Payroll disputes are one of the top sources of workplace conflict and can be caused by numerous common issues, like incorrect hours, missing overtime, slow corrections, and poor transparency.
These disputes can become major issues, and poor handling can lead to a decrease in trust. Remote's 2024 State of Payroll report found that 41% of employees indicated that a payroll mistake would lead to deterioration in their employee-employer relationship.
This deterioration can lead to a drop in productivity, loss of communication, and even an increase in turnover.
With these disputes having such a potential for impact, it is important for businesses to be proactive in dealing with them. Here’s how using cloud-based payroll software can help your business avoid disputes and assist you when they happen:
1. Timesheet Automation
Remote’s 2024 State of Payroll report also found that 40% of employees surveyed had encountered a payroll error in that year.
Manual entry can be tiring and time-consuming. Even with no malicious intent, mistakes can happen. Mistakes like missed overtime and inaccurate time stamps can all lead to disputes as employee expectations are not met.
Additionally, when a dispute does arise, the fact that there is no centralised system means that it can be hard to reach a satisfying conclusion.
The use of automated systems ensures that entries are both accurate and fast. With software that links attendance tracking and the timesheet, nothing gets missed, and it saves your HR team time.
This, combined with clear logs and complete records, means that when a dispute does arise, it will be easier to identify what happened and ensure conclusions can be reached with less friction.
2. Adding Transparency
Employees want to know how much, why, and when they will receive their pay, which makes payslips vital to preventing payroll disputes.
Payroll disputes often escalate not because of errors alone, but because employees cannot see how their pay was calculated or why changes occurred.
This can be particularly prevalent if overtime isn’t handled correctly. If a system relies on manual input and recording, times can be misrepresented, mistaken, or simply unrecorded.
With payslips that are unclear and limited in information provided, employees can feel both confused and frustrated, particularly if they were expecting a different amount than what they were paid.
Payroll software can allow employees to see the composition of their payslip, where the money has come from, and what, if any, extra they have earned. This clarity and the information being traceable ensure that employees don’t have any surprises. This can prevent disputes before they arise.
3. Faster Error Correction
Remote’s 2024 State of the Payroll report found that HR teams reported spending over 5 hours a month correcting payroll errors.
Even with software implementation, errors can still happen. Employees have patience when this occurs, but the more protracted the correction process is, the faster this patience can wear thin, and this is when disputes happen.
With an analogue tracking system, HR teams need to first identify the issue, find proof to support it or, to the contrary, double-check their information, and then communicate the outcome with the employee who raised the concerns. With a lack of communication and few updates, this process can make the employee feel isolated and unsupported.
With software that provides cloud-based, real-time updates, employees can see progress and updates as they happen.
By keeping records centralised and accessible, the process for correction becomes faster and simpler.
These, combined with an open line of communication throughout the investigation, ensure that when there are issues, they are less likely to escalate, as employees are kept updated and allowed to see what happens.
4. System Connectivity
Payroll requires many pieces of information coming together into a holistic overview. With lots of moving parts, it’s important that these systems have harmony.
By having single systems that collect data, such as absences, work time, and overtime, communication and collaboration between these systems can be a slow and tedious process that can take up a lot of HR energy and resources.
This can mean that mistakes happen, information may be missed, and key changes aren’t implemented in time, all of which can negatively affect payroll and can lead to disputes about what’s happened. Additionally, this compounds the time and effort needed to complete.
Utilising advanced systems ensures that when something happens, like an unexpected absence, it isn’t just logged in one system waiting to be input into the others; the information is input into all the systems together.
This ensures that the chances of missing information are limited, and the time taken for compiling and checking is shorter, freeing your HR team.
5. Stronger Audit Trails
When the time comes to check systems in place, manual systems can be hard to keep track of and present in a way that the information is clear and easy to follow. This can lead to an increase in audit time and slow down compliance checks.
HMRC requires that all businesses keep records of payroll for 3 years for every employee, which can mean a large database that, when not kept well, can become cluttered and difficult to parse for information.
An unconnected collection of information also means that when the time comes to deal with a dispute, the process itself can be an issue, escalating problems when it should be simple and helpful.
Software that allows you to keep access to all parts of the pay process, from timesheets to absences, in a single place, with automatically tracked data and options to easily search for relevant information, makes sure that you and those who need to can see everything.
When disputes do arise, it is easy to do so in a way that promotes transparency and trust in the employee and the company itself.
Supporting Payroll Clarity
Payroll disputes cannot be completely prevented, considering the many factors involved, but using technology, these disputes can be handled smoothly.
Turning a reactive process into a progressive one helps to give you and your staff confidence in how things are run when it comes to payroll.
