The functions of payroll administration and human resources (HR) departments are merging as the original barriers between the two fall away and payroll software undergoes radical development to cater for ever-changing legislative demands.
Grant Lloyd, managing director of payroll software developer Softline Pastel Payroll, says there are five major payroll laws that govern payroll processing and these place immense pressure on payroll administration and HR departments. Legislation nowadays requires reporting on skills development, the unemployment insurance fund (UIF), employment equity and occupational injuries and diseases, to name but a few.
“Some 50% to 60% of the costs in any business are employment-related and it is incumbent upon payroll administrators and the HR department to ensure that employees are not over-taxed and receive the benefits due to them,” said Lloyd. “Late or incorrect payments to employees can have disastrous effects on business and productivity levels.”
In addition to the payroll processes, there are various HR tasks that should be considered — such as recruitment processes and policies to ensure that suitable employees are recruited to meet the needs of the company. This also includes established performance reviews, disciplinary processes and ongoing training and skills development, all of which are important in driving a successful business.
Then there are leave entitlements, sick and compassionate leave policies — the list is almost endless.
Lloyd maintains that the payroll aspect of HR is critical in terms of meeting legislative requirements regarding tax deductions, UIF payments, pension and provident fund deductions, skills development levy contributions and rebates and skills development.
The proliferation of legislation and more expansive South African Revenue Services requirements have resulted in payroll administration taking on data capture and complex reporting functions that were previously the domain of HR, such as complying with the Basic Conditions of Employment Act regarding leave requirements and minimum working hours, among others.
“Features and functions that simplify the process of legislative compliance have already been incorporated into payroll packages and this has alleviated much of the burden that used to be the responsibility of HR. Almost 80% of the information required for the legislative HR reporting lies in payroll software,” said Lloyd.
Payroll software has evolved significantly in recent years. Lloyd says the notion of two grey-haired ladies sitting in a cramped payroll office sharing an old computer is something of the past: today’s payroll software could be accessible to hundreds of employees who can submit online leave applications, training requests, applications for transfers to other branches or departments, or to log travel and subsistence expenses. Or they can apply for a loan or car allowance, access their payslip history to check how much PAYE they have paid to date or see how much of their annual leave is left.
“Payroll software is a mission-critical application because without it companies may not be able to pay their staff on time. Payroll software is logically placed to drive productivity improvements in the work force and its involvement in delivering HR functionality is already happening,” said Lloyd.
There are payroll modules designed to make life easier for management, payroll administrators and HR departments. Web technology is used to break down the barrier of distance for companies that have branch operations, subsidiaries, sales people out on the road or to improve staff communications with department heads, administrators and management.
“Running payroll operations online makes it possible for employees to access payslips via the internet from wherever they may be, provided they have a web connection. Any previous month’s payslip can be viewed or printed via a secure online ‘zone’, eliminating many of the unnecessary and administratively intensive duties payroll and HR managers usually have to cope with,” said Lloyd.