Over the years, GroForth CEO Sarah Daly has encountered multiple examples of the payroll difficulties that can arise when a company’s payroll provider is not properly qualified. Here, she sets out some common payroll mistakes and explains why it is important to check your payroll provider’s qualification.
Many of my clients are in a panic the first time they contact me. Usually, this is because they have run into problems with their company payroll. Sometimes they don’t have a qualified in-house payroll administrator, sometimes they have outsourced their payroll to a service provider without doing enough due diligence beforehand, and sometimes they have an unqualified contractor looking after their payroll.
Over the years, I have seen many examples of the things that can go wrong when payroll is not correctly administered. Some of these can land an employer in serious trouble because of the way that payroll interacts with Revenue, anti-money laundering regulations and employment legislation.
21 common payroll mistakes
Typically, the difficulties that companies run into when their payroll provider is not adequately trained or qualified include one or more of the following:
- Incorrect or invalid Payroll Submission Requests to Revenue
- Using non-compliant payroll software
- Failure to backup payroll data
- Failing to keep up to date with new regulations and Revenue requirements
- Failing to comply with GDPR requirements
- Employees on incorrect pay scale
- Failure to calculate payments to part-time employees correctly
- Incorrectly processing pension contributions
- Misclassification of employees and contractors
- Miscalculation of overtime
- Failure to remove ceased employees from the payroll
- Errors on time sheets
- Breaches of duty of care and/or data breaches by third party service providers
- Failure of third party service providers to comply with relevant Revenue, employment and anti-money laundering regulations
- Poor record keeping regarding employee annual leave and sickness absences
- Employees on incorrect pay scale
- Failure to provide payslips — this is an offence under the Payment of Wages Act 1991.
- Failure to process Government schemes like the Employment Wage Subsidy Scheme and the Cycle to Work Scheme correctly
- Incorrect calculation of employee share payments
- Incorrect calculation of redundancy entitlements
- Errors calculating maternity pay and holiday entitlements.
Impact of Covid-19
Since the outbreak of the Covid-19 pandemic, many companies across Ireland are experiencing business interruption and disruption. Obviously, this has implications for payroll. As well as facilitating remote working, businesses are reducing working hours for some employees and/or implementing temporary layoffs. While various support measures are in place to help businesses cope during this difficult period, keeping up with the detail and ensuring ongoing compliance with the various requirements is a significant challenge for payroll teams.
In relation to Benefit-in-Kind, for example, Revenue introduced several Covid-19 concessions. For businesses with employees working remotely, an important concession to be aware of is that BIK will not arise where employers provide equipment such as laptops, printers, scanners and office furniture in order for employees to set up a working space in their homes.
Other BIK measures include several changes affecting company cars and a concession for employers who want to recognise the efforts of frontline or other key staff working during the COVID-19 crisis, either by accelerating part of a small benefit reward incentive usually paid later in the year, or by making an additional award.
Another BIK development to be aware of is that there is no BIK charge where an employer performs Covid-19 testing on an employee at the workplace. It is important that payroll administrators keep up to date with these changes.
For further details of these BIK measures, see the Revenue website or, if you are a GroForth client, contact a member of our payroll team.
Government also introduced Covid-19 related wage supports to encourage employers to keep staff on their payroll. These schemes include the Temporary Wage Subsidy Scheme (TWSS) and the Employee Wage Subsidy Scheme (EWSS) which replaced it. While welcome, keeping up to speed with these schemes added to the workload of payroll administrators.
Since the New Year, some businesses are discovering that they made mistakes when processing Covid-19 related payments and benefits. We have had a number of companies turn to GroForth for assistance in resolving specific problems.
Check your payroll provider’s qualification
Many small businesses outsource their payroll administration. This is particularly the case since the introduction of PAYE modernisation as manual processing of payroll is too time-consuming and error-prone for most employers. However, it is important to check that the outsourced payroll provider you choose is qualified and adequately trained to deliver services to the standard that you require. At a minimum, you should check that they keep up to date and comply with relevant tax, employment and AML requirements. It’s also important that they use industry-standard payroll software and provide a confidential and secure service. Remember, any failings in their system can land you in trouble if things go wrong.
Need payroll help?
GroForth provides comprehensive payroll administration and support services. Because of the complexity of payroll regulations, I am a firm believer in the importance of checking that payroll service providers are properly qualified. Our payroll team members hold Irish Payroll Association (IPASS) qualifications and before onboarding new team members, I always check that they hold a relevant qualification. We invest in our team, providing ongoing training and support to ensure that they keep up to date with all relevant legislation and guidance.
For more information about our services along with answers to frequently asked payroll questions, please see our payroll services page or contact me here and I will be pleased to explain how GroForth can help your business.