Every company needs to record information on its employees. This information needs to be relevant, of course. Any company that goes beyond collecting simple identifying information such as name, address, contact details, date of birth, and nationality may be accused of harvesting irrelevant information. The importance of keeping full, relevant information on employees is essential for any company, as company leaders will need to have an awareness and understanding of their workforce to correctly and efficiently administer their business.
First, contact details are needed for each employee. The reasons for this are obvious and numerous. For a start, many companies send pay stubs through the mail. Quite apart from the fact that these pay stubs contain no small amount of personal information, it is essential that they be sent to the correct address. It is also important to keep address details needed to send letters for any one of a wide range of reasons.
Keeping an employee's telephone number is also important. If an employee has failed to turn up for work, for example, the company may need to call if the person failed to call in sick. As well, a manager may need to call a staff member who is not working on a given day when that person's expertise in needed to deal with a work issue. Finally, a telephone number and address for the employee's next of kin is required.
The very mention of the words "next of kin" may cause many people to think of the worst; next of kin are, after all, the people who are contacted in case of a fatal accident at work. However, the requirement to contact an employee's next of kin does not always mean that the employee has died. Generally, it will be in the case of an accident at work, but this may just be to warn the next of kin that a relative is safe and needs to be picked up from the hospital or workplace.
Details of a customer's date of birth and nationality also are important. This is demographically relevant in terms of equal opportunities legislation. Among other details, companies need to keep these records so they can prove their employment policy does not discriminate against a section of the community. Some demographic information will be collected anonymously. For example, date of birth will be kept tied to the employee and will not be anonymous, but details of race, marital status, and sexual orientation will be. These are kept purely for statistical reasons so that companies can prove they have not favored or disfavored a section of the public in their recruitment policy.
If, however, a customer comes to the company with a particular request, the company can check to see if any of its employees is specifically equipped to provide the best service. This may be, for example, a special occasion for a customer who speaks only French. If someone within the workforce has a degree in French, the company can tailor its service to the customer by providing an intermediary who can communicate at the optimum level with the customer.
A company also will need to have details on any of its workforce who have special needs. Special needs, whatever the image it may conjure up to some, do not necessarily apply to customers with impaired mobility, although this is a major part of the requirement for any company. Mobility impairment is an obvious case of special needs, and companies who employ mobility-impaired people should certainly already have the correct provisions in place. Other examples of special needs include employees with food allergies. They may be lactose-intolerant or suffer from Celiac disease. Should the company lay out a buffet for its workers, it is important that it provide gluten-free and non-dairy alternatives.
The above are just a few examples of information a company might hold on its employees. Others include details of an employee's qualifications and disciplinary records. All companies should keep these in light of the numerous cases of appeal for unfair dismissal. When all of this is considered, it shows that the work of a payroll department is far from simply issuing pay stubs and cutting checks for the company's employees. In a great many cases, an inquiry by or about an employee will either start or end in the payroll department. The dedicated record-keeping for which this department is responsible is utterly indispensable for a company.
Ask a hundred different workers exactly why they do their jobs and the likelihood is that at least 80 of them will mention the salary as part of, if not the whole reason, they do it. Some of us are lucky enough to do something we really love for a living, something that we would do even if there were no payment at all. But the simple, undeniable truth is that bills have to be paid and groceries have to be bought; and if we are doing well enough, we like to have a bit of cash left over for the purpose of enjoying ourselves. Therefore, a payroll department is important for any company with lots of employees. If the employees did not get paid, they would stop turning up extremely quickly.
Paying employees has become a far more streamlined process in recent years, with the option for companies to transfer payments electronically to their workforce by means of automated payments. This process in any given month for a big company will amount to thousands or even millions of dollars, so there is a very large onus on the company's payroll department to get it right. A couple of wrong details and the company could be looking at a very costly process to put it right. Therefore, a company needs to have its payment policy and procedures nailed down from the get-go if it wants to avoid an expensive headache.
Full-time, permanent workers, by contrast, will have a regular shift pattern and be in the job for months at a time. Typically, this style of employment is referred to as "nine-to-five" work, as a shift will often start at 9 a.m. and end at 5 p.m. Although this has become a lot more flexible in recent years, the basic principle of working Monday through Friday with eight-hour days broken up by scheduled breaks is a firm favorite with employers. Whatever the exact pattern, it is the regularity that is the issue. Because of this regularity and the stability of the role, employees are often paid by the month
Then there is the rate of pay. Generally, on applying for a job, one will see the salary quoted as an annual amount, but companies often have an hourly rate for all levels on the pay scale. The average job will have an hourly dollar rate, expressed, for example, as 10.16 per hour. Therefore, if an employee in that role works 140 hours in a month, the month's gross pay for that employee will be $1,422.40. A part-time temporary worker, who may well receive a lower rate of pay, say $6.87, and works 16 hours in a week, will earn $109.92 for that week.
Note that the earnings mentioned above are referred to as gross earnings. This is not the amount that goes into a worker's account on payday. The amount the employee actually receives is arrived at via a number of deductions. We will deal with these deductions later, but for the moment, the amount paid to employees after deductions is their net pay. Often you will find that an employer advertises for a vacancy and lists the pay as a gross amount, for the simple reason that this is a larger and naturally more eye-catching figure.
- Payroll Management: Understanding Standard Deductions
- The Essentials of Payroll
- Basic Parts of a Pay Stub
- Software Used for Payroll Management
- Payroll Management: Understanding the Process of Paying State and Federal Taxes
- Awareness of the Debt Spiral Signs
- Strategies in Operations Management
- Emotional Factors That Affect Decision Making
- How to Create a Workplace Preparedness Plan
- Skills and Abilities of Managerial Accountants
- The Structure and Anatomy of a Decision
- Delegating Decision Making in the Workplace
- Accounting Concepts: Understanding Working Capital, Cash Flow, and Assets
- Following Decision Making Guidelines
- Understanding Managerial Accounting