November 23, 2017
Paying your employees can at times be complicated, especially if you have staff working different shift patterns and being paid varying salaries, and there are several pitfalls that business owners can encounter if they’re not careful. If you’re new to the world of business, or have recently taken on more employees and want to know more about how to pay them correctly and within the confines of the law, you’ll find a few pointers and guidelines listed below:
Don’t get pay day wrong!
Many employees rely on their salary being paid on a specific day, and having a certain amount of money credited to their bank account, and getting this wrong is likely to damage the relationship between you and your staff. Pay your employees on time to help improve relations and build their trust in you as their employer.
Withholding without consent:
Did you know that as an employer, you cannot withhold any portion of an employees’ wages without their consent, except in the case of withholdings required by law, such as FICA taxes; Social Security and Medicare taxes on income that everybody must pay. Employers must withhold these taxes from their employees pay checks, and pay them to the IRS (inland revenue service). FICA taxes are referred to as payroll taxes, because they’re based on the amount an employee is paid.
Accurately recording work patterns:
Some companies have a whole bunch of different shift patterns for their employees, and these need to be accurately reflected in your payroll processing. Getting the hours right that each employee has worked, is not only important for their salary or wage calculations, but it also has an impact on their health insurance and leave entitlement, so it’s important to get it right.
Withholding pay as punishment:
As an employer, you may not withhold the pay of an employee as a means of punishing them for any offence, such as violating company policy. Even if the employee is disgruntled and leaves on very bad terms, you are still obliged to pay them their full pay check.
Final pay check:
Generally, the final pay check of an employee is owed to them either on or before, the next regular pay day.
Don’t pay employees who no longer work for you!
This is a surprisingly common pitfall that occurs when payroll records aren’t kept up to date, and a staff member leaves the company but continues to receive pay. Recovering these payments can be costly and time consuming, so preventing this from happening is vital.
Remember, the best way to avoid making any mistakes and avoiding pitfalls when calculating and processing payroll for your employees, is to get sound advice from a payroll professional.