud Midwesterner based in Berlin, Germany, since 2017. Learn more about Grace here.

Beyond Numbers: Empowering People Payroll Transformati 04:05 ISSUE 1

GLOBAL PAYROLL MAGAZINE

e Through ion

In the era of digital transformation in payroll, are we at risk of forgetting what is at the core of payroll: the humans behind the payslips?

Author: Victoria Thatcher

An ever-changing landscape Only when you reflect over the past 20 years do you realise just how much the landscape of payroll has changed. We’ve had the introduction of auto-enrolment and RTI as well as COVID and the challenges brought to businesses overnight with furlough and global mobility, bringing the need to understand very complex legislation in a matter of days. And in the ever- evolving world of payroll, we are seeing no signs of the changes slowing down either! With digitalisation we are seeing legacy payroll softwares being discontinued, more and more cloud- based softwares coming to the fore, mobile apps to update personal details and benefits, employee self-service and AI to answer payroll queries.

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Transformation gone wrong The Phoenix system, recently covered by the GPA in a series of podcasts, was a decision made by the then PM Stephen Harper and his Conservative government intended to streamline processes and reduce payroll operating costs for the Canadian government by consolidating multiple legacy systems into one integrated platform. The project, however, was plagued by a series of missteps r ight from its inception and ultimately

One topic that is dominating industry conversations like never before: payroll transformation. Across sectors and organizations of all sizes, the desire for modernized payroll processes and systems has become a hot topic for all. “Payroll at the push of a button”, “payroll made easy” and “simplified payroll” are just some of the catchphrases being thrown around daily, and who wouldn’t be attracted to that? What is payroll transformation, and why? Payroll transformation is the strategic overhaul of payroll processes, leveraging technology to automate tasks, improve accuracy, reduce costs, and provide increased transparency around one of the biggest expenses of any business - payroll. And the benefits of it are enticing; streamlined processes to free up resources for other strategic initiatives, reduced error rates, reduced admin burden, enhanced data security and improved employee satisfaction. Sounds simple, right? It is a complex process, involving much more than simply updating software or implementing a new technology or process. It requires in-depth planning, coordination, and consideration of factors such as stakeholder engagement, change management and crucially – data management. It is a costly process, but investing in planning and specialists experienced in transformation projects will mean your project costs you much less than if you don’t, and we can look at the Phoenix system in Canada as a perfect example of this.

“As of 2023, it is paycheck to paychec same boat, relying correctly each perio

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The Human Damage The damage is much more profound and far-reaching than that. Almost overnight, thousands of hard-working and dedicated employees who had given years of their lives as public servants were thrust into financial hardship when they were paid incorrectly and many were not paid at all. Bills went unpaid, thousands of hours spent on calls with the CRA trying to get a reprieve from tax debts, homes were lost, marriages left in

came down to 3 critical points: inadequate planning, rushed implementation and insufficient testing. What started out as a $5.7 million project, and with an estimated saving of around $70 million, has cost the Canadian government a whopping $2.2 billion to fix without even fully rectifying the issues to date. But the monetary value, nor the reputational damage, of correcting the problems does not reflect the true cost of the botched project.

s estimated that 65% of Americans are living ck, and a third of the UK population is in the g on their employers to process their salaries od to ensure they can afford to put dinner on the table for another week or month. “

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ruins, children left homeless: the psychological impact brought by the fallout of the issues ran so deep that people were hospitalised, the pressure pushing one lady to take her own life. As of 2023, it is estimated that 65% of Americans are living paycheck to paycheck, and a third of the UK population is in the same boat, relying on their employers to process their salaries correctly each period to ensure they can afford to put dinner on the table for another week or month. This is the reality of payroll, the impact when it goes wrong and why I have always believed payroll is a caring profession. We are the relief when they see their payment has credited their bank accounts properly, we are in people’s homes, at the dinner table with them each evening, on the school trip they’ve been saving up to send their children on. Yet we are hearing an increasing number of big names in the news, rushing their payroll system implementations, or not investing in them properly and the result is financial hardship and ruin for their employees. To many, payroll is just numbers and transactions. For CEOs and CFOs, it is the biggest cost to their business and often the first area to be targeted when cost cuts are needed. But payroll is much more than a transactional service. At its core, it is about the hard- working individuals who contribute their time, skills, and dedication to the success of the organisation. It is also the critical touchpoint for employee

