Creating a Payroll Manual: Putting Your Procedures into Writing

HR Resource
November 5, 2012 — 1,900 views  
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Creating a Payroll Manual: Putting Your Procedures into Writing

Payday is the most important day of the week for most employees. In slow economic times, people exist from one paycheck to the next. For this reason the production of a correct and complete payroll is vital to the livelihood of employees as well as the success of the business. Extra effort should always be put forth to have payrolls completed on time and without error.

One of the best actions a company can take is the preparation of a payroll procedures manual that explains in detail the “how’s” and “when’s” of payroll policies. Having a written detail of the system used and the courses of action taken can eliminate questions, confusions and problems.

Rules should be established concerning when time records are to be submitted, the time required for processing and the projected pay dates. Procedures should be in place to govern the method used to rectify any overpayment or underpayment errors.

Employees should be informed how payroll managers will arrive at wage and hour totals. The manual should plainly state how and when straight time converts into overtime and when overtime is reflected as compensatory time or flex hours.

The manual should explain which days have been established as paid holidays and the procedure followed if the employees are required to work on those days. It should also be explained thoroughly how travel hours are to be paid and if weekend hours are to be classified as overtime.

Leave time should also be clarified. The standards by which sick time, vacation time and personal time are earned and details of how this leave time can be used should be spelled out plainly. Questions may arise such as whether overtime can be earned during the same pay period that leave time is used, whether leave time can abut holidays or whether off-hour staff meetings will be figured as overtime. These and similar questions would seldom be raised if a complete and concise payroll manual were made available to all employees.

Another item that should not cause confusion but does is deductions. Some employees fail to understand deductions such as Withholding taxes, FICA and Medicare. Some effort should be placed into explaining these deductions and items such as deferred compensation and pretax salaries. Further, the manual should discuss all insurance programs that could affect deductions and the percentage of company versus employee responsibility.

 

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