Having payroll under control while complying with the law is essential for every company in a country like the UAE. And keeping records in place is also a vital mandatory in order to avoid misunderstandings with employees or UAE authorities. So, if you are a business owner and need help with your payroll tasks, this information will be interesting for you.
In this article, you will learn everything you need to know about legal requirements and controls related to payroll functions. Here, we will provide you with the best tips to learn about the most effective payroll practices and control strategies. This way, your company will have its payroll controls in place, as well as its legal requirements and obligations. Let’s observe:
- What can you do to make sure that your payroll controls and requirements are in place?
- What should you know about payroll internal controls?
- How can you implement payroll internal controls in your company?
- What are the most common payroll risks and errors?
- What tips should you follow to ensure efficient payroll compliance?
- How can Connect Resources help you improve your payroll controls and strategies effectively?
1. What can you do to make sure that your payroll controls and requirements are in place?
Carrying out payroll tasks with efficiency will require you to develop and apply certain strategies and follow some guidelines. For example, having calculation methodologies and counting on the necessary tools and compliant systems will be essential during the process.
And, in case you are not sure how you should get started, we will briefly explain some details about it. More precisely, we will provide you with some useful tips that can help you improve and control your payroll management.
1.1. Make sure to keep a master file of employee data
One of the first things that you have to do is to keep a master file of your employee data. In fact, it would be recommendable to use a web-based HR and payroll system, so you can manage this data.
Nonetheless, using an Excel sheet with basic information should be enough to start building your employee master file. Some employee information that you must include is full names, job titles, nationalities, contact details, email addresses, bank details, etc.
1.2. Analyze and determine the cost of every employee
Each employee will cost your company a considerable amount of money, and their compensation and benefits are only a part of it. Some other elements that are included in the cost of an employee are annual leaves, sick leaves, medical insurance, etc.
Besides, other factors can have a major influence on the cost of each employee, like their gratuities. In addition, some employees require annual flight tickets to go back to their home countries, which is a significant cost.
1.3. Keep a record to ensure asset control
Another vital factor that will be necessary is keeping a record of assets that you allocate to your employees. For example, if you provide your employees with laptops, mobile phones, or any other equipment, you should keep their records.
You can do this by tracking these devices and linking them to your accounting’s depreciation. This way, you will be able to calculate the value of these types of assets. Furthermore, this practice will allow you to know when an asset should be returned after an employee leaves.
1.4. Consider the cost of employee benefits
It is impossible for an employee to figure out the total value that your company provides regarding employee compensation. And there are many non-cash components that their salary package includes and represent a significant cost for your company.
For example, things like medical insurance, parking permits, metro cards, lunches, and others, are considered non-cash benefits. But these can contribute to providing competitive pay for employees.
1.5. Make sure to accrue your end-of-service benefits
Although accruing for the end of service is not an actual legal requirement in the UAE, you should consider it. And generally, most small and start-up companies in the country do not make provisions for end of service benefits.
Nonetheless, by accruing gratuity payments consistently, small companies can minimize the cash flow risk when employees leave the organization. Therefore, make sure to consider doing this or getting a payroll outsourcing service that helps you make payroll improvements.
2. What should you know about payroll internal controls?
In order to protect vital payroll information and data, your company must follow payroll internal controls procedures. With these controls and processes, it is possible to prevent employees or any other third party from accessing confidential data. Furthermore, these internal controls can also prevent employees from stealing information or money through false time records and overpayments.
If you own a small company and desire to create internal controls for payroll processes, there are certain things you can do. For example, you can implement these controls by applying particular strategies, which we will explain below.
3. How can you implement payroll internal controls in your company?
The strategies that large companies apply to control payroll processes are different from the ones used by small businesses. Therefore, it is important to determine which strategies can best fit your company’s payroll requirements and needs.
You can try limiting access to payroll records, inspecting these records, creating a separate bank account, and many other methods. But in case none of these strategies suits your needs, you can opt for getting help from payroll outsourcing companies.
4. What are the most common payroll risks and errors?
Since there are many risks related to payroll functions, you have to be aware of them and avoid them. Otherwise, the chances of making your business get disrupted by human errors and fraudulent activities will be higher. Among the most common payroll errors and risks that you must avoid, you can find the following:
4.1. Having ghost employees
This is probably one of the most common causes of payroll fraud. There are different types of “ghost employees” that you have to be aware of, including these:
- People who exist on paper only.
