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As you prepare to scale down operations for December, don't forget to do these three things to your payroll

by , 20 November 2014
With 2014 coming to an end, you're probably doing your business forecast so your company looks at the bigger picture, stays ahead of the competition and plans in advance.

The next thing on your agenda is conducting year-end reviews so you can see how your employees did against the targets you set for them at the beginning of the year.

But what about payroll?

While it's all good and well to do forecasts and reviews, you mustn't neglect your payroll as you prepare to scale down operations for December.

In fact, there are three things you must do when it comes to your payroll so everything will run smoothly.


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As the year draws to a close, do these three things when it comes to your payroll

 
#1: Calculate employee bonuses
 
If your company gives bonuses to employees, 'your payroll manager must sit down with financial and line managers before the December pay run to calculate year-end bonus payments,' says Anton van Heerden, the managing director at Sage VIP and Sage Pastel Payroll.
 
If, for example, you've agreed to pay performance based or discretionary bonuses but after your meeting you decide not to pay them this year because your company didn't do well, tell your employees immediately.
 
In terms of labour law, if you can't afford to pay discretionary bonuses, you must give affected staff advance notice in writing. Here's a sample of the notice you can use.
 
Experts behind the Labour Law for Managers Loose Leaf Service urge you to remember that many employees are dependent on their bonus, especially if you've paid it each year and they've come to expect it. Therefore, you must warn them in advance, be considerate and give them enough notice if you're not paying a bonus this year.

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#2: Work out leave pay and leave balances
 
You must calculate your employee's leave pay correctly and stick to what the Basic Conditions of Employment Act (BCEA) requires you to do.
 
To find out what to include when you calculate leave pay, check out this article.
 
According to van Heerden, 'you must also ensure that there aren't any employees who have built up a huge reserve of leave days.'
 
#3: Prepare for January
 
The first week of January, according to van Heerden, is always frantic for a payroll manager.
 
'Having spent their December salaries and bonuses over the festive season, many workers look for advances or loans to tide them over until month-end,' he says.
 
He adds, 'be ready to answer the barrage of requests with a standard policy, irrespective of whether you're able to help or not. In December, communicate the January payday to employees and advise them to put aside some cash for this long month so that they can afford schoolbooks, tuition fees and so on.'
 
Doing these three things to your payroll as you prepare to scale down operations for December will help ensure everything runs smoothly and most importantly, you'll continue to run a legally compliant payroll.
 
PS: For more information on payroll management, check out the Practical Accountancy Loose Leaf Service.


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