Every organisation will, at some point, need to familiarise itself in the world of payroll and all the associated challenges of legislative changes, regulatory compliance, BEE scorecards, profit sharing and many more.

It is a highly sensitive process that requires deep expertise and knowledge, which is why many forward-thinking organisations outsource their payroll to professionals with the right skills and expertise.

Nowhere is this truer than with an executive payroll. Complying with legislation that governs remuneration for executives is a complex process for a variety of reasons. For one, executives’ remuneration is often only finalised towards the end of the tax year or even in the following one.

In addition, directors may receive dividends, profit share, or a large bonus at the end of the year, so at that time, the bulk of their tax will need to be paid to SARS at that time.

“This is one of the many reasons it makes good business sense to outsource the executive payroll function,” says Edmund Pohl, head of outsourcing at PaySpace. “It enables businesses to leverage the necessary expertise to make sure all compliance and governance boxes are ticked.”

Another compelling reason for outsourcing the executive payroll, is confidentiality. “Typically, within an organisation, there will be a mid-level executive who handles the payroll. However, having them know the ins and outs of each director’s salary package, isn’t ideal.”

He says when this function is outsourced to professionals, the principle of least privilege is applied, ensuring only those that strictly need to know the details will have access to them, and because they do not work at the organisation, there is no chance of confidential information leaking out.

“This is one of the most difficult areas to manage when it comes to handling executive payroll in-house. It’s not merely about keeping pay grades and bonus amounts confidential, but keeping personal matters relating to court-ordered payments or similar,” adds Pohl.

Unfortunately, he says it’s not uncommon to discover that confidential payroll information is shared with the general office in the form of idle gossip, irrespective of whether it is malicious or not, but it can end up seriously damaging the business.

“Outsourcing the executive payroll is a simple and surprisingly affordable way to manage the confidentiality of executives’ remuneration. Any payroll specialists will have a firm policy in place to ensure that payroll matters are only discussed with very specified employees within the business. They will respect the privacy of each executive on your payroll and ensure that no information falls into the wrong hands,” says Pohl.

Then there’s the question of accuracy and paying on time. “With executive payroll, there can be no room for error, and paying these high-level employees late simply isn’t an option. To gain that accuracy, PaySpace has rigorous checks and balances built into the payroll process, in fact, we tend to try to automate as much as possible to ensure the least possible amount of user intervention is required.”

Over and above all these benefits, he says the cherry on top is that outsourcing the executive payroll is highly cost efficient.

“This makes sense, because it is a far smaller sample of employees that need to be dealt with. Think of it as a 20% to 80% ratio. Because dealing with an executive payroll is a more onerous task than it is for normal employees, you might spend as much as 80% of your time managing the process. However, when you outsource it, you’ll find the cost is only 20%, which saves the company both time and money,” he concludes.