Lottie Bernard is a payroll compliance and governance expert who has 38 years’ experience working as a payroll specialist and for the past 13 years of her career has worked with a range of clients on implementations and remediation compliance. We spoke to Lottie about best practice for payroll compliance and tackling some of the key issues payroll professionals face using technology and more efficient processes.
Tell us about your payroll experience
I’ve worked a lot in government. Back when I worked with the NZ Post Office, it was all manual calculations in those days which shows how long I’ve been in payroll but you learnt how to calculate a pay compared to nowadays where I hear ‘oh the system is right because that’s how it was set up’. It’s an eye opener when you ask a person to show you the calculation and they can’t! I did about 9 years in Australia working for Queensland and Federal government; I worked for QSuper, Qld Shared Services department and then moved across to the ATO (Australian Tax Office) to work on and with the disestablishment of the Child Support Agency from the ATO. I’ve worked with a range of big clients like Fletchers, Mighty River Power, and APEagers in NZ. A lot of the work I’ve done in the past has been as a payroll specialist, then I moved to becoming an implementation functional consultant for vendors. I’ve worked across DHB (District Health Board) clients as well as the implementation for MBIE and the consolidation of those 4 government departments, working on parts of their remediation to ensure the system was set up to be compliant going forward.
I’ve moved from builds and design of software and now I look at remediation compliance. It involves looking at the builds, and aligning the builds with legislation and agreements as this is generally where the issues are found. The payroll system often isn’t designed to meet the employee agreements and large organisations often have many agreements across their business.
What are the biggest challenges with payroll compliance?
It’s the same no matter what company - it’s payroll getting their head around interpretation of the Act. It’s not black and white; there’s grey areas. A lot of payroll areas fall under the umbrella of HR which I understand because of onboarding etc. but a lot of the HR areas don’t understand the intricacies. Their interpretation of the act doesn’t mean that it’s designed in the software to produce the result they want and because of the segregation of duties, they only have access to certain areas of the payroll e.g. they don't see the calculations screen or leave payment rates, like a payroll person would see, therefore you find the gaps where policies and guidelines should fill but don’t cause there isn’t one or they are written up in such a way that it contradicts legislation. That connection is missing and that’s where I see some of the downfall but not all the time.
Us dinosaurs who have been in the payroll industry for years are now moving out of the profession. People behind us often don’t go through or get the proper training because there isn’t a recognised training program to attain accreditation (like a degree) so knowledge is either passed across (rightly or wrongly) or on the spot self learning so there is a gap to ensure that you have the right person and the person knows how the payroll system has been configured e.g. point out areas of the system where issues have been identified or a query from an employee requires you to go to all relevant areas of the system / solve them when needed.
How could the latter issue be solved?
Payroll should be acknowledged as a recognised profession with a degree similar to HR. This would allow/align best practice and standardise a process across businesses. At the moment everyone has their own interpretation and let's face it, employers/payroll believe they are performing best practice in their payroll area but ‘by what or who’s measure’?
You’ve had a lot of retail clients. What challenges do they face?
Variability in hours and correctly calculating holiday pay and entitlements. That would be the top challenge. The second: casuals. A lot of those retail industries and brands have a hard time trying to manage their casuals. There are certain rules you have to follow when employing casuals. You have that 40/10 rule which entitles them to leave and do you know who is a ‘true’ casual and who isn’t? The lines are blurred between employment types so employers have to be very vigilant and make changes in payroll when necessary.
Record keeping for time worked is done on paper a lot. I’m not sure why people don’t have faith in clocking systems and biometric apps. Retail businesses need to find a reliable system that can interpret rule sets based on employment agreements and calculate the correct entitlements for each unique employee such as overtime rates, award based allowances or public holidays that cross a shift.
If you were to make the perfect payroll system, what features would you have?
Definitely anything that takes away the need to do a manual process. It’ll have to have built in everything you can have putting data into it - in today's technology there is so much integration to other applications and I find that pushing data upstream, downstream, there is so much work to ensure the integrity of the data and this can happen especially where there are upgrades e.g. I have seen payroll systems where the data dictionary has moved/changed and all the reporting that is held in SQL requires updating which I’ve seen cause many a headache for the DBA’s. If you can have all of your systems built into one including payroll, time and attendance, rostering and reporting, data can’t have errors and reporting won’t go wrong - one source of truth.
When you’ve been in the industry for as long as I have, you can see when things are wrong. Someone merely running the pay isn’t a payroll specialist or payroll SME. They have to know the ins and outs of payroll e.g. if the payroll is significantly up or down, you want that payroll person to use their investigative skills and payroll knowledge to be able to understand and use their analytical skills to find what the cause is if it’s not obvious i.e. not related to backpays, redundancies or incentive payments. If they can’t see there’s been a variance and just hand over reports because they reconciled that the payroll report total matched what went to the bank, it’s something to be concerned about. It defines their role as more of a payroll administrator and we need more payroll analysts and/or payroll specialists.
What advice would you give to payroll professionals to ensure compliance?
I always tell people to get their company to send them to an EMA course, they are brilliant. They have the right people and speakers from all spectrums within the payroll industry such as employment lawyers, tax specialists etc and their consultants on the phone when you ring with a query are so informative and they always confirm in writing with assurance that they have also confirmed with legal - win win.
Payroll software must be designed with payroll experts involved. I’ve found past clients to have been performing calculations incorrectly because their software was missing a key comparison calculation albeit the payroll person hasn’t had the knowledge or understanding of it and didn’t know there was one. You need to have visibility of what a system is doing to understand the problem i.e. I understand that back end screens, fields etc are for vendor consultants however, I don’t see why they can’t make these ‘view only’ for the payroll person(s) so that they can follow the process in the system as well as give more detailed information to the vendor support team if they find/see an incorrect set up.
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