Managing payroll through the coronavirus crisis
Article 3 minute read

Managing payroll through the coronavirus crisis

24 March 2020

Coronavirus is bringing many challenges to businesses around the globe but providing support to employees is a high priority.

There is not a company in the world that will be left untouched by the effects of coronavirus. With global markets reeling and citizens confined to their homes, the coming weeks and months will put companies’ business continuity plans to the test as never before.

Many governments are moving swiftly to introduce new measures to support the economy and  their populations during  these difficult circumstances. A list of government support schemes can be found here

Businesses will need to adapt their systems and structures to keep up with the changing legislation. Companies should always prioritise the best interests of their staff wherever possible, and HR and payroll issues should be the focus now.

Ensuring people are paid the right amount at the right time is crucial to maintaining trust and motivation of employees and can be a challenge at any time. Now with sharp economic shock, companies of all sizes  will come under intense pressure to get it right.

Evolving laws

Companies have an obligation to stay on top of emergency legislation as it is announced, and rapidly integrate it into their policies. For multinational companies, this adds another level of complexity. Clear communication and processes are more important than ever and will be key to managing uncertainty among employees and third parties as the situation evolves.

From an HR and payroll perspective, there will be changes relating to sick pay, overtime, and leave − compassionate leave in particular.

In the UK, for example, there has already been a move from the government to fund statutory sick pay (SSP) relating to coronavirus for businesses with fewer than 250 employees. Similarly, it has changed legislation to enable SSP to be paid from day one rather than day four, as is usually the case. Companies now need to ensure this update is reflected throughout their systems and that payroll  is adjusted.

It is likely that other countries will adopt similar measures, and further down the line we may well see SSP extended to cover longer periods.

Payroll taxes are another area where countries have been passing legislation to help businesses. For example, in Australia, there have been payroll tax waivers passed in Queensland, Western Australia and Tasmania. Each scheme contains different specifics, such as deferral time and payroll amounts. It is imperative that companies pay close attention to the new rules and apply them to their current payroll systems in each jurisdiction.

Unemployment benefits are another focus of governments around the world as businesses are being shuttered for indeterminate amounts of time. For example in the Netherlands, companies faced with a loss of turnover can apply for the government scheme ‘Emergency fund bridging employment’ intended to allow companies to pay their employees on permanent and flexible contract. Variations of unemployment benefit schemes are being adopted worldwide.

The new normal

With staff welfare a top priority, some companies may decide to go beyond the legal requirements and voluntarily adopt measures to ease the stress and financial burden on their staff.

This will also help companies maintain a strong employer reputation  when the crisis comes to end. Such policies could include paid leave to allow people to care for relatives, or to support self-isolation.

With travel restrictions in place and sickness causing last-minute changes of plan, there will be an increased number of employees wanting to cancel or move leave. Flexibility regarding adjusting paid and unpaid holiday is another area some companies may wish to explore. Accommodating this will require adjustments to policies and internal working practices to ensure everything remains in sync.

Overtime policy and the use of contractors may need to be reconsidered, as employees look to find workarounds in the new normal. This will have implications for payroll and tax in both the short- and medium-term.

Dealing with change

Faced with an astounding amount of changes, companies must focus on maintaining clear communication with staff, including updating handbooks. They must ensure all new policies are consistent across jurisdictions but fall within the limits of local regulations.

There is also a possibility of  the lack of adequate staff to deal with filing and processing, as well as delays to third-party payments. Workflows and processes will need to be adapted in anticipation of this. Mitigating the risks of late payroll or non-payment needs to be a priority. If any delays are expected to payroll, this needs to be flagged clearly and early.

The first step is to conduct a workflow analysis to identify processes that are critical in paying employees and filing tax obligations. Can all of the systems be accessed remotely?

Resourcing is another issue that needs considering. Are there adequate back-up staff if key team members are unavailable? As far as possible, Companies need to ensure a broad knowledge base and avoid skillsets being siloed.

Third parties and partners need to be kept informed about any changes to ways of working, or potential delays in payment or processing. They, too, could institute new workflows and these changes need to be reflected and shared around companies.

Finally – and crucially – there needs to be clear communication to employees.

With further uncertainty ahead, ensuring policies and systems are in place to support staff and staying on top of the constantly evolving legislation in every jurisdiction where your company operates must be the immediate focus for all businesses.

If you need help in understanding what support is available for your business, get in touch with our experts.

Written by

Gary Wright

Head of Solution Architects, Global payroll and HR services.

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