Best Practices in Hospitality Payroll Management

Payroll management is possibly one of the largest administrative burdens on hospitality operators. Often, despite best efforts, costly mistakes can be made and result in unhappy employees and a suspect government body reviewing your processes and policies.

Fortunately, avoiding these common challenges in payroll is a relatively simple task if your business decides to invest in a payroll outsourcing solution.

Alternatively, hospitality organisations can follow these best practice policies to ensure their payroll function runs smoothly, without the risk of legal action or an expensive error.


Accurate classification 

In the hospitality industry, it is common for organisations to employ a wide range of staff. Whether they require long-term permanent workers or casual event staff, a hospitality company may have a significant range of employee classifications to keep track of.

Ensuring all staff are accurately classified will ensure payroll reporting is correct, particularly in regards to the tax, superannuation and wage levels you are required to pay each individual.

Keep deadlines 

Time management and meeting deadlines is a crucial factor in keeping payroll processes performing strongly. Missing a payday can not only result in frustrated employees but could also result in the Fair Work Commission issuing penalties for non-payments.

Furthermore, the payroll management team will need to abide by all state and federal payroll tax requirements. Late deposits could result in company fines or interest charges.

Minimise manual input

Human error is a very real issue when dealing with any system that requires manual input and calculations. Mitigate the risk of these costly mistakes by upgrading your payroll function to a software based service.

Furthermore, investing in a software-as-a-service (SaaS) payroll function can enable you to migrate your system to the cloud - effectively reducing the risk of theft or damage to files.

 Hospitality and Human Resources

Double check systems

Even when a payroll function has been transformed into a SaaS system, it is still important to double-check your entries to avoid data entry errors impacting on the finished result.

This is particularly vital if your payroll function is accessed and changed by multiple people, as just one employee inputting the wrong hours can result in expensive payroll errors.


Train multiple employees in payroll processes

As payroll systems become more technology-reliant and streamlined, often business owners believe this means they can reduce their payroll management team to just one individual.

Unfortunately, this can be a costly mistake if the payroll manager was to fall ill or have to leave the office for any reason. The payroll function is a time-sensitive process, which means that if you are unable to find a replacement to run the system, you could face significant workplace issues.

Have a manual backup

Despite the proven reliance and effectiveness of an online SaaS payroll system, it is important to ensure you keep manual records and functions in place to protect your business against computer breakdown.

Technology is not infallible, as these systems can - very rarely - fall victim to hacking, software failure or even just an internet or power outage. Having manual records on file will ensure that you can continue running your payroll function with little to no interruption to your business.

Tax deductions

With Australian businesses currently working through their tax obligations, outsourcing can have significant benefits for those wanting to increase their deductibles.

If you outsource your payroll function, it can be counted in your business as a running expense and declared as a deductible, according to the Australian Taxation Office. This means that rather than counting your employee's wages as a payroll, which can attract tax above and beyond the tax-free threshold, it is instead considered a worker-related deduction.

Additionally, your outsourced provider will take care of calculating the various tax-related deductions required on your staff's wages – including superannuation, the Medicare levy and student loan repayments.

Regularly review the payroll function

Once you have an effective payroll function in place, it is important to regularly review the system for any potential issues. Even automated software can produce errors and failing to catch these can result in significant business costs.

Additionally, reviews should also extend to potential legislative changes and available software updates. Staying up-to-date ensures that you will not be caught up in a non-compliance issue, or be running a payroll function that is not operating at its full potential.

If you are concerned about your own payroll function, you may benefit from BENCHMARQUE's hospitality recruitment and workforce management solutions. Our offering includes all employment and labour management obligations, including screening, recruitment, HR and payroll requirements. 

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About the author Marlowe Bennett

With 22 years of experience and over 23,000 professional hours working across Sydney’s hospitality industry, our content aims to inspire young candidates to pursue professional careers and to help operators grow compliantly.


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