experience and satisfaction and by ensuring a smooth transition and completion of any payroll-related project you are not only securing your organisational reputation but also the happiness of the people who keep your business functioning. Having recently completed a transformation project of my own to migrate hundreds of businesses from 5 payroll softwares into 1, I understood that the success of the project relied not only on the efficiency of the new system and the processes implemented but also on the well-being and satisfaction of the employees impacted by the change, and so they remained at the heart of every decision we made and at every step of the project. Planning is Everything Following the disastrous launch of the Phoenix system in 2016, the Canadian Government has acknowledged that the project was rushed. Insufficient time was allocated for preparation and testing, and this directly contributed to the failure of the implementation and ultimately destroyed their reputation as an employer and the trust between them and their employees. This is also true for other big brands such as Asda and Next who have hit the news in recent years, their failed implementations publicised for all to see. It is easy to get blinded by the data or carried away with the thought of saving millions of pounds, however, we must remember who is at the heart of it all:

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“It is easy to get blinded by the data or carried away with the thought of saving millions of pounds, however, we must remember who is at the heart of it all: the human beings. The employees.”

the human beings. The employees. Whilst it may be tempting to cut corners or rush the process because there is an urgent need to get a project over the line, cut costs or whatever drives your own transformation, investing time and resources upfront really is crucial for laying the foundations of a successful project. Investing in a team of specialists as well as thorough planning and robust

project planning can avoid costly mistakes and disruptions in the post- implementation phase and ensure the success of both the project and the business. By ensuring that payroll transformation is done right, you will not only empower your employees but also fuel the success and growth of the entire organisation.

Author: Victoria Thatcher

Victoria is a Chartered Member of the CIPP with 18 years of experience in the payroll industry, known for her dynamic leadership and proven ability to drive business growth and profitability. Passionate about enhancing payroll operations, she has been instrumental in aligning them strategically with broader business objectives, thereby increasing their value within organisations. Victoria’s mentorship and strong leadership have played a pivotal role in nurturing talent and driving professional growth within the industry. Committed to advancing the payroll industry as a whole, Victoria actively engages in initiatives aimed at supporting and developing others. Whether through mentoring programs, industry associations, or speaking engagements, her dedication to sharing knowledge and fostering positive change reflects her passion for shaping the future of payroll.

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When it comes to global payroll and HR management, the selection of a suitable service provider or partner holds paramount importance. Global companies must meticulou choose a provider that aligns with their needs and can effectively navigate the complexities of international payr and human resources.

Essential Guidelin Selecting the Perf Payroll and HR Pa

The following guide discusses indispensable tips designed to assist payroll and HR professionals in making informed decisions when selecting the right global payroll and HR partner:

Comprehensive Understanding of Global Regulations: Always look for a partner with a profound understanding of the intricate web of global payroll regulations and compliance requirements. The right provider should have the expertise to navigate the legal complexities of various countries and regions, including tax laws, labor regulations, and data protection requirements.

Author: Helios

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usly

roll

nes for fect Global artner

Scalability and Flexibility: Your company’s growth and evolving needs are critical. Opt for a partner that can scale their services to accommodate your needs accordingly. Whether you are expanding into new markets or restructuring existing operations, a flexible partner can seamlessly adapt to changes and provide tailored solutions to meet your unique requirements.

Technology and Integration Capabilities: Evaluate the potential partner’s

technological capabilities, including payroll software, reporting tools, and integration proficiencies with your existing HR systems. A technologically advanced partner can streamline processes, enhance data accuracy, and provide real-time insights for informed decision-making.

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Service Level Agreements (SLAs) and Support: Prioritize providers that offer robust SLAs outlining service commitments, response times, and escalation procedures. Ensure that the partner provides dedicated support to address any issues promptly and maintain a high level of service delivery. Data Security and Compliance: With the increasing focus on data privacy and security, verify that the partner adheres to stringent data protection standards and compliance regulations such as General Data Protection Regulation (GDPR). Confirm the measures in place to safeguard sensitive employee information and mitigate cybersecurity risks.

