Home Retail What HR can learn from retailers’ recent payroll errors

What HR can learn from retailers’ recent payroll errors

by Ozva Admin

Payroll is making the news headlines. More specifically, systemic payroll errors – the result of ongoing underpayment of employees by Next and Asda, something both employers attributed to problems with payroll providers.

Affected employees, as well as those who work in human resources, payroll, and finance functions, will know that this isn’t just a numbers issue that can be fixed with some quick tweaking and retroactive payments. It’s a real-world issue that has implications for the well-being of workers, as well as their ability to buy essentials, pay bills and stay out of debt, while also affecting key business performance metrics.

Against the backdrop of the current cost-of-living crisis, skyrocketing inflation, and headline disputes over fair wages, the impact of payroll problems, whether on an individual’s health and finances or the brand of a company, is now exacerbated and magnified. So how can those with payroll responsibilities get it right?

Payroll errors have ‘heartbreaking’ impact on employees

For Gethin Nadin, director of innovation at Benefex and author of RR. “Even in the best of times, most of this country had around £500 or less in savings. This gives people no protection when it comes to payroll errors,” he explained.

“Even a few days late on payment can have a big impact: If there isn’t enough money for direct debits (usually set for payday), people end up in the red, get phone calls from creditors, and end up stressed.”

This impact can be seen in the details of the Asda and Next payroll debacles. At Next, staff, some of whom are already paid less than the National Living Wage, were forced to turn to food banks after their employer made payroll errors.

At Asda, staff were paid less than £500 at a time, causing employees to skip meals and turn to payday moneylenders. Some reported that their benefits and credit score took a hit.

Nadine Houghton, GMB Country Officer for Asda, said to guardian the situation was “heartbreaking”, adding that “during a cost of living crisis, underpaid workers must be able to rely on a level of decency from their employer that ensures they are paid for the work they do”.

What these real-world effects cause is highlighted in recent research from Zellis. Their Financial Wellness 2022 The report found that more than half of employees who notice mistakes with their pay experience stress and anxiety.

This can lead to health and relationship problems and the magnification of existing mental health issues which can then affect friends and family. This, Nadin said, shows the deep and interconnected impact of payroll errors.

“This should be of real concern to employers as most are now committing to employee well-being, but if you’re not paying someone accurately and on time and it causes them stress, you’re not looking after their well-being. “, said.

Understand how payroll errors affect business

According to Doug Betts, interim director of people and culture at Natural Power, quoted in the Zellis research, the effects of payroll issues can affect company culture.

He said: “Employees will forgive most things, but not payroll errors, especially at a time when many people are already feeling the effects of the cost-of-living crisis.

As Zellis research found, payroll errors can lead to loss of motivation and productivity issues. But it’s not just performance against key people and business metrics that payroll errors can affect: Failure to pay an employee properly is considered an unauthorized deduction from wages and is covered by the Employment Rights Act.

Daniella McGuigan, a partner at the employment law firm Ogletree Deakins, added that employees can take their employer to court for unpaid wages, as well as appropriate additional financial losses they may have incurred as a result. She added: “It could, therefore, be a costly mistake.”

Additionally, Paul Britton, director of Britton and Time Solicitors, explained that if an employment contract specifies a date by which an employee is to be paid, failure to pay correctly on this date could be a breach of contract leading to a employer to county court as opposed to a tribunal.

Also, if payroll errors start to make headlines, this could also affect the bottom line. Britton added: “Consumers may then decide to move away from your brand and associate with more responsible companies.”

How to get the payroll right

For Duncan Brown, Senior Associate at the Institute for Labor Studies (IES) and Visiting Professor at the University of Greenwich, a path to better payroll can be built by understanding the importance of payroll centrality, as well as the impact it has on The payment. on employees, especially those with low wages.

He explained: “Large employers should not take any chances with handing over pay to any employee, but especially to their lowest-paid workers.

“Gender pay reporting and other factors have helped improve relationships between payroll and human resources. [as a result of] payroll and HR professionals working more closely on issues rather than leaving payroll until the end of reward design.”

Sirsha Haldar, General Manager of ADP UK, Ireland and South Africa, added that getting payroll on the agenda as a priority, and therefore making sure it works, is possible if there is a broader understanding within the company of the benefits of doing it right.

He said: “Good payroll can be the gateway to higher growth and a stronger workforce, and payroll-related data can help teams manage and improve broader business and workforce strategies.”

Similarly, Dawn Lewis, content editor for the Reward & Employee Benefits Association, added that better financial education can help everyone in the company understand the importance of salary. “It’s not all up to employers, as employees have a responsibility to verify and understand their payslip, but unfortunately many don’t verify or understand, or both.

“Financial education in the workplace often needs to get back to things like educating people about what their paycheck means, not just focusing on more complex issues like pensions,” he said.

Ken Pullar, executive director of the Chartered Institute of Payroll Professionals (CIPP), believes that education is part of ensuring payroll works effectively, along with good process, good management and expertise, and effective communication and transparency in payroll. case it goes wrong.

He explained: “Payroll is complex and you shouldn’t think that the ‘computer’ will just do it. Payroll professionals must be fully aware of payroll rules and procedures and be able to respond to employees knowledgeably.”

Payment, Payroll and Pandemic Lessons

While most companies may think they understand the individual impact and strategic importance of payroll, for Brown there is concern that many employers are not learning how to provide care, through pay, to some of their most vulnerable workers. .

He added: “The pandemic has highlighted the essential role and often horrible wages and conditions of frontline retail workers. As a society, it doesn’t seem like we have learned our lesson from Covid and now the cost of living crisis.

“The deepest question [beyond how to get payroll right] that is why these bosses have so many employees, as the TUC said, one day’s pay from poverty”.

An Asda spokesman told the guardian it was “imperative that our colleagues are paid correctly and on time and we regret that this has not been the case for some of them”.

Next also told the publication that he was “well aware of the problems these payroll errors have caused some of our colleagues. We sincerely apologize to everyone affected and assure you that we are resolving these issues as a top priority.”

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