It is a fact that the functions of payroll administration and human resources (HR) management are merging, as the original barriers between the two continue to fall away. This is as a result of management information systems undergoing radical development to cater for ever-changing legislative demands.
The internal revenue ACT2000 (ACT592), the Labour ACT 651 and the new National Pensions Act, 2008 (Act 766) govern payroll processing. The complexity of these ACTs, especially ACT592, places immense pressure on payroll administrators and human resources departments.
Approximately 40% 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 to which they are due. 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 obtained to meet the needs of the company. This also includes established performance reviews, disciplinary processes, 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.
The payroll aspect of HR is critical in terms of meeting the legislative requirements including tax deductions, SSF payments and provident fund deductions. The proliferation of legislation and more expansive IRS requirements have resulted in the accounting function taking on data capture and complex reporting functions that were previously the domain of HR, such as complying to the Labour ACT regarding leave requirements, minimum working hours and so forth. Features and functionality 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 databases. There are great opportunities for HR personnel with accounting and payroll expertise.
Payroll software’s are the logical starting place for HR Systems; existing payroll database has a store of information and it makes sense from a security and management access viewpoint to create HR functionality from payroll thereby storing all of the relevant documentation and personal data in one place. Inventory management would also make sense in payroll, giving management quick access to the details and serial numbers for laptops, notebooks, cellular phones and other valuable company equipment allocated to employees.” Payroll software has evolved significantly in recent years. Gone are the days when payroll was relegated to the back office, today’s payroll software can be accessible to hundreds of employees who can submit online leave applications, training requests, applications for transfer to other branches or departments, log travel and subsistence expenses, apply for a loan or car allowance or just simply access their pay slip history to check how much PAYE they have paid to date or to 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. Already there are payroll modules designed to make life easier for management, payroll administrators and HR practitioners. Web technology has been used to break down
the barrier of distance for companies that have branch operations, subsidiaries, or sales people out on the road, improving staff communications with department heads, administrators and management. Running payroll operations online makes it possible for employees to access pay slips via the Internet from wherever they may be, provided they have a web connection. Any previous month’s pay slip 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.
In conclusion, we are of the opinion that where companies are already using payroll software, it makes sense to look at HR software extension into payroll systems, rather than take on something totally “new.”