Dealing With The Pandemic – Key Considerations for Payroll Continuity

As the Coronavirus pandemic continues to spread country by country, global businesses are facing testing times in the most literal sense. COVID-19 has pushed the practice of business continuity to its limits, stretching the recovery plans of organizations big and small to new levels.

It’s the biggest test of Business Continuity Planning (BCP) that most, if not all, organizations have ever faced. Typically, an extended outage is something that lasts for 14 days, but we now expect the crisis to run for longer. Of course, the pandemic is first and foremost a health and humanitarian issue. And our thoughts are therefore very much with you and your employees at what is a challenging time for everyone.

The outbreak reminds us just how vital a role HR and Payroll can play to help reduce anxieties around personal finances through what will be a very difficult period. Business continuity, particularly in payroll, is therefore key to supporting people through the storm – helping them worry less about the one thing they will be concerned about most at this time – getting paid.

In this article, we’ll look at some of the impacts of the pandemic on payroll, and assess how continuity plans can be delivered effectively to support the organization and its people.

The challenges for payroll in a rapidly changing environment

At a glance: In this section, we explore:

• The impact of COVID-19 on the workforce
• The new challenges faced by global payroll teams
• Suggested resources to stay ahead of the continually changing pay legislation

While all areas of the business are being impacted by the COVID-19 outbreak, it’s unquestionably the ‘people’ parts of an organization that are the most under strain.

Engagement, productivity and well-being all become harder to manage as teams have to adapt to working from home. But from a payroll perspective, changes to employee and contractor pay are happening on a daily basis, as new emergency legislation is rushed through.

For organizations operating in a single country or region, the task is significant enough. For businesses with a global footprint, it’s a huge challenge to stay out in front of – with every country implementing its own new tax and benefit measures at different times. Even the most efficient and effective payroll teams just weren’t prepared for changes on such a scale.

How you monitor and respond to new emergency legislation in each of your countries could make a huge difference to how your company navigates the pandemic, and what kind of shape the business is in when we reach the other side.

Given the speed at which the landscape is currently moving, it’s a tall order, but resources are available.

In America, the IRS has set up its own online resource center, while HMRC in the UK has produced guidance for employers and employees, doubtless to be updated in the coming days and weeks.

We have also produced a series of useful guides to help you monitor developments around the world:

• New measures in France and the Netherlands
• New measures in Germany and China
• New measures in the UK and Ireland

Providing continuity at such a turbulent time

At a glance: In this section, we take a look at:

• The issues associated with running payroll from home
• How the cloud has significantly eased the transition to remote working

Of course, it’s not just the ever-changing emergency measures that are challenging for payroll professionals. Like any other business function, global payroll also faces the difficulty of delivering ‘business as usual’ with many of its practitioners away from the office.

With remote working the new normal for at least the foreseeable future, payroll’s ability to carry on as normal depends much on the organization’s technology stack and vendor landscape.

For many payroll teams, the use of certain files and forms, document signing or bank checks for staff payments are implausible at the moment, while on-premise payroll software is almost impossible to work with while offices are in lockdown.

Even where businesses look to navigate the crisis by issuing temporary payrolls based on the previous month’s figures, there’s a greater reliance on access to data that may just not be possible.

It’s a reminder of how critical cloud technologies are to modern-day continuity plans. For many, the cloud has been somewhat of a silver lining – affording teams visibility and anytime access to collaboration tools, let alone payroll data at a time when on-premise systems require a major workaround to reach.

With software-as-a-service (SaaS) can now deliver on its long-promised disaster recovery potential, cloud-based solutions for global payroll provide employees with reassurance and confidence in payroll continuity – something which can’t be underestimated in the current climate.

The key continuity questions for payroll

At a glance: In this section, we focus on:

• The key questions to ‘stress test’ your organization’s own payroll continuity plans
• What your payroll team needs in place to adapt to the new normal
• The importance of security and compliance at this difficult time

While we may never see the likes of this pandemic on the same scale again, the importance of payroll continuity will not be forgotten. Organizations must now ask serious questions of their continuity plans, both to navigate this challenging period and to ensure greater resilience in times to come.

Identifying and documenting the physical processes within the end-to-end payroll chain (think: signing employee documents, physical paychecks, in-person filings or statutory payment requirements) is a key place to start. This allows the business to assess and mitigate the risks associated with reduced physical access.

It’s also critical to gain a clear understanding of who performs the fundamental tasks in each location, to evaluate the impact of certain staff being away from the business. As per other critical business functions, when key payroll staff are unavailable, it’s essential that their shoes are adequately filled.

Organizations must also look more closely at their remote working arrangements, not only ensuring staff have the necessary equipment and environment to do their jobs from home, but also making sure that payroll data privacy is not compromised as a result.

Questions must be asked of the organization’s IT infrastructure. With more people than ever working from home, greater strain is likely to be placed on server resources and software. Can your HR and payroll systems be accessed remotely? Can payroll inputs be received on time?

In terms of the payment process itself, businesses must also assess whether payroll teams have sufficient access to key payroll data, such as the previous month’s payment files. Can pay slips and general ledger files be easily accessed away from the office too?

Last but by no means least, consideration must be given to your controls framework, especially relating to the processes behind releasing bank payments. New risks will undoubtedly emerge as people move to a remote set-up and controls are often circumvented, even though the best intention is to minimise disruption to the business. With increased pressure to deliver in such a rapidly changing environment, controls are sometimes relaxed, which creates opportunities for fraud.

So, do you still have appropriate access controls while balancing the need to enable your team to adapt to a new way of working? And how much is your controls framework impacted by remote working and has this potentially softened your segregation of duties?

A challenge that must be met

With the Coronavirus pandemic showing little sign of abating in the short-term, many businesses are facing their biggest ever continuity test.

For global payroll in particular, the challenge is multi-faceted – tasked with tracking and responding to the wave of new emergency tax legislation across the globe, while attempting to deliver business as usual, and to do so safely from home.

It’s a challenge that simply must be met – because now more than ever, payroll has a key responsibility to the people it pays.