The Wallet Pandemic: How COVID-19 is Reshaping PayrollWednesday July 22nd, 2020
Payroll practices across organizations have continuously been urged over the years to adapt to societal and technological changes. Advancements within human resource management and technology have led organizations of all sizes to explore the most effective ways to sustain their payroll practices and consequently the livelihoods of their employees and their dependents.
Over the years, the sphere of human resource management and payroll, specifically within the African continent, has seen shifts from physical lines outside departments and banks to receive monthly checks to remunerating thousands of employees through a few clicks behind the screen. With the ongoing COVID-19 pandemic, organizations have been forced to rethink how HRM and payroll software and services could be used to increase efficiency.
Challenges brought forth by COVID-19
Social Distancing – Impact of Payroll Administration and HR Activities
With the onset of the COVID-19 pandemic spurring the need to avoid physical interactions and confining individuals in their respective homes, employers are presented with challenges in meeting the needs of their staff with as little physical interaction as possible. The need for social distancing consequently implies the minimization of interactions during the payroll process.
Activities conventionally done in person such as attendance registering and collection of paper payslips pose infection risks to staff. These processes, of which some involve the use of touch-based biometric devices and significant human interaction have stalled organizational payroll systems.
Companies, specifically SMEs, have been spurred into considering the fully digital route of bank transfers or mobile money payments to avoid physical contact. Some companies have their payroll system at the office, forcing the payroll officer to return to the office during confinement to run the payroll or to bring the sensitive system home.
Remunerating work from home
COVID-19 has blurred the lines between differentiating the work and home environment. With non-essential services staff in most countries working remotely from home, employers are faced with adapting pay, leave, overtime, and sick leave policies amongst others to accommodate employee needs and the changing world of work.
New elements need to be added to existing payroll systems to cater to the changing environment. Payroll areas such as paid and unpaid holidays, need to take into account the reduced mobility and flexibility of employees and consequently less leave of absence requests.
Homes will continue to act as the main office for a while, and thus employers have to adapt all their current practices to accommodate this change whilst fairly remunerating their employees.
Changing legal frameworks
Notably, various sectors and companies have had to reduce their labor costs through retrenchments and reduced working hours. South Africa has seen over 350 000+ job losses since their first confirmed cases. These high numbers are but a glimpse of increasing unemployment numbers across the continent.
In the context of the pandemic, Labour Law and Taxes are constantly on the move. Governments are taking measures to counter the three main interrelated economic threats:
• large-scale company bankruptcies; and
• the declining incomes of the poor and vulnerable.
Governmental response to reduced labor hours and wages through tax reliefs and emergency stipends requires companies to integrate these into their payroll system.
In this aspect, organizations must continuously alter their resources and pay structures to abide by the legislative changes of the country.
Adapting to the Changes
Adopting flexible and efficient solutions
The constantly changing work environment necessitates the need to rethink the operation process and staff remuneration packages to accommodate current needs and ways of working whilst fulfilling tax obligations. Businesses need to leverage existing human resources and payroll skills to ensure that systems are put in place that adheres to constantly evolving legislation.
Failure to mobilize resources to meet requirements could result in reduced employee productivity and legislative penalties .
More and more organizations are choosing to outsource to experts outside the organization who will do their best work, thus decreasing the in-house organizational responsibilities to enable more focus on businesses’ main activities.
The increase in demand of outsourcing of the payroll administration or the human resources functions, such as recruitment and benefits administration, and the availability of outsourced HR and Payroll providers are confirmations of how organizations are adapting to more flexible solutions.
The call for digitizing payroll and workflow processes has never been so strong. The leveraging of digital payroll platforms offers various short and long term advantages to organizations.
The introduction of cloud computing has played a crucial role in enabling businesses and governments to quickly apply solutions to respond to the crisis and maintain continuity. The technological shift to cloud computing is likely to be the key to business resilience in the aftermath of the pandemic.
Online payroll and HR services offer accessibility, automation, assist calculated decisions, and insights on staff cost with fewer health risks to parties involved.
The ability to automate payments enable companies to decentralize and dematerialize payroll flows whilst enabling employees to take charge of their experience. Employees can book leave, view payslips, and manage their records remotely. The maintenance of this data will in turn facilitate accurate decision making and based on up-to-date staff data although the staff isn’t physically present. Further, entities that employ the use of payroll software can maintain timely payments throughout the current working circumstances.
The reshaping to the workings of payroll by COVID-19 will have long-standing effects within industries. It is up to companies to adapt and re-imagine processes to keep their systems afloat.