Salary disbursement frequency is a critical issue to both employees and management. The management has to implement an efficient pay frequency that minimises cost as well as being in line with statutory requirements. Moreover, employees need a robust pay schedule that they can rely on so as to allow them to plan their personal budget. Thus, determining the ideal pay frequency for the business has to be a strategic decision.
When a company decides to change their pay period, it be attributed to a variety of reasons. For the most part, it is due to easier administration while for others, it could arise due to the working culture of their employees – for instance freelancers, part-timers etc.
If your company is in the midst of changing your payroll frequency, here are some simple steps to follow for a seamless transition.
Create a team to focus on this change process
Having one team in charge of this pay period change process will help keep the transition process on track. Furthermore, it is best to ensure that the team has some relevant background in HR or payroll so as to minimise the risk of making mistakes during the transition process.
Ensure statutory compliance
Changing your pay period might mean easier payroll administration for your HR department. However, is this in line with the statutory requirements? In Singapore, for any employee covered under the Employment Act, you have to pay them salary at least once a month. Whether your company ultimately decides to pay salary on weekly or daily basis is entirely up to your discretion.
However, under the statutory legislations, an employee must be paid their salary 7 days after the end of the salary period. If the employee is entitled to overtime pay, payment for overtime work must be paid within 14 days after the end of the salary period.
Save the date
Set a target date to complete the transition into the new pay period. This will allow the team to plan a timeline and work towards timely completion. It would be particularly helpful to implement the change of pay period nearing the end of a financial year or quarter to avoid payroll book-keeping issues.
Communicate to your employees
Payday is an important matter to the employees and if your HR department is going to make changes to the payroll period, employees definitely have to be notified well in advance. Hold a question and answer with your employees to inform them about the transition into a new pay period. Such sessions will facilitate a more open discussion and allow employees to feel heard. Furthermore, it allows immediate clarifications of any queries that employees might have, thus preventing any confusion.
Transiting into a new payroll period is no doubt a critical decision for the company given its immense impact on the company’s costs and resources, compliance as well as the employees. Nonetheless, with proper planning and effective communication to your team and employees, it should allow for a smooth transition into the new payroll period.
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