Getting on a pay roll – is 2010 the year to change the system?
Payroll is constantly faced with the need to improve cost efficiencies while maintaining an important focus on compliance and customer service delivery. HR leader looks at some of the latest trends and reveals some important developments for payroll professionals
Payroll is a complex and ever-
changing function. While tech
nological developments have
facilitated easier administration
of payroll processes, payroll
professionals are faced with ongoing com
pliance issues in addition to demands for
greater efficiencies. The number-one chal
lenge for payroll professionals is an ever-
changing legislative environment, according
to Jason Low, general manager for The
Association for Payroll Specialists (TAPS).
In the past six months there have been
several big changes, including: changes to
the definition of ordinary time earnings,
particularly for bonuses and payments in
lieu of notice; the introduction of
Reportable Employer Superannuation Con
tributions; and most importantly, the final
phase of the Fair Work Act 2009, which
comes into effect on January 1 2010. “Pay
roll professionals will need to be compli
ant with new National Employment
Standards (NES), new Modern Awards and
new severance conditions,” Low says.
“The new legislation will have a signif
icant impact on payroll. It would appear
that many businesses are not prepared for
the changes.” Speaking at a recent semi
nar for business owners, Low says he was
surprised by how little they knew and how
unprepared they are. The two issues that
caught their attention were that current
conditions of employment in employment
contracts, federal awards, NAPSAs, exist
ing workplace agreements, ITEAs and
AWAs that are less beneficial than the NES
will be overridden from 1 January 2010,
and the new modern awards could force
some employees to be covered by awards
for the first time, Low explains.
“There is a common misconception that
processing payroll is easy; the computer
does all the work. Payroll software cer
tainly makes crunching numbers easier, but
it is essential that payroll professionals stay
current to avoid non-compliance penal
ties,” he asserts.
The need for efficiency
Payroll is constantly faced with the need
to do less with more, and in-house profes
sionals achieve this in a number of ways.
Damian Membrey – manager of payroll
control and compliance in the HR division
at Monash University – says this process
is a balancing act between maximising effi
ciency while maintaining an important
focus on compliance and customer service
delivery.
There are a number of key drivers for
improving payroll within Monash Uni
versity, according to Membrey, with an
increased focus on the process of transi
tioning from processing data to manag
ing data. To improve efficiency and
effectiveness of any payroll operation,
he says it is critical to identify and
remove any unnecessary or non-value-
added intervention with regard to the
flow of data from the source to the end
result. “By streamlining the data flow we
can focus on managing the outputs and
the integrity of the data and results can
improve,” he explains.
The university is also looking for oppor
tunities to interface data to efficiently man
age additional HR/payroll-related
functions, Membrey adds. Monash is plan
ning to implement an online probation con
firmation and salary incremental
progression approval system, which he says
will provide relevant data directly to and
from the HR/payroll modules.
As with most other payroll profes
sionals, Membrey is also tasked with the
challenge of reducing payroll processing
costs by increasing efficiency. “A focus
on payroll error rates can provide pay
roll departments with an immediate
opportunity to develop improved
processes that will reduce overall time
spent on reworking data or process
errors,” he says.
Low believes that the GFC has
increased the need for payroll to be more
efficient, and says payroll professionals
should be constantly reviewing their
processes to ensure they are performing
tasks in an organised way, with a mini
mum use of time and effort.
At TAPS’s annual conference, he says
it was identified that the most efficient
practices in the production of payroll
include: a focus on technology for col
lecting time data; the use of electronic sys
tems to disperse wages, superannuation,
deductions and payslips; making single
payments per pay cycle and avoiding off-
cycle payments by investigating and elim
inating errors; and creating a stronger
relationship with HR to streamline the
end-to-end process.
Professional development
Payroll practitioners are constantly faced
with the need to improve their profes
sional skills, and there is an increasing
trend towards certification within the pro
fession. “At the moment there is no legal
requirement for a payroll person to be
qualified in anything,” saysBrian
Williamson, managing director of bou
tique law firm Workplace Law, which spe
cialises in employment, industrial and
workplace relations law.
“Payroll people often drift into the
function from the accounts department,
but I don’t think we are too far away from
the day when companies, as part of risk
management, will want their payroll peo
ple to be qualified in accountancy or pay
roll management.”
Membrey also believes it is important
for payroll professionals to take time out
of the operation of the business and focus
strategically on where they can position
themselves and their staff to offer the
greatest benefit to the organisation. “Ask
yourself some important questions: ‘Am
I managing data effectively and efficiently?
What are the top five processing pain
points for our department and what can
I do to improve these? What are the chal
lenges or issues that I am likely to have in
12 to 18 months’ time and what can I do
now to prepare for these?’,” he asks.
“Answers to these questions will lead
to opportunities for you to make a real
difference to your organisation.”
