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Outsourcing Payroll - Could It Be Right For You?

Payroll is like housework

Payroll administrators may well think payroll is like housework. People only notice when something is wrong, and when you have finished it 's time to do it again!

But the analogy stops there. Miss out Joe's overtime and Mary's holiday pay and you'll cause problems for them at home and at work. For most employees the money they earn is a major reason for working, and it's a sensitive issue. Produce too many pays incorrectly too often and you'll not only have angry employees, but you'll change the culture of your organization.

It can be a thankless task as well. When someone contacts the payroll administrator and demands to speak urgently, is it to say thanks for a job well done or to complain because they think there is an error? Unfortunately, it is more likely to be the latter. And it doesn't end there. The payroll administrator will need to be able to explain complex issues in simple language. Issues such as why the sick leave rate is different from the annual leave rate; why some of the final holiday pay has been paid in dollars not time; or why the annual leave rate is different from when they took leave last time, or why KiwiSaver has been deducted from their pay.

A payroll administrator has a tougher job than most would imagine. Consider, for example, that they have to cope with changes to employment Acts that over the years have become more and more difficult to administer. It is so difficult that in a recent survey the Employers and Manufacturers Association concluded, “the law is so complicated and confusing that most employers appear to find aspects of it unworkable and are not complying with all of it.”

Outsourcing Payroll could be an answer

If you are an employer and you're starting to think that vacuuming never sounded so easy, outsourcing your payroll may be the answer. All of your payroll processing requirements can be taken care of leaving you with peace of mind.

What do payroll outsourcing companies do? Well, at The Paymasters we take care of the complete payroll function. That includes data entry, payroll processing, employee banking, producing payslips, and reporting and filing IRD reports and payments. Client companies can then concentrate on their core business.

Companies may choose to outsource their payroll for a variety of reasons. One is that many employers find it difficult and time-consuming, keeping up with changes and understanding employment related legislation... and more changes are due. The Minimum Wage Act changed on April 1st this year, and more changes to the Holidays Act are likely in 2011.

Another common reason to outsource payroll is to lower overheads. Employee time is freed up for other tasks, and employees no longer need training in software, time to fix errors, or training in legislation. There is also no need to provide a backup person in case the payroll administrator is absent. Additionally, some companies like the confidentiality of having their pay processed offsite. Knowing that the IRD will have reports filed and payments made on time without the risk of penalties is another obvious benefit.

If you would like some more information about outsourcing payroll for your organisation please contact us and we will be very happy to discuss your particular requirements.

This article has been submitted by Jenny Sainsbury of The Paymasters Ltd. For further information please contact Helen Wendelborn of this office.

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