FEATURE INSIGHT
It's all about compliance
Ros Hendren MSc, FCIPP, Mgr FCMIDip, FHEA, of Well Delivered Ltd (t/a Well paid Consulting), explains compliance and how to achieve it
W hat exactly do we mean by compliance? If we asked a hundred different payroll professionals to explain compliance and put it into context, we would probably receive a hundred different answers. The reason being that compliance can literally mean very different things to different people. However, in order to provide a constant for the purposes of this discussion, quite simply put it is, ‘the general observance of, and adherence to, rules and standards’. organisation in a huge way, and have an enormous negative impact on its ability to function normally. You may think this statement to be a little dramatic, but when you consider that the consequences may include significant fines, bad publicity, enforced audit by HM Revenue & Customs (HMRC), overpayments, opportunity for fraud etc, then the matter should not be dismissed lightly. For example, simply through a lack of consistency within a payroll team to calculate a daily rate in the same way, employees could easily be paid differently for undertaking the same work, which in turn could lead to claims Why is this so important? An act of non-compliance can impact an
of unequal pay. The consequences of this could include fines and bad publicity as already identified, but also potential internal grievances, tribunals, and reduced productivity – to name a few. ...the general observance of, and adherence to, rules and standards... Where do we start? Thinking about the statement that compliance is ‘the general observance of, and adherence to, rules and standards’, let’s take a moment to consider what areas of payroll activity are governed by those ‘rules and standards’. I’m sure it didn’t take any of you long to identify that this applies to pretty much everything we do in payroll! Regardless of the size, complexity, or frequency of the payrolls you are responsible for, there will always be a common processing workflow covering four key areas: ● data input and gross pay calculations ● gross to net calculations ● payments and investments ● internal and external reporting.
Each of which will require observance of, and adherence to, different rules and standards. So, what are those rules and standards? It should be fairly safe to assume that most of you will be aware of the need to comply with legislation associated with HMRC (tax and NI, for example), employment law, The Pensions Regulator (auto-enrolment), the Data Protection Act (and the impending General Data Protection Regulation) etc. However, you may not have considered the ‘rules and standards’ set internally within your own organisation; policies published by various departments such as human resources (HR), IT, or finance. Furthermore, your internal or external auditors may have devised a set of ‘controls’ they expect you to observe and adhere to, introduced to protect your organisation from fraud or risk. If you are not already familiar with your internal policies and controls, then it is highly recommended that you review them immediately. But what might you expect from that review? HR policies should set out how to calculate a day’s pay, overtime, holiday pay, sick pay etc; ensuring all employees are paid in a consistent and fair manner.
| Professional in Payroll, Pensions and Reward | November 2017 | Issue 35 46
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