Establishing and Maintaining a Payroll System - Case Study Example

Establish and Maintain a Payroll System: Assessment Table of Contents Table of Contents 2 Task Payroll - Case Study and Question/Answers 3 Whatinitial information is required when commencing employments? 3 Employment status: 3 Personal information: 3 What deductions and allowances may be included in their pay? 4 Allowances: 4 Deductions: 4 What information will they receive from the payroll department? 4 What are the leave entitlements? 5 Permanent Full-Time: 5 Permanent Part-Time: 5 Casual Employment: 5 Fixed-Term Employment: 6 Task 2: Payroll Procedures Manual Questions/Answers 6 Brief summary of the payroll system for the company 6 Role of payroll staff 6 Security Information 7 Legislative Requirements 7 Information required by employees 8 Forms produced by payroll department 8 Employees entitlements 8 References 9 Task 1: Payroll - Case Study and Question/Answers What initial information is required when commencing employments? The trainees in Australia are offered a range of working time combinations preceded by trainings. These opportunities are provided in a range of full time, part time, and school-based trainings. The scope of the case covers a full-time permanent employment. The elements described below are important to provide understanding of the payroll system to a group of new trainees. Employment status: The employment status in Australia comprises four categories: full-time permanent, part-time permanent, casual, and fixed-term employment. Full-time permanent employment status requires a thirty-eight-hour work week and some additional hours if required. Part-time permanent employment presupposes contracts with fewer working hours, and benefits are also adjusted accordingly. Casual employees are allocated as an essential basis of the organization. The type of contract depends on the employment status as well while the probation and qualifying periods are applicable with full pay (Vandome, 2004, p. 17-22). Personal information: It is required to complete a tax declaration form at the beginning of employment. Personal details, namely full name, residential address, phone number, emergency contact details, details of superannuation fund, tax file number, bank account number, and age are required. The failure to provide tax file number has implications on tax deductions; to maintain a regular communication, these details should be updated in case of any change (Fair Work Ombudsman, Australian Government, 2012). What deductions and allowances may be included in their pay? The allowances and deductions are a part of the payroll system. It is important to understand the impact of entitlement of allowances and cases of deductions. The allowances and deductions should be agreed in the employment contract. However, they can also be agreed on later stages should the need arise. It is essential that a written agreement on the entitlements and inferences be signed before the employee begins to work. Allowances: The common types of applicable allowances are mainly associated with undertaking work outside the scope of the job. It is also a common practice that some allowances are entitlements mentioned in the job description, and they are provided accordingly. The common type of allowances are for hazardous work, trial periods, extra efforts for opening and closing the business, training courses, travelling for work, and essential attendance at an event. Deductions: The deductions from the pay cannot be made if they are not communicated prior to the event. The deductions made from the remuneration of an employee are mainly based on the law or court orders. The income tax deductions, superannuation or health insurance contributions, and trade union dues are formal type of deductions. However, additional deductions can be made in case of private use of credit cards, mobile phone, or car fuel (Fair Work Ombudsman, 2012). What information will they receive from the payroll department? The payroll department is obliged to provide employees with information regarding their payroll, and pay status. The employees can seek information concerning all payroll issues. The general information provided by the payroll department is about the policies of the organization, and in some cases may not be applicable to all employees. The relevant information provided by the department is primarily about Australian Business Number (ABN), date of wages payment, period of pay, last pay date, number of paid hours, overtime and normal payment rates, amount of the payments, deductions, superannuation details, gross wage, tax amount, net wage, and allowances. The loadings and penalty rates and other amounts paid are applicable for casual employees. What are the leave entitlements? The leave entitlements are mainly dependent of the type of employment offered and the contract offered by the employer. The leave entitlements for all types of employments are mainly defined by the National Employment Standards (NES) in Australia. The type of employment is determined by the contract offered by the organization. The leave entitlements according to the types of employment are defined as follows below (Fair Work Ombudsman, 2006). Permanent Full-Time: Four weeks of paid holidays, along with ten days of personal/carer’s leave, community service leaves for community welfare activities, and a jury service. Permanent full-time workers are also entitled to public holidays, and after the completion of one year period, they are also allowed to secure one year of parental leave without pay. Permanent Part-Time: Part-time employees enjoy the same types of leave entitlements as full-time employees do; however, the number of their leaves is calculated according to the ratio of their working hours per week. Casual Employment: They are not entitled to the annual or sick leaves; instead, they are paid casual loading. Fixed-Term Employment: These employees are entitled to the annual and sick leave, calculated on the basis of the period of employment. Task 2: Payroll Procedures Manual Questions/Answers Brief summary of the payroll system for the company Marsden (2010, p. 521) observes