Calculating an organization’s payroll may seem like a relatively simple task:
- Take each employee, identify the number of hours worked in a pay period, multiply by the hourly wage and then pay that amount.
This would be correct in an ideal world however in the real world things are a lot more complicated and so a lot of errors are made in determining payroll. In addition to identifying the specific wage each employee makes and identifying the number of hours worked for each employee, organizations must also take into account:
- Sick days
- Vacation days
- Overtime
- Statutory holidays
- Provincial/State tax deductions
- Federal tax deductions
- Benefits
- Retirement Plans
- Unemployment insurance
- Etc
Statistics have shown that 33% of employers have made payroll errors which have a variety of impacts such as legal implications, unhappy employees, lost revenue, etc. Studies have also shown that many organizations overpay employees as a result of human calculation errors. Even if organizations discover this overpayment recouping the payment can become a long process which will negatively impact morale in the company.
What can you do to avoid payroll errors?
A great solution to avoiding payroll errors and the negative impacts associated with them would be to automate your organization’s time and attendance using workforce management software. In an automated system, employees can sign in and out of work using a time clock which lets employers know exactly when their employees came into work and when they left. The time clocks in combination with the software calculates the exact amount to pay an employee based on their hours worked, wage and the various other considerations mentioned above (taxes, benefits, etc).
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