When a contract is signed between an employer and employee, this is a legal agreement that the employee will execute the duties assigned, and the employer will pay for these services. Pretty easy arrangement, right? Sadly, there are many businesses that compensate staff later then the agreed date.
Late payments to employees whatever the reason, can cause them severe disruption as well as potential late payment charges. Bills, mortgages, rent and living expenses are generally due on a certain date of the month, and if a company is late, it creates a knock-on effect down the line, with the employee being the one to feel the most negative impact.
Market Research company Censuswide conducted a survey of 251 HR professionals found startling statistics. Covering the private sector only, over three-quarters of the respondents admitted that they had paid staff incorrectly or late on more than one occasion in a year. As you can imagine, from an employee perspective this can prove to be an incredibly difficult situation, and for HR and payroll professionals, is embarrassing and causes undue stress.
As HR professionals we must ask ourselves why this happens. There can be any number of reasons with a new starter, but with long time employees, when it comes to basic pay this should be correct.
So why are the figures for incorrect or late payments to employees so high?
One obvious reason is that over half the respondent companies stated that they are still paying employees from a spreadsheet, and that over a third stated that they still used paper timesheets.
Both of these systems are more likely to cause payment problems due to human error, which can put a strain on the HR and Payroll teams and cause ill feeling amongst colleagues.
As an employee, incorrect payment is a huge problem, and can cause further problems down the line with low morale, engagement and motivation. A company should be a finely oiled machine if everyone is working to the best of their ability, but when morale is low, productivity levels go through the floor.
Employee motivation is something that all departments have to work to keep at a good level, but if there are problems in payroll, all efforts to keep morale high will be exercises in futility until these problems are corrected. To make it a easier for HR and Payroll to prevent anomalies in employee pay including late payments it is always advised to move to a purely electronic system.
One version of this is Breathe HR, a cloud-based integrated HR and Payroll function, which ensures that all employees are more likely to be paid on time and correctly. This system is one that we have found to be a really useful tool in the HR and Payroll armoury, and it is much easier to pay through this than you would imagine. We have helped our customers onboard systems like this, and it really does make a huge difference. Not just in terms of payments either, as there are several functions available which can make life a lot easier for those involved.
For more information on any of the above, or to speak to us about your HR queries, please contact us here.