Reputation and References: Conduct thorough research on the reputation and track record of potential partners to ensure it is the right fight. In addition to the capability deck and case studies provided, gather references from existing clients so you can get a clear understanding of the potential partner’s reliability, responsiveness, and overall performance to ensure they are the right fit.. Cultural Fit and Communication: Cultural compatibility is important with any partnership, so be sure to have a clear understanding of the partner’s core DNA, as well as their communication style and language capabilities. Effective communication is vital for seamless collaboration and mutual understanding in managing global payroll and HR operations.

“Effective communication is vital for seamless collaboration and mutual understanding in managing global payroll and HR operations.”

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“A technologically advanced partner can streamline processes, enhance data accuracy, and provide real- time insights for informed decision- making.”

Making the right decision in choosing a global payroll and HR partner is not just about selecting a vendor but forging a strategic partnership that can drive operational efficiency, compliance, and business growth on a global scale. It is a long-term relationship that is centered around shared goals, innovation, collaboration, and mutual benefits, all while working together to create a strong workforce culture. By following these essential guidelines, global payroll and HR professionals can navigate the selection process with confidence and select a partner that will support their organization’s success in managing international payroll and human resources effectively.

Author: Helios

Launching in 2024, Helios is at the forefront of global Human Capital Management (HCM) and Payments. The cutting-edge platform offers essential tools, capabilities, expert guidance, technology safeguards, and AI-driven support that empower businesses to streamline hiring, management, and payment processes, fostering seamless collaboration and unlocking new opportunities for teams. Helios’ tech-enabled solutions help businesses efficiently operate while seamlessly hiring, managing, and paying their global workforces. Helios is designed to provide the flexibility needed to support various business operations, whether it involves hiring contractors for specific projects, onboarding employees in new countries without a legal entity, or transitioning from an Employer of Record model to managing global payroll internally. By transcending geographical boundaries, Helios facilitates the seamless integration of diverse workforces while ensuring compliance with local regulations.

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Payroll Trends in Key African Mark

Africa’s economic landscape is undergoing a renaissance, with several key markets experiencing exponential growth.

Author: Talent PEO Africa

This surge, fueled by urbanization, technological leaps, and a vibrant young population, presents both opportunities and challenges for businesses operating in the region, particularly in the crucial area of Human Resources (HR) and specifically, payroll management. In this article, we delve into three of Africa’s high-growth markets - Kenya, Nigeria, and South Africa - and dissect the most prominent payroll trends shaping their HR landscapes. The EOR service provider utilizes a potent combination of data, recent industry developments, and expert commentary to offer valuable insights for businesses navigating these dynamic environments.

Kenya: Embracing the Cloud Revolution

towards the cloud is driven by several compelling factors:

Kenya, a frontrunner in Africa’s technological revolution, boasts a rapidly expanding tech sector and a tech-savvy populace. This translates into a surging demand for cloud-based payroll solutions. A recent 2023 study by PWC revealed that a staggering 72% of Kenyan businesses are actively considering or already implementing cloud-based HR solutions. This shift

Efficiency and Cost Optimization : Cloud platforms offer centralized data storage, automated processes, and real-time access, leading to streamlined operations and significant cost savings for HR teams.

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kets

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Enhanced Security and Compliance : Reputable cloud providers employ robust security measures and ensure compliance with evolving local regulations , addressing data security concerns and mitigating compliance risks. Expert Insight:

Improved Scalability : Cloud-based solutions offer unmatched scalability, allowing businesses to effortlessly adapt their payroll systems to accommodate growth without the need for expensive infrastructure upgrades.

“Kenya’s dynamic tech ecosystem fosters a culture of innovation in HR practices. Cloud-based solutions empower businesses to streamline payroll operations, unlock valuable data insights, and stay compliant amidst ever-changing regulations,” Sarah Mwangi - HR Director at a leading Kenyan tech company - said. Ms Mwangi points out that the recent government initiative to incentivize cloud adoption through tax breaks further fuels the cloud migration trend.

Nigeria: Formalization and Automation Take Center Stage

Nigeria, Africa’s economic powerhouse, is witnessing a growing emphasis on formalizing the workforce. This trend is fueled by government initiatives such as the National Social Insurance Trust Fund (NSITF) , aimed at promoting decent work and social protection. Consequently, businesses are increasingly adopting payroll automation solutions to efficiently manage the growing number of formal employees.

