Payroll is an area in your business that can have large consequences when it goes wrong, without you even realising it. If there is an error in calculating pay, there can be many repercussions for your business. These include:
- Loss of employee trust
An employee that trusts their employer will be motivated to work harder for the business and losing that trust could not only impact productivity, but it could also prompt employees to look for jobs elsewhere.
- Time wasted dealing with corrections and inquiries
The team responsible for payroll will spend unnecessary amounts of time correcting any errors and making sure that the employee payments are rectified. They will also probably face numerous calls or emails from frustrated employees that have not been paid the correct amount, taking up further time which can again affect productivity through the business.
- Damages employee morale
An employee can feel very disgruntled about payroll errors, especially if it results in some temporary financial difficulty for them. Whilst it may be a simple administrative mistake, employees can take this kind of matter very personally, especially if it happens on more than one occasion. Low employee morale can affect productivity, the team’s overall morale and can even result in employees leaving, which will cost you even more in recruitment costs.
- Causes tax complications
Incorrect payroll has an impact on tax deductions and you might need to liaise with HMRC to update the Employer Payment Summary for the month. This will take additional admin time to rectify.
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