Payroll in a pandemic

Payroll is a core function of business continuity, but it doesn’t always get the attention it deserves. HRD talks to Eugene LaFontaine of Frontier Software to find out why it’s so crucial – and how outsourcing payroll can benefit your business.

No matter what extraordinary events occur in the business world, one thing that employees will continue to seek is financial security through timely, accurate salary and wage payments. The COVID-19 pandemic has been the latest extraordinary event (and arguably among the most impactful) in Australia, but it’s hardly the first. One need only look back a few years to see how other events have caused business disruption and exposed weaknesses in continuity plans in the process – payroll among them.

No matter the issue, working employees still need to be paid, explains Eugene LaFontaine, National Operations Manager at Frontier Software. It’s crucial to business continuity but is often overlooked when businesses are creating their continuity plans.

“Payroll is fundamental,” says LaFontaine. “You don’t want to cause extra stress for your staff at a time when they are already challenged, coping with the many restrictions imposed on their normal way of living.”

There are myriad factors that can cause disruption to employee payments, LaFontaine points out; for example, not having a work from home strategy. Do your payroll staff have the technical infrastructure to access payroll in a work from home environment? What happens if your key payroll person/team becomes ill, or is stranded over- seas? What happens to the knowledge they have around your payroll and individual contract arrangements? For smaller businesses, it can be an especially pressing issue, particularly in situations where payroll has traditionally been the domain of a handful of long-term employees.

So, how can these issues be addressed? With continuity of pay being a major concern – for staff loyalty in particular – LaFontaine notes that businesses should be considering their future plans carefully.

“Given the drastic shift toward work from home arrangements over the last couple of months, we’ve seen a lot of businesses reassessing the way they handle payroll and looking to outsourcing as a viable solution,” LaFontaine explains.

He predicts that there will be massive growth in outsourcing in general over the next few years, as businesses begin to recover from the COVID-19 pandemic and plan for potential future issues.

“For businesses affected by the pandemic – which is almost all of them – the smart ones will be taking steps to prevent being in this situation again,” he says.

LaFontaine believes the adoption of outsourcing will address wider concerns around business continuity. Payroll services outsourcing enables businesses to better focus on day-to-day issues, and revenue retention and generation. By delegating the process to a reputable vendor, they maintain regular payroll delivery, even when there are interruptions to normal business processes.

Outsourcing also allows for a greater focus on the core business, a reduction in the likelihood of fraud, and also has very predictable, measurable costs, LaFontaine says.

“You remove the prospect of a single point of failure, because now you’ve got a team supporting your payroll,” he explains. “When you’ve got that kind of security, you ensure peace of mind for the whole business.”

Key conversations

With that said, LaFontaine explains that there are several factors businesses should consider before outsourcing their payroll operations. Foremost is data accessibility and integrity. How easily can employees get hold of the files they need to perform their day-to-day roles? Of equal importance, how can you ensure the security of those files?

“You’ve got to be cognisant of what employees can and can’t access,” says LaFontaine. “It’s no different to your usual day-to-day operations. There will be certain employees who need lots of access, and others who shouldn’t have any.”

“Given the drastic shift toward work from home arrangements … we’ve seen a lot of businesses reassessing the way they handle payroll and looking to outsourcing as a viable solution” Eugene LaFontaine, National Operations Manager, Frontier Software

“For businesses affected by the pandemic – which is almost all of them – the smart ones will be taking steps to prevent being in this situation again” Eugene LaFontaine, National Operations Manager, Frontier Software

LaFontaine is also in favour of partnering with an onshore payroll services vendor.

“When you’re using offshore processing centres, you can run into issues around communication, time zones and sometimes the interpretation of Australian data compliance legislation,” he says. “Data sovereignty is crucial, and as an employer you need to be going above and beyond to ensure that the personal and payroll data of your employees and contractors is being stored safely.”

Moving to the next level

LaFontaine also explains that there are more steps in the process than simply picking up and running with an existing payroll system. Additional fail-safes and processes should be added in order to protect the integrity of the system into the future.

LaFontaine points to his own experience as an example of this in action. Since early March 2020, he and the rest of the Frontier Software team have been handling queries from clients who were concerned about potential COVID-19 developments and were looking for ways to support their payroll team.

“The first thing we did was provide them with an alternative payroll processing plan,” he says. “It gives an outline of how things can be handled in emergency situations. Depending on the client, that might mean clauses to allow key stakeholders to approve payments remotely through digital signatures, or moratoriums on things like master file changes. It should also reinforce the integrity of the payroll process once conditions return to normal.”

LaFontaine encourages companies to have clarity around exactly what they’re outsourcing when it comes to payroll. Given the numerous high-profile payroll issues that have plagued some of the biggest companies in Australia over the last few years, he urges businesses to ensure they “get it right” when it comes to interpreting awards, enterprise agreements or employment contracts.

“Companies need to be very clear that they’re not outsourcing the interpretation of these documents to the payroll company,” he explains. “That’s the responsibility of HR and the industrial relations team. All the needs of the relevant employee legislation must be met.”LaFontaine acknowledges that this may be seen as old-fashioned by some, but he remains unapologetic regarding his stance.

“I’m old-school. HR and payroll are joined at the hip as far as I’m concerned,” he says. “There’s been a shift towards HR responsibilities being focused on overseeing employee experience in recent years, but ultimately they’re still responsible for determining how people are compensated for their work. They still have a key role to play in overseeing the process.”

Ultimately, LaFontaine believes that having such measures in place can not only smooth the payroll process during the ordinary course of work but also significantly boost employee confidence during challenging times.

“Having employees on-side during times like these is crucial, and with the right support you can really alleviate employee concerns,” says LaFontaine.

“Finance is crucial to people’s stability, and being able to provide that securely, irrespective of the wider circumstances, makes a big difference.

Originally published on HRD Magazine in May 2020