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The Key Components to Setting Up Payroll: Part 5.1 – Company Payroll Policies

3 mins read

This article is written to provide you with an understanding of why it’s important to document payroll policies.

It would be fairly unprofessional if payroll were processed differently each period or had errors because there are no set guidelines or procedures on how the company handles its administration of salaries, timekeeping, schedules, payment methods, and other related matters such as paid time off.

A payroll administration policy establishes those internal checks and balances to control and protect this expense in any business. Having these policies documented keeps the company consistent, accountable and ensures that all employees are paid equally in accordance with the company’s current practices.

Many businesses already have their payroll policies in place, however they may not be documented and that can lead to confusion when processing pay. It can be beneficial to the company if their payroll practices and policies are documented, as it is a great place to reference to ensure payroll is processed accurately. This can reduce the incidence of errors and possibility of fraud.

As mentioned above, payroll administration policies keep the company accountable by creating efficiencies when it comes to collecting time, data entry, payment and record keeping. In addition to this, policies help guarantee that employees will receive the correct pay, as they ensure the company is following their current controls as well as federal and provincial regulations. When businesses do not comply with their governing bodies regulations, they risk having to pay expensive penalties.

HR/Payroll policies to consider implementing for your business are:

  • Employee Classifications, including Exempt and Non-Exempt
  • Standard Work Schedules
  • Overtime and Banked Time
  • Paid Vacation and Vacation Pay
  • Sick Days
  • Other Leaves of Absences
  • Fringe Benefits

Payroll procedures support the implementation of established compensation structures and systems, department budgets and collective bargaining agreements.

For further details on Company HR/Payroll Policies, see Part 5.2 of our series on Payroll, for Employee Classifications.

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