Payroll departments often ask us, how does workforce management software impact the payroll process and how does a WFM system ensure accurate payroll files? Being payroll people, they want the details and because they are responsible for paying thousands of people accurately, that stuff matters. They want to ensure that any implementation is going to deliver 100% accurate payroll files.
So, in this article, we try to answer those questions for our friends in payroll or anyone else who has an interest in WFM implementation.
What are the benefits of a workforce management system to a payroll department?
The simple answer is a more accurate payroll for less effort from a payroll department. A WFM platform and the managers and staff within an organisation do a lot of the heavy lifting to create a “gross payroll file” which can be exported directly into a payroll system to calculate tax and other deductions. How does a WFM do this?
- Single database in the cloud: this removes duplication and checking of spreadsheets and associated errors.
- Updated daily capturing changes and exceptions as they happen: If the average person works 22 shifts a month, that is a lot of start and finish times, overtime payments and sickness to keep track of for most organisations. The payroll file becomes more accurate by managing these changes and exceptions as they happen.
- Automation: The workforce management system is pre-programmed with lots of business logic and rules and can automate the calculation of pay, break deductions, and leave accruals. It can also automate most of the approval process and reporting.
- Self-service tool for staff and managers: Allowing managers and staff to make their own changes improves accuracy and efficiency by allowing essential information to be kept up to date.
- Visibility for staff: Giving staff access to their worked hours via a self-service app, including any changes such as overtime or sickness, means that the data stored in the workforce management system that relates to an individual can be checked by that person as it changes throughout the month. Queries can be managed by their line manager before they ever hit the payroll file, dramatically reducing payroll queries post-payday.
What is the high-level process for a workforce management tool to deliver a payroll file?
As we have said in other blogs, a WFM system is a sophisticated software system that meets a number of objectives, including complying with the working time directive, forecasting staff levels and scheduling to that demand and helping staff happily book leave. In this article, we are only going to focus on the areas of WFM that are key to the output payroll file.
Workforce management software does this in a few steps:
- The hours worked for every employee are confirmed either by a manager, often with the help of a time and attendance system.
- Additional payments, such as overtime, are either confirmed by a manager or calculated by the system.
- The WFM system has either the pay rules for every person and their different premiums and additional payments, or it contains the pay codes that a person can be paid against.
- The WFM system automatically matches the hours and the pay rules or pay codes and produces a payroll export file which contains all of the information required by the payroll software to calculate the pay for every individual for the relevant period.
What tools and information does a WFM system need to deliver an accurate payroll file?
Not all WFM systems are the same, so to know exactly how does workforce management software impact the payroll process will depend on the chosen system. If accurate payroll is one of your objectives, then you need to make sure that your chosen system includes the following:
- Time and attendance software: Used to accurately record the hours worked, often using biometrics readers. These can ensure that all hours are properly recorded.
- Rules Engines: The WFM system must contain all the rules you require to calculate someone’s pay. This can be very complex and is often subject to a detailed discovery process. It is a good idea to check with your WFM vendor before you sign a deal that they can deliver all of the required rules. Not all vendors can.
- Worklog, exceptions management or timesheet: This process allows managers to check and approve everything recorded for a day or a shift in their department. For example, approving overtime or adding an end-of-shift time for someone who didn’t clock out. Much of this process can be automated, but managers still need a process to manage exceptions.
- Self-service tools for staff: Allows for booking of leave and checking of hours.
- Payroll export manager: A tool used to build a payroll file, check it and export it to your payroll system.
What types of payroll files can a WFM system deliver?
There are two main types of payroll files a WFM system can deliver to payroll software:
- A file which lists the gross pay of every employee. In this type of file, the payroll software takes the gross pay calculated by the workforce management system and then calculates tax, national insurance and other deductions before arriving at a net pay per employee. In order to be able to produce a gross pay file, the workforce management system needs to contain every pay rule against every employee, including “multiple contracts”.
- A file which lists the hours worked and the pay code for against the number of hours worked for that level of pay. In this type of file, the payroll software calculates the gross pay from the pay code and the number of hours worked for each code; it then calculates the tax and other deductions.
