Originally published in Purely Payroll’s November 2014 e-magazine
In the payroll world, the calendar is your frenemy. You know what I mean – all of us meticulous individuals who do not actually count workdays by Monday through Friday, but by changes cut-off date, calculation date, funding date, pay date, and reporting date. Yep – you know who you are. As you are brushing your teeth in the morning, you are thinking about what color/symbol is on today’s pay calendar.
Mostly, the payroll calendar is the friend part of the frenemy persona. It keeps everyone in line with the expectations of a smooth payroll run. As long as everyone and everything follows, the calendar there is harmony, birds singing and phone silence. Interfaces come in, people supply the data on time, payroll is calculated and reports generated. Ah bliss!
But just like that, the frenemy shows the evil side of her personality and payroll processing turns into a nightmare. The interface file comes in corrupted, Robert forgot to send his changes before he went on holiday, the commission calculator used the wrong exchange rates to calculate the sales bonuses, and on and on. The calendar becomes a huge ticking time bomb to get payroll out.
So what is most important at this juncture? Accuracy? Compliance? Wringing Robert’s neck? It is important to understand the various levels of compliance required when payroll timing gets tight. Sometimes you have to choose between getting payroll out and making adjustments, delaying the whole payroll cycle or just letting errors go through on a few people, which can be fixed later on an off-cycle or on the next cycle.
So what are the ramifications of releasing an inaccurate payroll? Some obvious items come to mind: Unhappy employees, incorrect compliance paperwork, and additional costs of off-cycles to fix the issues. But there are other situations to consider: Are there union agreements in place? If yes and the payroll is inaccurately calculated, employees may walk off the site, shutting down production. In other countries if overtime is calculated incorrectly governments will assess penalties. Collective agreements maybe violated, paid time off improperly accrued, pension funds erroneously allocated and financial accruals and reporting reflecting inaccurate company cost. All of these consequences need to be considered before determining a course of action. Each work disruption, penalty, accounting impact must be quickly analyzed to reduce exposure to the company and its employees.
Your frenemy was kind this month and no payroll processing issues occurred. Everyone followed the calendar, interfaces went through, payroll was calculated accurately, and bank files were sent. But just when you fall exhausted in your seat, you notice on the news that Ramadan is not ending because the moon was not sighted, so the banks in one of your countries are closed on pay date. Your frenemy the calendar just winks at you, because you didn’t consider the ultimate calendar destroyer, Mother Nature.