What is a payroll error and why is it important to avoid them?

A payroll error is an error made by the company when calculating or paying an employee’s pay. Payroll errors can happen for several reasons, including human mistakes, software issues, and even fraud. When a payroll error occurs, it can be very costly to the company and the employee.

There are many different types of payroll errors that companies may make including:

  • Paying an employee too much or too little
  • Paying an employee for hours they did not work
  • Failing to pay overtime wages
  • Failing to withhold taxes properly
  • Failing to pay into retirement accounts such as SSNIT or Tier 2 pension contributions.

How You Can Avoid Common Payroll Errors

Payroll errors are costly mistakes that can cause a lot of trouble. It is important to avoid them at all costs. We can easily prevent these mistakes by following some best practices and following the rules of the game. For example, we should not make changes to payroll without consulting our HR team. Also, it is wise to document every change that we make for us to be able to revert if necessary.

Other practices like creating policies for employment termination to avoid any disputes, keeping accurate records of every transaction that takes place on your company’s payroll system, and fixing errors immediately they are identified helps to avoid errors as much as possible.

What Determines Which Type of Payroll Error Is More Costly

The cost of a payroll error can be determined by the frequency and severity of the error. For example, a just-in-time error would be more costly than a ready-to-ship error.

A just-in-time error is when an employee is paid for hours they didn’t work. This typically happens when an employee clock in early or clocks out late. This type of payroll error is costly because it causes the company to pay for hours that are not worked. A ready-to-ship error is when an employee’s paycheck doesn’t include all of their hours worked. For example, if they work on Monday but their paycheck doesn’t reflect that day, then this type of payroll error has occurred.

Ready to ship errors are not as costly as just in time errors. Just in time errors are considered more costly to a business they are more likely to go unnoticed and accumulate over time, leading to a large sum of money at the end of the year.

Common Causes of Employee Payroll Errors and How To Prevent Them

Payroll errors are common in the workplace. They can lead to serious consequences, such as employee dissatisfaction and lost productivity.

Companies should start by implementing a payroll system that is easy to use and understand. The system should also be able to handle all types of payroll transactions, including overtime pay, deductions for benefits, and tax withholding.

What do you think happens when you don’t avoid employee payroll errors? achievePayroll is a free cloud-based payroll solution that automates the entire process. From managing employee information to validating and sending remittance reports. We’re here to help you get rid of your headache. The software is built to help you avoid errors and offers tools that will empower your employees to achieve financial wellness

1 Comment

  1. By
    April 28, 2022

    To God be the glory. You congrats for Africa And Ghana Specific.

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Between

SPRY LIMITED, a limited liability company incorporated and existing under the laws of the Republic of Ghana and having its registered office at 47 Osu Badu Crescent, Airport West, Accra, in the Greater Accra Region of the Republic of Ghana (hereinafter referred to as “Spry”) of the one part;

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