Planning for contingency planning

So what have we learnt from 2020, a year that was like no other, that we can take into 2021, a year that will be unlike anything we are expecting?

Aside from learning to play piano accordion through the lockdown (learning that’s been - ahem - delighting the rest of my household bubble), the biggest lesson for me has been about resilience. Not just the resilience of the payroll profession, but of the whole community – the vendors, the professional bodies and support groups, and the agencies they work with.

If you had suggested back in February that everyone would shift to working from home practically overnight and be expected to continue delivering payrolls, as well as applying for new grants and allowances and dealing with all the upheaval to the employee base, I would never have believed it possible.

Many companies we have spoken to have been equally surprised at how little disruption they have experienced. Their business continuity plans have kicked into place, vendor’s contingency plans have been invoked and on the surface, things have carried on as normal. It almost seems like the uncertainty over the UK’s withdrawal from the EU is likely to cause more upheaval over here, as difficulties in sending payments to foreign bank accounts, and managing cross-border working loom.

However, while congratulating ourselves for the community’s resilience, we should sound a note of caution for a number of reasons. Firstly, while being locked away in our little boxes for most of the year, we don’t really know how well all the work has been done. Certainly payroll professionals in and out of house have been working all hours. We know the work has been done – but how well is has been done is an entirely different, and rather critical, matter.

With the threat of furlough fraud looming and fines and penalties in prospect, companies need to be sure that claims have been filed correctly, the onus being on the company itself to make the correct claims. There isn’t even a defence that you were poorly advised – if you signed off the claims amounts, then it’s your responsibility. Added to that, the window in which you can correct claims is limited. That’s why some companies have employed temps to run through every single last claim they’ve filed and ensure they were calculated correctly – so they can make amendments while it’s still possible. 

Secondly, we don’t know exactly what’s coming next – but that’s exactly what a contingency plan is. Planning for the eventuality that plan A doesn’t work out as intended. So while the contingency plan might have been successful so far, it’s not done yet. What future scenarios can you imagine, what risks do you face and what’s the likelihood of them occurring? Some companies just breathed a huge sigh of relief that they seemed to have got through the difficult times, without necessarily bringing the full rigor to their contingency planning. The pandemic created an opportunity to take contingency planning to the next level – and it’s an opportunity that should be grasped.

A third caution is to be vigilant. If the pandemic has taught us anything, it’s the importance of visibility, being able to see exactly who you’re paying and how. Contingency planning tells us not only to understand the risks and mitigate them, but to do that by understanding what resources are at your disposal. Several global payroll vendors have reported that business is booming because companies have suddenly realized they need better visibility into disparate disconnected systems.

Technology can help pull together this data into a single reportable pool, and with modern application interfaces it’s becoming increasingly easier to connect different vendors, so you don’t have to put everything on a single unified platform. Our report, “Global Payroll Technology Platforms: A critical differentiator in selecting payroll outsourcers”, which is being released in the New Year, shows why these capabilities are so important in today’s global payroll set-ups, as well as categorising the strengths and weaknesses of different platforms.

If your contingency plan is simply to pay the same amount as last month, then maybe it doesn’t go far enough. That works for one month, but what then? And what about all the of the critical feeds into and out of payroll and grey areas around it? If you’re paying employees in 20 countries, whether in a centralized global payroll or decentralized local payrolls set-up, understanding what’s happening at the local level in those grey areas is key. Your greatest compliance risk isn’t likely to be in the gross to net payroll calculation, but in how you refund expenses, how you manage time, administer benefits and so on. And if you don’t know who’s carrying out these tasks, then you can’t even begin to understand your compliance risk.

One thing we can be fairly certain of in all this uncertainty is that there will be far fewer payslips around this year. That’s bad news for an industry that prices business on a per payslip basis. But it also means that while your vendor’s business continuity plans might have got them through this first phase of the pandemic response, there’s still a lot of contingency planning you should be doing.

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