Data-Driven Insights: According to the International Labour Organization (ILO), over 50% of Nigerian workers are still employed in the informal sector. A 2022 report by McKinsey & Company projects that Nigeria’s formal workforce will balloon by 20 million by 2030.

Expert Commentary: “As Nigeria’s workforce formalizes, payroll automation becomes an indispensable tool for efficiently managing a larger employee base. Automation streamlines processes, minimizes errors, and ensures timely and accurate payouts, ultimately enhancing employee satisfaction,” John Adebayo - CEO of a leading Nigerian payroll service provider - said. Mr Adebayo highlights the recent rise in partnerships between fintech companies and payroll service providers as a significant development, offering innovative financial solutions like microloans and early wage access to formally employed Nigerians.

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South Africa: Championing Diversity and Inclusion in Payroll Practices

offering flexible payroll options to cater to the diverse needs of their workforce. The South African Department of Labour reports a 3% decrease in the gender pay gap between 2018 and 2022, indicating progress towards pay equity.

South Africa, with its diverse workforce, is at the forefront of adopting inclusive payroll practices. This includes ensuring equal pay for equal work, regardless of gender, race, or any other protected characteristic. Additionally, South African businesses are increasingly

Dr Mthembu also emphasizes the growing trend of businesses incorporating diversity and inclusion metrics into their performance evaluations, further solidifying their commitment to equitable practices. Expert Opinion: “South Africa’s commitment to diversity and inclusion extends to its payroll practices. Businesses are actively promoting fair compensation and offering flexible payroll options like early wage access, catering to the evolving needs of their diverse workforce,” Dr Thandiwe Mthembu - a leading diversity and inclusion expert in South Africa - said.

Conclusion

Africa’s payroll landscape is undergoing a dynamic transformation, driven by factors like technological advancements, workforce formalization, and increasing emphasis on diversity and inclusion. Examining the trends in key markets like Kenya, Nigeria, and South Africa reveals a shift towards cloud-based solutions, automation, and inclusive practices. As businesses navigate this evolving landscape, partnering with a reliable and experienced EOR can be instrumental in ensuring compliance, streamlining operations, and attracting and retaining top talent in the continent’s booming economies.

Author: Talent PEO Africa

Talent PEO Africa isn’t just observing the trends; we’re shaping them. As a leading African PEO, we offer cutting- edge cloud solutions, guide businesses through workforce formalization, and champion diversity and inclusion in payroll practices. But our expertise goes beyond compliance. We partner with businesses to seamlessly hire, manage payroll, and navigate the complexities of the African market, empowering them to focus on growth and thrive across the continent.

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Jeni Morris

Jeni is a National Minimum Wage expert with unique insights and knowledge from her many years working within HMRC’s NMW team. She uses that wealth of experience to support businesses in mitigating the financial and reputational impact of ongoing or pending HMRC NMW investigations and to navigate the ever-changing regulatory requirements compliantly. Jeni is a regular speaker on NMW/NLW issues at regional and national conferences.

Question I have been in business for over 25 years and have been involved in many HMRC investigations throughout the years, however, this is the first time I have dealings with HMRC’s National Minimum Wage team. This NMW investigation has been ongoing for over 12 months and I really do not see the finish line yet! We have had a recent change of Compliance officer and they seem to be going right back to the Firstly, I am sorry you are having such a difficult time with this NMW investigation – the structure of a NMW investigation differs significantly from other HMRC investigations, mainly due to the fact that the compliance officers are undertaking a review to identify if any worker has been underpaid. Any arrears found will ultimately belong to an employee or former employee (not HMRC) and as such the whole process can feel very different.

start of the investigation and looking at all processes and practices again.

HMRC have already had 2 meetings with the business, numerous emails and calls with me, they’ve conducted employee interviews and asked for a mountain of data, but I still do not know if HMRC thinks the business has inadvertently underpaid any employee. What can we do?

