Article: Managing payroll in the post COVID-19 workplace

Compensation & Benefits

Managing payroll in the post COVID-19 workplace

Ensuring people are paid the right amount at the right time is crucial to maintaining employees’ trust and motivation. Now with sharp economic shock, companies of all sizes are under intense pressure to get it right.
Managing payroll in the post COVID-19 workplace

With global markets reeling and citizens confined to their homes, companies’ business continuity plans are being put to the test like never before. Remote working practices are likely to become commonplace, forcing employers to rethink how they could execute even simple tasks like payroll. 

Ensuring people are paid the right amount at the right time is crucial to maintaining employees’ trust and motivation. Now with sharp economic shock, companies of all sizes are under intense pressure to get it right. Many will need to adapt their systems and structures to keep up with the changing legislation and prioritize their staff’s best interests.

Getting used to evolving laws

Companies are obligated to stay updated on emergency legislation as it is announced and rapidly integrate it into their policies. For multinational companies, this adds another level of complexity that requires experts on the ground support from service providers. Clear communication and processes are critical and will be key to managing uncertainty among employees and third parties as the situation evolves.

There will be changes relating to sick pay, overtime, and leave − compassionate leave in particular. It is imperative that companies pay close attention to the new rules and apply them to their current payroll systems in each jurisdiction.

With more companies retrenching employees and announcing wage cuts or compulsory no-pay leave, the post-pandemic outlook remains negative. Wages are likely to be harder hit than employment amid the outbreak, although those in the F&B, recreation, and retail trade sectors are most vulnerable to layoffs. Government policies such as Singapore’s Jobs Support Scheme (JSS) play a big role in alleviating cash flow concerns for these sectors. 

Unemployment benefits are another focus of governments around the world as businesses are being shuttered for indeterminate amounts of time. Over 140,000 employers have started to receive the first tranche of payouts under the JSS. Totaling over $7 billion, the payouts will help to cover the wages of over 1.9 million local employees in Singapore. Under the JSS, the Government will co-fund gross monthly wages paid to each local employee for a total of nine months. There are three tiers of support for employers in different sectors: firms in the aviation and tourism sector will receive 75% co-funding, firms in the food services sector will receive 50% co-funding, and firms in all other sectors will receive 25% co-funding.

In Hong Kong, $710 million has been allocated under the Anti-epidemic Fund to implement targeted measures for the construction sector. This fund supports the industry in combating the effects of COVID-19, reducing the risk of viral infection and spread among site workers, and preventing disease outbreaks on construction sites that would lead to mass suspension of work among construction workers. A $30 billion fund has been allocated to provide relief to businesses, safeguard jobs, and stimulate the economy. About $17 billion has been established for enterprises and organizations to use at their discretion, such as pay employees’ wages. 

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. 

New workplace trends that are here to stay         

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 an area some companies may wish to explore. 

As revenues shrink, firms are likely to reduce labor costs through a combination of reductions to wages and headcount. Where local government support measures are insufficient to offset overall business losses, some firms affected by the fallout from COVID-19 may still have to undertake labor costs adjustment measures such as putting workers on shorter workweeks or no-pay leave. Overtime policy and the use of contractors may also 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.

It is critical for businesses to be well equipped to deal with the accelerated change anticipated in the post-pandemic era.

Dealing with change

Some basic services like payroll when provided in house, are dependent on a very small team. There is 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. The businesses that will best endure the crisis are those that digitalize and pivot their plans as the pandemic evolves.

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 consideration. 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 skill sets 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 with 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.

 

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Topics: Compensation & Benefits, #GuestArticle, #TheNewNormal, #ResetWork, #COVID-19

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