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Could you be paying the price for incorrect payroll?

A reminder for payroll cut-off pops up in your calendar. How does it make you feel? If you have someone in place to manage PAYE for your business, you might dismiss it without a second thought. But, if you are managing payroll yourself, it could be an unwelcome interruption to your day.

Holiday calculations, tax codes, leavers and changing legislation can make payroll a long and complicated process. The thought alone can instigate a headache.

Paying employees correctly and on time is not only a legal requirement but also an essential function of any successful business. To put it simply, you expect employees to turn up and work, and they expect to get paid. This agreement forms the foundation of your employment relationships. So if payroll goes wrong, it can cause all sorts of problems.

Whether an honest admin mistake or complications caused by a difficult situation with an employee, payroll problems can get ugly. They also come with a high price to pay. Along with time spent getting back on track can come back payments and sizable fines.

There are many tricky aspects of payroll to be aware of. We have listed some of the riskiest below.

Withholding wages

There can be times when an employee fails to complete work to the standard expected and you may feel it justified to deduct their wages. But be warned, this is a risky move. Failure to pay someone wages that they are entitled to is known as an unlawful deduction and can bring a claim against you.

In fact, docking wages is known to be a major cause of Workplace Relations Commission (WRC) claims and according to the WRC over €3 million in unpaid wages was recovered last year.

Inaccurate calculations

Using payroll software should give you peace of mind that calculations are accurate, and that PAYE is being processed correctly. But if the tool you are using does not meet the unique circumstances of your business, you could be at risk of underpaying staff.

This was found to be the case in a recent appeal ruling on the incorrect renumeration of junior doctors in the UK. The payroll software used did not accurately calculate data on rest breaks, resulting in millions of pounds in unpaid wages.

It can be a challenge to keep up with changing legislation on working hours, breaks and holiday pay. Anyone in charge of managing your payroll software needs to be informed on how to keep systems maintained.

Incorrect classification

We see this a lot. Labelling someone as self-employed but treating them like an employee means you could be incorrectly paying them. Some companies working with contractors have come under fire in recent years for this. You may be familiar with high profile cases involving Uber, Deliveroo and RTÉ.

Each employment status comes with specific entitlements and it’s important to know the difference when hiring staff for your business and processing payroll.

Need an expert eye on your payroll?

If processing payroll for your company has become a major pain give us a call. We’ll make sure you’re compliant and give you the time back to focus on developing your business.