The main function of payroll is essentially to pay employees for work done. This however covers several activities ranging from calculating tax and paying it to SARS through to paying employees for expenses incurred or leave taken.
What your payroll involves and the specific functions you will be required to perform will depend upon the size of the company and any payroll policies and procedures which are in place. Often companies with a large workforce and a complicated remuneration system will have a payroll department and employ a number of staff to process the pay. Smaller organizations will not have the same requirements and may employ one person to do a range of functions, one of which is processing the pay.
The Human Resources (HR) and the Payroll Administration Departments are inter-related and operate in close contact. The HR Department formulates the personnel policies and manpower planning, whereas the Payroll Department will see to the implementation and maintenance of the payroll and related functions.
The functions of a payroll administrator can be summarized as follows:
The payroll process has evolved from manual wage books to sophisticated computer-based systems which perform many of the calculations necessary in the administration of payroll.
Manual systems are exactly as the name describes a manual system of calculating employee pay. Manual systems are very time consuming and require an enormous amount of cross checking and reconciliation. Due to the time-consuming nature of a manual payroll system, they are only suitable for employers with uncomplicated payroll requirements.
Computerized payrolls are becoming the preferred payroll system and unlike manual payrolls, the computer software associated with the payroll performs most of the calculations and usually cross check and reconciles the payroll. The automatic nature of computerized systems makes it very time efficient.
Confidentiality is specifically addressed in the Basic Conditions of Employment Act which refers to “preservation of secrecy” stating that you may not disclose any information, which you have obtained in the course of your duties, concerning the financial affairs of any other person, except:
As a payroll administrator, you will for example, be contacted by stores who want to check an employee’s credit references. If the store wants to know what the employee’s earnings are, ask what amount he/she gave them and confirm it. Do not give the amount yourself.
A payroll administrator should always keep the principle of confidentiality in mind. You should regard all information as confidential. Even particulars like an employee’s marital status and age should be treated as confidential.
More guidelines:
When you set up a company in South Africa, make sure that you are registered for:
As a company you will also need to be registered for company tax as well as VAT.
US:110024, NQF Level 34 Worth 10 Credits PLAN, ORGANISE, IMPLEMENT AND MONITOR WORK WITHIN THE PAYROLL ENVIRONMENT | |
Unit Standard Purpose | This unit standard is for learners in the payroll profession, or those seeking to enter the payroll profession, who wish to enhance their payroll competencies. Learners who are competent in this unit standard will be able to plan and, where necessary, agree on work methods and/or activities to achieve work objectives, to coordinate his/her own work with that of colleagues in achieving planned work outcomes and to monitor and control planned work, taking corrective action where necessary. The qualifying learner is capable of: · Planning work for payroll cycle. · Monitoring and controlling the achievement of targets planned within the payroll cycle. · Developing procedures to meet specified needs. · Implementing and maintaining procedures. · Managing appointments. |
Learning Assumed to be in Place. | It is assumed that the learner has the following knowledge and skills: · Communication at NQF Level 3. · Mathematical Literacy at NQF Level 3. · The Unit Standard “Demonstrate an understanding of statutory legislation and requirements relating to payroll administration” at NQF Level 4. |
Session 1 SO 1 | Plan work for payroll cycle. |
Learning Outcomes (Assessment Criteria) | · Tasks are identified and prioritized to meet organizational statutory and requirements. · Resources are allocated to complete identified tasks in order of priority. · Changes in priorities are recognized and resource allocations adapted accordingly. · Relevant assistance is identified, negotiated and coordinated to meet specific demands and deadlines. · Tasks are accurately defined, and appropriate information provided. · Work methods and activities are clearly defined and agreed with appropriate persons. · Work methods and activities conform to statutory requirements and organizational procedures. |
The most common payroll frequencies are daily, weekly, fortnightly or monthly. Payroll frequencies are determined by the Basic Conditions of Employment / Applicable Bargaining Council Main Agreements or Company Policies.
Important things to understand before a Payroll (Cycle or Process) can be established:
Full Cycle Payroll processing consists of the steps needed to pay employees each period. The life cycle of payroll processing is usually between 1 – 12 days.
Payroll processing involves processing employee remuneration [Basic Salary, Wages, Overtime, Gratuities, Allowances etc.], processing deductions and contributions [Statutory PAYE, UIF, Union fees and any Bargaining Council elements and non-statutory deductions as governed by Company Policies, Pension / Provident Fund Contributions, Medical Aid, Fines, Tools etc]
The payroll cycle is a process that you complete each time that you pay employees. The payroll cycle consists of these basic steps:
Before each payroll cycle, you enter and update information that the system uses during the payroll cycle. This information includes pay frequency and employee information, such as the Employee’s Tax Number, ID Number, Pay Rate, Variable Income, Variable Deductions etc.
This diagram shows the standard flow of events (the payroll cycle) that you use to process payroll for employees. The top line shows the flow of the tasks that you perform before and after a payroll cycle. The circle represents an example payroll cycle:
It is imperative that you review Company Information and possible Legislative Changes before starting with your Payroll as some Payroll Systems require authorization to apply legislative updates or require recalculations to be done before proceeding with the next Payroll Period.
The importance of Planning can be defined by the 5 P’s – Prior Planning Prevents Poor Performance
Take the following into consideration when planning:
The Payroll Cycle within each organisation may vary depending on the company structure, available resources, review, approval processes and pay methods.
Example:
Action | Responsible Person |
Process Company and Legislation Changes. | Payroll Administrator or Payroll Manager |
Process Employee Changes. | HR Administrator or Payroll Administrator |
Process Employee Income / Deduction / Contributions. | Payroll Administrator |
Process Variables. | Payroll Administrator |
Send For Integrity Check. | Payroll Manager |
Send For Accuracy Check. | Payroll Manager |
Process Corrections. | Payroll Administrator |
Send For Final Check. | Payroll Manager |
Send For Approval. | Payroll Manager |
Send For Payment. | Finance Manager |
Process Journal Entries. | Payroll Administrator |
Print Payroll Cycle Reports. | Payroll Manager |
Close. | Payroll Manager |
When planning a Payroll Cycle, ensure a realistic timeframe is added to each action, considering some time for unexpected delays and additional input or correctios.
A good example of a Payroll Cycle is:
Action | Timeline | Responsible Person |
Process Company and Legislation Changes. | 1 Day ** | Payroll Administrator or Payroll Manager |
Process Employee Changes. | 1 Day | HR Administrator or Payroll Administrator |
Process Employee Income / Deduction / Contributions. | 3 Days * | Payroll Administrator |
Process Variables. | 1 Day * | Payroll Administrator |
Send For Integrity Check. | 1 Day | Payroll Manager |
Send For Accuracy Check. | 1 Day * | Payroll Manager |
Process Corrections. | 1 Day * | Payroll Administrator |
Send For Final Check. | 1 Day | Payroll Manager |
Send For Approval. | 1 Day | Payroll Manager |
Send For Payment. | 1 Day | Finance Manager |
Process Journal Entries. | 1 Day * | Payroll Administrator |
Print Payroll Cycle Reports. | 1 Day * | Payroll Manager |
Close. | 1 Day * | Payroll Manager |
15 Days Total |
* Can be actioned simultaneousl