Payroll compliance: 10 tips to help you get it right every time

Non-compliance with Labour Relations regulations – like paying employees the right amount, on time – can lead to penalties and impact team morale and productivity.

We’ve put together a series of tips to make sure you’re always on top of payroll compliance.

1. Update employee information

Always make sure that employee personal records are accurate. The onus is on you to maintain this information, and keep it up-to-date throughout the duration of a person’s employment.

Remember that information like contact details, address, and marital status can change over time – which means that your payroll will need to be updated accordingly.

Whether you’re dealing with a salary increase, a promotion, or someone taking time off for maternity leave, everything has to be processed properly.

2. Ensure employee compliance

Educate your employees about how they can help the business to remain compliant, by – for example – sticking to the company’s expenses policies, or keeping accurate records of overtime.

Assist them with this whenever possible. Put procedures in place that guide them in completing forms, and documenting expenses and overtime correctly. This limits your exposure, and manages employee expectations.

A list of policies and procedures detailing everything that affects their pay should also be sent to each employee. That way, they’ll know exactly how the company’s payroll system works, and if any queries should arise around deductions or additions, you can refer to the document.

3. Understand compulsory employee benefits

No matter what kind of business you run, some employee benefits are compulsory, and you have a legal obligation to pay them.

You don’t have to pay retirement funding or health insurance, unless you fall under the public sector employer schemes or you’re regulated under a Bargaining Council Agreement. These benefits are regulated by the Medical Schemes Act and Pensions Fund Act, as applicable.

However, you are required by law to register your employees with the Unemployment Insurance Fund (UIF). You have to pay 1% of their salary into UIF every month.

Other legally required contributions include the Skills Development Levy (SDL), and Compensation for Occupation Injuries and Diseases (COIDA).

Through these contributions, you ensure payroll compliance, and safeguard the welfare of your employees.

4. Set up audit trails

If, for whatever reason, an investigation needs to happen into your business’s payroll compliance, it will be a lot easier if you’ve tracked everything. Audit trail functionality should be a feature of your payroll software.

Audit trails are incredibly helpful because they can validate any unusual-looking payments. They do this by linking every transaction to supporting information, like purchase orders and invoices.

Audit trails can also:

• Protect against fraud,
• Make sure that your corporate accounts are accurate, and
• Give you information about the financial health of your company.

5. Get up to speed with payroll legislation

Staying up to date with frequently-changing payroll legislation is crucial.

You can do this by watching webinars, attending industry conferences and seminars, and joining social media groups, to get advice about staying compliant.

Chat to industry experts when you can, and find out about payroll procedural changes that might affect your business.

To make things really easy and streamlined, consider using a payroll software provider that gives you updates and advice about legislation changes. You can also visit the SARS website to find out more.

6. … and international legislation

If your company’s operations span more than one country, then payroll compliance can be more complicated than normal.

Every country has its own rules and regulations when it comes to salaries, deductions, payments, and reporting. Add to that the complexities of time zones, different currencies, and customs, and things can get even more challenging.

Make sure you understand international legislation, so that you can stay on top of things.

7. Get advice from an expert

Talking to someone who is proficient in the payroll compliance and legislation arena is of enormous benefit. Talk to your accountant – they will always have a keen understanding of payroll compliance and can help with any relevant changes or updates.

Your accountant is also a good resource for helping you keep your records current, and of course, helping you to file your tax returns. They should also be able to assist with payroll issues, or inconsistencies in your records.

8. Talk to your employees

Regular communication with your employees is a good way of keeping your business healthy. Ask for feedback. Listen to how they think you can improve processes.

If an issue arises, then you and your payroll team can analyse what the problems are, figure out where they’re coming from, and root them out.

Teams that feel comfortable voicing their concerns, feel heard. But it also means that you can step in before anything gets out of control. Tell them that you have their best interests at heart, act on that, and you’ll have a committed and dedicated team on your side.

9. Move to a self-service model

Your payroll team is busy. There’s a lot to do when it comes to the people finances of a company. Having to collect, collate, and update data about your employees takes up valuable time.

When you move to a self-service model, you free up that time for more important things, and you give more responsibility to your workforce. They have to submit their personal information, and it’s much simpler to review and approve requests as they come in.

10. Don’t miss deadlines

There are penalties for companies that submit information late, and because payroll can be complex, there’s a possibility that this could happen to you. Remember when dealing with payroll compliance that you’re not just paying salaries. You also have to consider things like:

• Tax deadlines,
• Shifting paydays, and
• Reporting deadline.

It’s vital that you keep ahead of these important dates, and give yourself enough time to get things done. One way to do this is by creating a calendar. Highlight important dates, including when timesheets and invoices need to be submitted, and when payments are due.

This will ensure that nothing is missed, and you’re always on time. Employees will also know exactly when they’re getting paid, and your team will be able to carry out payroll tasks efficiently.

The last word

Payroll can be complicated and complex, but there is never an excuse for not abiding by all legislation. There are a lot of things you need to do to be compliant, so be sure to ask for help and support when you need it. Stay up to date with all legislation changes, ask questions, attend trainings and webinars, and you’ll always be ahead of the game.