Setting Up A Payroll Contingency Plan

Having a payroll contingency plan is the key to avoid a payroll disaster. An IT hiccup, incorrectly classified employee, or even a thunderstorm leading to a power outage can all have profound impact on your payroll process without warning.

Would your organisation survive?

Why is a payroll contingency plan important?

A payroll contingency plan is not just for major disasters. It comes in handy in situations such as data loss, changes in legislations, as well as day-to-day errors. As the mental well-being of your employees is highly dependent on accurate and timely salary disbursement, it is crucial to have a contingency plan in place. A study conducted by Workplace Institute found that close to a quarter (24%) of people will start looking for a new job as soon as they experience a payroll mistake.

Contingency Planning

Implementing a payroll plan is no doubt a complex affair, coupled with the need to get it right. Here is how a payroll contingency plan should look like:

Cross-train employees

Cross-train your employees on payroll processes as well as any relevant software. Do not assume that that one payroll staff knows where all the payroll data is stored and how everything works. Ensure that there are process documents, one-on-one training and practice sessions to ensure that every payroll staff is well-trained across the entire payroll spectrum. You may assign every staff different roles from there but ensuring that every staff has a high level overview of the process will prevent any potential hiccups should the unforeseeable happen.

Give appropriate levels of accesses

Regardless of the roles that your employees play in your contingency plan, ensure that they only have the access they need. For example, details such as login credentials and payroll bank details should be secure and accessible to specific people. If your accountant requires access to your payroll software in order to rectify a payroll issue, set up a restricted security role such that they are unable to view sensitive salary information. Additionally, ensure that any external partners such your organisation’s bank, tax agencies or any other external service providers are legally authorized to speak to your backup staff. This helps to facilitate the recovery process as these external partners know who to work with in times of payroll crises.

Back it up

What happens if you lost all your payroll data? This is where having a backup process can be the difference between survival and destruction. Accurate record keeping means that your organisation is able to restart despite the disaster occurring. Best practices suggest that historical and existing payroll records should be stored in multiple places including on the cloud or removable disk and should be easily accessible and separate from existing business servers. These backups can allow your payroll staff to quickly pick up where they left off or access the payroll data remotely. Concurrently, this helps to diagnose what could have resulted in the payroll error.

Invite outside help

Developing a payroll contingency plan can be a daunting affair. If you need support managing the continuity of payroll processing, do not be afraid to ask for help. Find a reliable outsourced payroll provider that can help to oversee some of your payroll processes if you are shorthanded. Depending on their range of services, they can help to work with tax agencies or even payroll data entry. Payroll outsourcing is flexible, convenient and provides the necessary professional help and expertise when you are short of critical resources.

Practice makes perfect

Once you have a payroll contingency plan in place, have it documented in detail, and most importantly, have it in practice. Perform at least one dry run with your payroll staff to ensure that everyone is clear of their roles. For instance, have your backup team run payroll once from start to finish to ensure it runs smoothly. Not only does this familiarise your staff with the payroll contingency plan, it also helps your team to identify any potential hiccups with the contingency plan and allows your staff to provide feedback on areas for improvement.

Payroll disasters may strike when you least expect it. As such, it is imperative that your payroll team is able to respond and act quickly in such uncertain times. At the same time, it is important to regularly re-examine your payroll contingency plan as your organisation grows and changes. Your payroll contingency should align with your organisation’s specific needs. If your organization does not have a payroll contingency plan in place, it is best to get started today.

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