NMW investigations can be lengthy too due to the mountain of evidence required by the investigating officer, they obtain the employer’s information, then have to cross-check that with a sample of workers’ interviews. If the employer does not have the evidence such as time and attendance records but the workers say they all work additional hours then HMRC may ask for additional statistical data such as computer system logging in/ out data, or

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Firstly I would suggest asking HMRC for an update meeting (with agenda) to ask for feedback on their findings around any NMW risks that they or the previous office have identified. HMRC are supposed to keep in regular contact with the business to keep them updated, however, I have heard of cases where there have been many months without any update. If and when a NMW risk is disclosed, you then have the opportunity to Challenge the risk – with counter- evidence to disprove its existence or Accept the risk but through

CCTV data or they may even conduct their own time and motion study to see how long certain tasks are taking. Remember NMW investigations can cover a total of a 6 year period, so gathering evidence for all employees and former employees over the previous 6 years can be a daunting and time-consuming task. I have been involved in many NMW investigations which have surpassed 4 or 5 years. That said, as your investigation has been ongoing for over 1 year I would have expected HMRC to have identified (and also ruled out) if any risks are at play here and be looking at ways to sample check if the risk/s actually led to any employee being underpaid. The change of compliance officer is frustrating, and many businesses have said that they feel when this happens the whole investigation seems to go back to square one. In my experience it will take a new compliance officer a few weeks to review all the previous notes and data gathered by the original investigator, however, it may be that there were gaps in the evidence which had not been correctly collected or reviewed leaving the new investigator to ensure all possible risks areas have been reviewed, evidenced and addressed correctly. After all, it is the responsibility of the compliance officer to satisfy themselves that the audit has been completed correctly, if arrears are identified and HMRC issues an enforcement notice which the business appeals, it will be the compliance officer who will have to present and defend their findings at any employment tribunal.

sampling you can demonstrate that the risk has not caused any employee to be underpaid.

If the sampling exercise identifies NMW underpayments, HMRC will usually ask the business to provide calculations for all employees across the previous 6-year period to show how much each employee has been underpaid (this will be calculated on a pay period basis). If the business is unable to undertake the calculations HMRC will ask for the relevant data and provide you with draft calculations for you to check and approve. Once the business has approved the draft calculations HMRC will issue an enforcement notice where the business will have a limited time to pay all the arrears to employees and former employees. They will also have to pay a penalty to HMRC (this is usually 200% of the arrears but can be reduced to 100% if all the arrears and penalty payments are made within 14 days).

So what can you do to facilitate the closure of your investigation?

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Payroll Security: Protecting Sensitive Employee Data

Author: Employment Innovations

Running a business involves handling a lot of sensitive information, especially when it comes to payroll data. This includes personal details such as addresses and birthdates, as well as the tax and bank information of your employees. Security breaches with this data can lead to employees losing trust and harm the employer’s reputation. A simple online search shows that companies and their payroll systems are at risk of cyber attacks. In fact, in Australia, ASD responded to over 1,100 cyber security incidents from Australian entities and reported that nearly 94,000 reports were made to law enforcement – around one every 6 minutes. It’s crucial to prioritise the security of payroll data in your business.

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“Payroll security is as important as making sure your employees are paid correctly”

Understanding Payroll Security Payroll security is as important as making sure your employees are paid correctly. It involves having processes in place to prevent any risks to the security of the data in your payroll system, as well as ensuring your software is built to withstand security threats. Let’s discuss some ways to ensure this security.

Tasks which should be defined and documented where assigned to a stakeholder within the payroll process can include:

Onboarding employees Rostering Employees

Approving leave and timesheets Approving employment changes Administering employment changes Processing payroll Handling employee pay or employment queries Regularly reviewing payroll processes Reviewing system access on a regular basis Assigning responsibilities for specific payroll-related tasks ensures protocols are built out around system access and can also be bundled with payroll processing guidelines. Most importantly, it also ensures that the right people within your organisation have access to the correct information relevant to their role.

Tips for Keeping Payroll Secure

Define Roles within the Payroll Process Defining roles within the payroll

process is a great way to make sure that the correct stakeholders within the organisation have access to the right level of information within the payroll process. Payroll starts before an employee begins work - it starts when the employee is hired. Their employment information is collated, sent to them for confirmation and then they onboard, which typically includes the employee providing key information related to them receiving their pay.

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Establish Payroll Processing Guidelines

Include Payroll in the Business Security Strategy Integrate payroll into your overall business security strategy. This can involve conducting background checks before hiring, limiting access to sensitive payroll information, and having a clear offboarding process. Including payroll in the business security strategy could also involve ensuring your payroll team, along with all relevant stakeholders within the payroll process, are familiar with the security protocols of the organisation - such as reporting a data breach, or even instances of reporting where someone is mistakenly provided access to sensitive information. Employees could also be trained as a part of company policy to lock their computers at all times they are unattended, or not be granted permission to connect to public networks.