- Terminated employees who still remain on the payroll.
- People who do not work at the company, but receive paychecks from it.
You must keep an eye on your staff working on payroll functions since they are usually the ones who perpetrate these frauds.
4.2. Padding hours
Padding hours is something employees do when they claim that they worked more hours on their timesheet than they actually worked. This payroll risk is more common in companies that use obsolete timekeeping systems, like spreadsheets or paper time cards. If there is little or no managerial oversight at all, timesheet padding can become a potential risk for your payroll process.
4.3. Attendance by proxy or “buddy punching”
Another thing that employees do and can represent a risk for your payroll is this one; attendance by proxy. It is also commonly known as “buddy punching” and it happens when an employee clocks in for another. It will only be a significant risk if this situation happens frequently in a company.
4.4. Incorrect employee classification
In case you hire contractors and full-time employees at the same time, you will need to avoid misclassifying these workers. This can happen if your internal payroll staff has not enough expertise or experience dealing with a situation like this. Therefore, it is suggestible to get help from payroll outsourcing companies in Dubai or any other location to avoid misclassification.
4.5. Data loss due to lack of security
If your payroll systems are not secure enough, there will be a higher chance of losing vital employee information and data. However, if you decide to opt for getting services like payroll outsourcing in Dubai, you will improve your systems significantly. Nonetheless, it is important to confirm that the payroll outsourcing cost fits your budget.
In the UAE, your company must comply with and know the latest updates on labour laws and regulations in order to carry out its operations smoothly. However, there can be consequences if you do not fully understand relevant laws related to taxation, overtime pay, minimum wage, and others. And since the legal framework and requirements can change from time to time, staying up-to-date is vital for any company.
5. What tips should you follow to ensure efficient payroll compliance?
Staying compliant is a basic requirement that all companies must fulfill when operating in a particular country or location. However, not all companies can successfully stay compliant and avoid legal issues due to a variety of reasons. And if you want to ensure full payroll compliance, make sure to follow tips like these:
- Make sure to keep accurate personal records.
- Stay up-to-date with payroll regulations.
- Get in touch with payroll specialists for guidance.
5.1. Make sure to keep accurate personal records
An important thing that you need to do is to make sure the system has the correct personal information for each employee. It may look like an obvious task to complete, but still, you have to be sure this information is correct.
Otherwise, it will be difficult to accurately maintain employee records and complete the payroll procedure efficiently. Besides, you need to keep in mind that the personal information of each employee may change on a regular basis.
5.2. Stay up-to-date with payroll regulations
This is another essential thing that you must do in order to make sure that your company stays compliant. And since the government tends to make changes to the different laws and regulations, you must keep up with them.
You can stay up-to-date if you attend payroll seminars, watch webinars, and go to payroll-related conferences. In addition, you can consider getting help from a reliable payroll outsourcing company to be aware of the latest changes.
5.3. Get in touch with payroll specialists for guidance
If you need additional help to ensure payroll compliance, you should get the services of payroll outsourcing companies in the UAE. This way, you can get the support you need, so you can solve each issue related to this particular area.
And by using services like payroll outsourcing in the UAE, you will be able to get more knowledge and experience. However, you need to make sure that you choose a company that fulfills your requirements.
6. How can Connect Resources help you improve your payroll controls and strategies effectively?
Getting payroll legal obligations and controls in place is a priority for any business owner like you in the UAE. However, this task can be tedious and complex in most cases, so you will need guidance and payroll outsourcing services. Connect Resources is the business ally you need to achieve your goals and stay compliant with the laws and regulations.
By working with Connect Resources, you will be able to get the payroll services your company requires to improve all aspects. Besides, you can also get other similar services to have a more efficient HR department and improve all HR functions. For example, our Employer of Record solutions will provide you with ongoing support and benefits that will be favorable for you.
Keep in mind that we have a wide range of solutions for your business. And even though we specialize in HR services, you will find so much more! Just check out our main website and see how we can be of great help to your company. From legal services to visa processing, we know how to do it all.
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