that payroll system of an organization is designed to allocate, record, maintain, and produce correct accounts of attendance, pay, leave, allowances, deductions, tax, and termination of an employee. The payroll system is designed to ensure information security and confidentiality. The access to the information is limited, and only authorized personnel are allowed to access classified information. The legislative requirements and government forms should be maintained and updated according to the latest developments. The payroll system is required to assist the payroll staff in providing exact information to employees. The legal obligations to meet the criteria are incorporated in the system to ensure fulfillment of all requirements. Role of payroll staff The role of payroll staff is dependent on the size of the organization. The payroll of large organizations with multiple branches is managed by finance professionals. In small to medium sized organizations, payroll is managed by one payroll manager, and some organizations also outsource their payroll management. However, the job scope of payroll staff includes calculations for the pay, checking, and processing the payment. Payroll staff record employees’ data and prepare relevant documents; they are also responsible for information security and confidentiality. Besides, payroll staff are responsible for maintaining employee records for attendance and time management. They are also responsible for keeping legislative requirements up-to-date. Payroll managers overlook the above mentioned processes, and at the same time they may be in charge of managing human resource issues: developing contracts, policies and procedures, and providing trainings to employees for payroll of the organization. Security Information Security and confidentiality are an important part of the payroll system. The security procedures should be devised in order to safeguard personal information of the employees. Apart from it, they should be developed to maintain the integrity of the time management registers and ensure the elimination of dishonesty (Lambert, 2005, p. 128). Employees are required to sign pay slips in case of cash payment, and updating of pay vouchers in case of bank transfers is necessary. The storage of electronic records should be given limited access, and only authorized users should be allowed to view, retrieve, save, and maintain information. It is also required to perform regular audit of the information security procedures and make changes and improvements accordingly. Legislative Requirements The legislative requirements for the payroll are broadly covered by the national employment standards (NES), covering mainly minimum ten types of entitlements. However, the Fair Work Act, passed in 2009, and Fair work Regulations, signed in 2009, also cover a range of payroll legal requirements. The Payroll Tax Act (2009) is a legislative requirement for businesses to follow. This act is a comprehensive guide on the applicable payroll tax rates and minimum threshold since tax rates are different in all the states. This also explains the payroll tax rebate, grouping of employees, administrative issues, objections and appeals, and checklist for taxable items (Revenue South Australia, 2012). Information required by employees The information included in the pay slip is relevant for employees. It includes the employee’s name, the ABN number, gross and net amounts of pay, and any entitlements paid. The employees of the organization also require information about their pay date, pay period, allowances, overtime, rules about deductions from wages, and hourly pay rate in case of part-time employment. If an employee is paid a salary, the employer is obliged to provide the annual rate of pay as of the last day in the pay period. The employees can also ask about their leave entitlements and the name and number of the fund for which deductions are made; also, they can demand from the employer their time sheet and the amount of allowances earned. Information about the overtime period, rate, and amount is also relevant for employees. Forms produced by payroll department The forms produced by the payroll department are tax declaration forms, pay slip forms, monthly time record forms, and name and address change information forms. The payroll vouchers, absence report, direct deposit forms, requests to transfer sick leave to vacation, and bi-weekly time records are also produced by the department. Employees entitlements The payroll procedure should ensure that employees are paid accurate pay and enjoy their entitlements without hindrance. Employee entitlements are an important part of the payroll system. The system is required to certify that each employee entitlement is maintained correctly. The categories for entitlements include pay, leave, and agreed allowances. The common examples of entitlements are wages for ordinary hours, overtime wages, annual leave, personal/carer’s leave, allowances, and minimum prior notice; moreover, additional allowances as agreed are also part of their entitlements. References Fair Work Ombudsman, Australian Government, 2012. Employer obligations in relation to employee records and pay slips, [pdf] Available at: http://www.fairwork.gov.au/factsheets/FWO-Fact-sheet-Employer-obligations.pdf [Accessed 26 September 2012] Fair Work Ombudsman, 2006. Entitlements under the National Employment Standards (NES) - Conditions of employment - Employment - Fair Work Ombudsman, [online] Available at: < http://www.fairwork.gov.au/employment/conditions-of-employment/pages/entitlements-under-the-national-employment-standards.aspx> [Accessed 26 September 2012] Lambert, V, 2005. Payroll a guide to running an efficient department. New Jersey: John Wiley & Sons. Marsden, SJ, 2010. Australian master bookkeepers guide, 3rd edn. Sydney: CCH Australia Limited. Revenue South Australia, 2012. Payroll Tax Guide to Legislation 2012-13, [online] Available at: http://www.revenuesa.sa.gov.au/GuidesToLegislation/G2L_PRT_2012-13.pdf [Accessed 28 Sep 2012] Vandome, N, 2004. Getting a job in Australia: working in Australia- a step-by-step guide. 5th ed. Oxford: How To Books. Read More