Payroll processing guidelines are a way of documenting the procedures involved within the payroll process, to ensure that those administering the payroll follow a specific process which ensures checks that are performed each payrun.

This can include (but not be limited to):

Ensuring employee changes are made prior to the payrun being created Making sure all timesheets and leave entries are entered accurately (such as checking time entries against a roster) Checking any data changes, and where they have come from

“Assigning responsibilities for specific payroll-related tasks ensures protocols are built out around system access and can also be bundled with payroll processing guidelines”

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Ensuring the payroll provider has data security measures in place such as ISO 27001 and 9001 standards, and also any practical measures the provider may take to ensure that data security is paramount (such as data encryption, transmission of data between client and provider, risk management plans for data security). Conclusion Protecting sensitive employee information in payroll is crucial for maintaining trust and reputation. By defining roles, setting guidelines, including payroll in your security strategy, going digital, and choosing a secure payroll provider, you can enhance the security of your payroll data for your employees. “Including payroll in the business security strategy could also involve ensuring your payroll team, along with all relevant stakeholders within the payroll process, are familiar with the security protocols of the organisation”

Protect or Eliminate Physical Payroll Data

Physical payroll data relates to when the employee information is not stored electronically - such as paper tax file declarations that are stored within a filing cabinet. These sorts of files can be easily accessible by a variety of people that may not require access to this information, and utilising a cloud payroll application that allows electronic entry of this information by the employee can ensure data security. Cloud payroll systems require user authentication, such as a password, to access or edit existing information for an employee - or in addition 2 factor authentication or an inactivity timeout function for an extra security layer. Some can also provide an audit log of who made changes to an employee which are also timestamped. Outsource your Payroll Process When scoping out a potential provider it is always good practice to list the types of questions or issues you wish to address when adopting and investing in a new service. If you are considering outsourcing your payroll process, you can investigate what data security measures a potential provider may have in place to ensure employee and payroll data are kept secure.

Author: Employment Innovations

Employment Innovations offers payroll outsourcing services to thousands of businesses in Australia, ensuring processes that improve accuracy, reduce administrative burden and help gain a competitive edge in the market.

The Middle East, characterized by its economic dynamics and rich culture However, for those planning to expand to this region, navigating the payro Tackling these challenges may require a deep understanding of local regu help you understand the key steps to establish a functional payroll proces calculations and processing. Ultimate Guide to Payroll Compliance 04:05 ISSUE 1

Author: Akrivia HCM

Adhering to Payroll Compliance in the Middle East Ensuring payroll compliance in the Middle East involves considering several critical factors. Businesses must, on the one hand, abide by labor laws which govern employee entitlements every employer needs to adhere to, such as working hours, overtime, minimum wages, statutory leaves etc. On the other hand, businesses should ensure compliance of social security contributions accurately while also withholding and remitting taxes, wherever it is applicable.

Understanding the Diverse Payroll Landscape of the Middle East In the Middle East, each nation has its own compliances. This means businesses need to be flexible and adaptable to operate there. While on one side there are countries which are part of Gulf Corporation Council (GCC) (i.e., UAE, Saudi Arabia, Oman, Qatar, Bahrain, Kuwait) where we see no personal taxation for Individuals, on the other side countries like Turkey, Egypt, Israel, Iraq etc. have complex tax regulations. Hence, one needs to know the exact requirements to construct an efficient payroll framework while complying with the local regulations.

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e, offers distinctive prospects for businesses engaged in the region. oll compliances in this volatile environment can pose challenges. ulations, labor laws and taxation frameworks. This article will ss in the region, accompanied by a roadmap for accurate payroll in the Middle East

entitlements, safety and working conditions of employees. These regulations vary for each country depending on the needs of the labor markets. With globalisation becoming more important day by day, many countries are coming up with significant changes to make employment regulations safe, fair, and attractive too. UAE, Oman, Bahrain, and Egypt are some of the countries which introduced new labor regulations bringing significant changes related to employment contracts, social security benefits, leave benefits, working hours conditions etc. to ease working conditions and provide

