Top Common Payroll Mistakes & How to Avoid Them

Payroll is changing each month, which includes allowances, commissions, MPF contributions, working days, leave days, OT/normal hours, etc. It is different for each employee. As long as there is an error in one of the processes, the company with hundreds of employees will confront large losses.

Where will the error occur?

In the process of traditional manual Payroll, the following are the most common payroll mistakes.

Too much manually operated data

The industries of F&B, hotel, or clinics require constant rostering and calculating. If pen and paper are the clock-in/out methods, manual record inputs will be required. During the process of entering data, the computer will not prompt you that there is a digital error. Therefore, it is difficult to find out whether the date, working hours, and working days have errors.

Payroll file is not organised

Some SMEs need to save e-documents and export paper documents after using Excel for payroll. However, if each e-file does not have a corresponding folder, or the paper file is not stored correctly, the files will be scattered, resulting in the loss of files and lack of data.

Excluding ADW in payroll

Some payments such as holiday, annual leave, 4/5 sickness allowance and more must be calculated on the basis of the average daily wages in the preceding 12 months.

Excluding Attendance in Payroll If an hourly-paid employee is late/absent from work, the employer may deduct a reasonable percentage of the salary according to the provisions in the “Employment Ordinance”. Therefore, when calculating the actual salary, remember to calculate the supplementary and deducted labour separately, and make a record.

Read More: Can Employers Deduct Salary Because an Employee is Late for Work?

MPF Mistakes

Employers often forget that employees (aged 18 to under 65) who have been employed for 60 consecutive days or more are required to register for MPF within the first 60 days of employment. Temporary employees (construction industry or F&B industry) refer to those who are between the age of 18 and 65 and are employed on a daily basis or for a period of less than 60 days. They need to register for MPF within the first 10 days of employment.

Read More: Non-“418”-rule Employees No Need to Enrol MPF Scheme?

Payroll Without a HR Team

Small company employers often have to perform payroll by themselves. These employers often do not have a systematic understanding of the “Employment Ordinance” or the internal compensation framework of the company, and it is difficult to ensure that they meet the legal requirements during the payroll calculation. Combined with their other duties, they will soon be overwhelmed.

Not up to date with the latest legislation and policies

Payroll policies in Hong Kong are continuously updated. Therefore, companies need to timely regulate the internal personnel management. Hong Kong Pizza Hut has been calculating wrong pay for 10 years since 2007. More than 3,000 employees have been underpaid, with an average of 1% of their annual salary being underpaid each year, and 2007 happened to coincide with the revision of the Employment Ordinance. Therefore, in order not to violate the ordinance, you must ensure that your company’s calculation method complies with the latest regulations.

Workstem – your best assistant

If you do Payroll manually, even if you have been an officer for more than ten years, you cannot guarantee that the calculation is perfectly correct. The most important thing about Payroll is accuracy and compliance. Workstem, the cloud-based payroll & HR system, can fix this very well. In addition, Workstem is a good choice if you want to spend your time increasing the company’s revenue and reducing the burden of administrative work for yourself. It can help you save a lot of time and labour costs. Even if thousands of pay runs at the same time, the system is still fast and stable.

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