A good WFM platform should be able to deal with both types of files.
How does a WFM system calculate the correct pay for a shift worked?
A workforce management platform that can calculate gross pay needs to structure its rules around three rule types.
- Pay elements: These are single rules that can apply to multiple people on different contract types. A good example of this would be time and a half. This instructs the WFM system to multiply the hours worked by the basic rate of pay by 150% to work out the gross pay for this period of time.
- Pay rules: These are a combination of pay elements which can be used to calculate the cost of an individual shift, some shifts can have multiple pay elements applied. For example, a 22:00 to 06:00 shift worked on a Sunday night through to the morning of a bank holiday could include the following pay elements:
- Basic pay
- Sunday premium
- Bank holiday premium
- Night time premium
Together these pay elements form the pay rule. The Workforce management system will need to take all of these into account to get an accurate cost for that shift.
- Contract type: A contract will include all the rules that apply to an individual when working in the relevant role. These can consist of pay rules, lunch break rules, rate of pay etc.
What does “multi-contract” mean in relation to workforce management?
In some organisations, staff can have more than one set of terms and conditions depending on what role they are performing at a time. For example, in a leisure centre, someone could be paid one rate if they are a lifeguard at a pool and a different rate if they are working as a personal trainer.
The employer must pay the person the correct amount for the role worked and accrue leave for each role.
A workforce management system manages this by creating a different set of rules or a “contract” for each role and applies those rules against the hours worked in the relevant role. Some vendors call this multi-post, and others call this multi-contract.
What other rule types does a workforce management system calculate to generate a payroll file?
A workforce management system must generate a few other calculations before creating an accurate payroll file. These include:
- Break rules: often called lunch break rules but relate to any breaks where deductions in pay are made.
- Accrued leave: Leave is often calculated based on hours worked over a previous number of weeks, and a workforce management platform has to calculate this, including for multiple contracts, so that the correct leave can be accrued and then booked. Leave is paid and needs to form part of the payroll file.
- Lateness rules: The system needs to know if there are any grace periods for lateness and adjust pay accordingly.
How does a payroll export manager work in WFM?
A payroll export manager is a part of the WFM platform that is used to manage the export of a batched file at the end of the payroll period. It may be called different things by different software vendors but it is a tool to help to create the correct file, spot-check it and then export it to your payroll system.
It should allow you to select the payroll period, group the people involved in that file, such as salaried and hourly paid, and then export the file directly to payroll software so that payroll can calculate tax and other deductions.
What types of integration are available between WFM and Payroll software?
There are two types of integration between a WFM and a payroll system:
- An API integration where the data is updated in real-time. This is the more advanced of the two options and ensures synchronisation between the two systems at all times.
- A batched process where a payroll export file is generated which can then be imported into the payroll system at the end of the payroll period. Although this is the less sophisticated form of integration, it is still very popular with payroll departments as it allows them to spot-check all of the data on the workforce management system before running the export file. This method often fits well with a payroll department’s way of working.
A good WFM platform should be able to deal with both types of integrations.
How does the Workforce management system track joiners and leavers?
Either the workforce management system holds all of the staff data and is used to manage joiners and leavers, or this is done in either the Payroll or HR software, and integration ensures that the staff list is accurate.
What can go wrong with payroll in a workforce management implementation?
There are many different workforce management vendors, and they all focus on different things. Some don’t have a time and attendance component, including the ability to capture and manage exceptions and changes to the rota. Whilst some don’t have the ability to calculate pay based on rules or limited automation. If any key components you need to deliver accurate payroll files are missing, then you probably need to look at a different supplier.
We hope you have given you a good idea on how does workforce management software impact the payroll process and what you can expect. A good workforce management implementation can save a payroll department time and costs through automation and staff self-service. It can also improve the quality of the payroll file dramatically. We believe that with the right preparation and research, a workforce management implementation has the potential to be transformative for payroll departments and hopefully, this article has given you some thoughts on what your WFM system has to be capable of to deliver this.