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Get your payroll ready for the year-end

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As we hurtle headlong in the festive season, payroll managers need to start preparing for their companies to scale down operations or shut down completely over the December holidays, says Anton van Heerden, MD of Sage HR & Payroll.

Usually, they need to be ready earlier in the month for the pay run than they do in the other months, and they also need to think about calculations for bonuses and leave pay.

Here’s a checklist of the most important things to get done before the end of year rush.

Do bonus calculations
Payroll managers need to sit down with the financial and line managers well before the December pay run to calculate year-end bonus payments, if any. Then, they should also aim to communicate the news – good or bad – to employees ahead of the pay run so that they know what to expect.

There might be a 13th cheque, profit sharing or performance bonuses for staff that qualify. Bonus payments need to be made in accordance with the company’s contract with each employee and any relevant agreements with trade unions and bargaining councils. Consider if newer employees are entitled to bonuses and the proportion of the bonus they will receive. Some companies pay bonuses along with the usual December pay run; others pay it separately. Either way, keep staff informed.

Calculate leave pay and leave balances
At the end of the year, companies also need to do the complex calculations necessary to determine their employees’ correct leave pay. To get it right, you must follow the dictates of the Basic Conditions of Employment Act (BCEA). This law outlines the rights of employees around annual leave and severance or notice pay.

The calculations must take into account variable income types and be based on the average earnings of each employee over the 13 weeks preceding the date upon which leave becomes effective. There are many factors that affect the calculations, including overtime, commissions, allowances and other payments.

Also ensure that there aren’t any employees who owe you leave or any who have built up a huge reserve of leave days.

Arrange the skeleton crew
With summer in the air and children on school holidays, lots of employees want to take leave over December. It’s important to ensure that there are enough people around to attend to urgent customer requests, answer the phones, and keep an eye on the business. Double check who has taken leave and who is available to work to make sure that you will not be short-staffed.

Prepare for January
The first week of January is always frantic for the payroll manager. Having spent their December salaries and bonuses over the festive season, many workers are generally looking for advances or loans to tide them over until month-end.

Be ready to answer the barrage of requests with a standard policy, irrespective of whether you are able to help or not. In December, communicate the January payday to employees and advise them to put aside some cash for this long month so that they can afford schoolbooks, tuition fees, and so on.

If you really want to start 2015 on top of your game, you can start to prepare the data for your employment equity reports, which can be filed online before 15 January.

Closing words
Automated payroll and HR solutions can help you to make most of these processes far simpler by keeping records and doing the complex math for calculating bonuses and taxes or doing the individual sums necessary for leave pay. They can also handle advances seamlessly and make it simple to manage separate bonus and salary/wage pay runs.

Given the complexity of these calculations and ever-changing Bargaining Council agreements, tax regulations, and labour laws, an automated solution is the most convenient and accurate way to run your payroll. And today, with the advent of cloud computing, it is quick and easy for an organisation of any size to roll out a modern payroll and HR solution that meets its needs.

Rather than poring over a spreadsheet this festive season, you could do most of your numbers with a mouse click or two, and spend the rest of the holiday season at the pool.