Non-compliance with these regulations can lead to significant penalties and damage to the company’s reputation. This emphasizes the need for precise and punctual payroll management. So, let’s understand the following concepts: 1. Labor Laws : Labor laws in the Middle East are the most critical regulations among all other regulations. From hiring contracts to gendered laws, labor laws regulate a vast number of important aspects related to rights, responsibilities,

04:05

ISSUE 1

“The range of contributions across Middle East countries varies from 0 to 26%.” cases. While in Oman, the Annual leave, sick leave, and maternity leave period has been increased overall. UAE is also making significant changes in the End of service benefit. While the Social Insurance Organization (SIO) has introduced end-of-service gratuity for non-Bahrainis working in Bahrain. One of the other important areas, where different countries are bringing up significant changes are statutory leaves. In the updated regulations, UAE increased the maternity leave by 15 days with 50% pay and, moreover, another 30 days is allowed for specific more benefits to the employees. For instance, in most of the Middle Eastern countries, standard working hours are stated as 8 hours a day. Further, countries like Kuwait restrict overtime hours to 2 hours a day, while in Oman, the maximum working hours including overtime is 12 hours a day.

2. Withholding of taxes on employment income : While GCC countries don’t have the concept of personal taxes, countries like Turkey, Lebanon, Egypt, and Iraq have complex tax regulations. In Turkey, all the calculations are done at a salary component level including gross-up calculations which makes it quite complex to arrive at the net pay. In payslips too, net and gross figures need to be reflected at the component level. Likewise, in Lebanon, if an employee hasn’t worked for a full year, then their income is considered as earned, while the tax slabs need to be apportioned based on the time the employee has worked. In Iraq the way exemption is calculated for allowances makes it quite sensitive to errors. In Egypt, income needs to be annualised to calculate tax. In practice, multiple methods are followed including monthly, yearly, monthly with annualization and cumulative calculations. However, multiple methods may lead to incorrect calculations. Therefore, it’s important to ensure that the calculated tax is compliant. 3. Contribution to Social Security : There are different social security benefits that citizens receive in each country, and they must pay a certain amount to contribute towards these schemes. It falls upon the employer to deduct or remit these amounts, as required by the specific laws. The contributions in some countries could even vary for local nationals and expatriates.

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1. General Pension and Social

Further, if a GCC national is working in another GCC country, the social security contributions need to be contributed based on their home country’s regulations. The range of contributions across Middle East countries varies from 0 to 26%. For instance, in UAE, the monthly contribution is 26%, the contribution for employee and employer are 11% and 15% respectively and may vary for some classes of employees working in the private sector and joining after October 31, 2023, or even for some of the free zones like DIFC. In Iraq, employers contribute 12% of an employee’s net salary as social security contributions while employees pay 5%. In Egypt, the employee rate is 11% and the employer’s is 18.75%. To comply with these complex regulations, it’s advisable to refer to country-specific regulations and guidelines available through official sources. Having experienced people on board to ensure that all compliances are managed accurately is a must. Here are some relevant links that can help you stay compliant:

Security Authority announces issuance of new Federal Decree Law on Pension (gpssa.gov.ae)

2. Laws | Laws & Regulations |

Ministry of Human Resources & Emiratisation MOHRE

3. GCC Insurance Protection

Extension Program (gpssa.gov.ae)

4. Social Insurance Organization (sio.gov.bh) 5. Labor Law | Ministry of Human Resources and Social Development (hrsd.gov.sa) 6. Home - Government Communications Office | Government of Qatar (gco.gov.qa) 7. manpower.gov.kw/LaborLaw.aspx 8. mjla.gov.om 9. mof.gov.iq 10. Turkish Taxation System | Revenue Administration (gib.gov.tr) 11. eta.gov.eg 12. Ministry of Finance (jordan.gov.jo) 13. ministryinfo.gov.lb/en

Author: Akrivia HCM

Akrivia HCM is a unified HRMS SaaS platform that packs in everything you need to manage your entire employee lifecycle. With 9 HR products and 40+ modules – from recruitment & learning to performance, payroll & offboarding, the Akrivia HCM suite is powered by AI to automate all your mundane tasks and give you a strategic edge. Ready integrations with 3rd party ERP and other tools make for a unified experience, while its seamless interface and employee-centric features aid employee experience, the scalability, configurability, detailed depth and breadth of the product are loved by HRs of 100+ enterprises across India, GCC and SEA.

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