The Holidays Act is an ongoing nightmare. (Will the government ever release the Holidays Act review? Hope it was a new year’s resolution!) There is a whole industry of people now promoting themselves as payroll experts, offering their services to resolve business payroll issues.
Just because a person calls themselves a payroll expert does not mean they are one. And for a business wanting to employ or contract a payroll SME to help them in resolving payroll issues, you must spend time actually investigating the skills and knowledge of the so-called payroll consultant, so you don’t create a bigger mess.
In my role, I get the bounce around many different payroll environments which is challenging, interesting and one of the reasons I love payroll. I also get to interact with a range of people, and from time to time, I come across payroll consultants that have been employed or contracted by the business based on their promoted skills in payroll.
From what I see, it is the Wild West with people promoting their payroll skills to be of an advanced level when they are not. For the business it results in their payroll problems being exacerbated with additional costs and uncertainty, especially in compliance.
Of course, the business must take full responsibility to identify their payroll issues and select the right consultant to help resolve them. But the problem for the business is payroll is very technical and specialised. And for a non-payroll person, identifying the required skills or assessing a candidate for the role is challenging. Many businesses will just take at face value what the consultant has stated are their payroll skills and experience.
In this post, I want to cover several questions that must be asked by the business to ensure you are not getting what I call the FAKE PAYROLL CONSULTANT. Payroll is a business-critical activity. If you use a payroll specialist or contractor, you must ensure they have real experience, knowledge and skills in New Zealand payroll.
Here are some general but wide-ranging questions I would encourage you to ask of any payroll consultant you are considering:
- What is their experience in New Zealand payroll?
- What positions have they held in payroll and over how many years?
- Do they have extensive understanding and experience of end-to-end payroll processing?
- What is their in-depth knowledge and application of legislative terms with a focus on ensuring payroll compliance?
- What evidence and references can they provide to verify everything they have stated?
What is their experience in New Zealand payroll?
- I have stated New Zealand payroll because I see overseas payroll consultants involved in implementing New Zealand payroll without understanding the local payroll environment. Saying payroll is payroll is correct to a basic level, but the differences just in legislative requirements are vast even between New Zealand and Australia. I have had Australian payroll practitioners going through the New Zealand Holidays Act, shocked at how complex calculating leave in New Zealand is compared to the Australian version.
- An overseas payroll consultant should just be that – a payroll consultant for overseas payroll. They should be seen as a risk to payroll compliance. I recently had a company looking for a new payroll system, and they asked me for insights on issues with New Zealand payroll and what to look for when talking to vendors. The consultants involved were not based in New Zealand. (The call had people based in Singapore, USA and Australia but no one local.) They asked questions on the Holidays Act and how the calculations needed to be applied. It was then stated they had a USA-based payroll system that they would configure during the implementation process. I asked if the provider had a New Zealand module and was told no, they would just modify it during implementation. This is just another payroll disaster waiting to happen. None of these consultants had any New Zealand payroll experience. And they did not understand how complex the Holidays Act is and their implementation strategy of modifying as you go is totally flawed.
What positions have they held in payroll over the years?
- Learning payroll is not a five-minute activity. Nor can it be done by watching YouTube clips. Payroll is learnt over time from actually doing payroll as it is an operational activity and is not based on theory and concepts.
- Payroll is not a one-size-fits-all operation. To be a payroll consultant, would mean they have learnt payroll over time across different payroll environments. For instance, there is a big difference between a professional services organisation with all employees on salaries receiving annual bonus payments compared to a factory environment where waged employees are on multiple collective agreements, receiving a range of taxable allowances based on the day, week and annually along with variable overtime. A true payroll consultant has lived and breathed these types of environments and can use real-world experience and knowledge as a payroll SME to identify, resolve and overcome payroll issues for businesses. They do not create new problems by not having a depth of knowledge.
- Be careful about relying on payroll position titles as a guide to experience as these can be quite misleading. For example, I have had payroll practitioners stating they are a Payroll Manager when, in fact, they are a sole charge payroll practitioner running a basic payroll for a medium-sized business. Get them to detail what the role involved, look at their decision-making focused on compliance, payroll process and configuration.
- Another area to ask about is what professional development have they undertaken as this is a sign they are up to date with current payroll legislative requirements.
What is their understanding and experience of end-to-end payroll processing?
- To advise and consult on payroll, there must be an in-depth understanding of how payroll is processed end-to-end. It is not about making payroll fit what the payroll system can do. It is about understanding all the inputs and outputs required and appreciating the special requirements the business may have from agreed terms while having an overarching focus on compliance.
- Ask the consultant questions on their knowledge of end-to-end payroll processing. And use your own payroll system as a template to assess the responses provided.
- Look for the warning signs of a consultant’s reliance on the payroll system instead of having an in-depth understanding of the actual end to end payroll process. A consultant needs to show their knowledge of the steps involved in processing and then be able to match that to how the payroll system processes pay. They should be able to see the gaps from both sides and know how to resolve those gaps.
What is their in-depth knowledge and application of legislative terms with a focus on ensuring payroll compliance?
- This is where I find out quite quickly that they don’t come from payroll or have no real payroll experience because of the lack of knowledge and inability to apply payroll legislative requirements. I recently conducted an audit for a business, and they had a contractor as a project manager. They were project managing the audit from the employer side and made decisions confirming payments, payroll configuration regarding the Holidays Act and signing off returned employee assessed files. I had to basically give them the 101 of the Holidays Act as they clearly did not know the law to the level required.
- The business was also wanting this consultant to help in the selection of a new payroll system. In discussion with the consultant, their selection method was they had a friend that worked for an overseas payroll provider and thought that would be a good system to use as their friend knew New Zealand payroll. The outcome of this was, we had to do a lot of rework on the audit because of the employed consultant’s lack of understanding. The employer is in the process of implementing a new overseas payroll system that from my experience is non-compliant (especially with the Holidays Act). I expect to be back in a couple of years to do another audit!
What evidence and references they can provide to verify everything they have stated?
- I mentioned earlier that many consultants’ skills are taken at face value (acceptance of what the consultant has stated they can do). This is just unacceptable when their actions could impact a business-critical activity (payroll), which is one of the highest costs a business has (labour cost).
- It is essential that anything the consultant states they can do aligns with what you need them to do for the business and is confirmed by evidence from the consultant. This could even be an assessment activity as part of the selection or recruitment process.
- Being able to talk to former clients of the consultant can be useful. You will get confirmation about their skills and knowledge of payroll (and of course, achieving successful outcomes). And you also get to understand if they are the right fit for your business (how they communicate, project manage, achieve deadlines, and payroll culture fit).
- As part of NZPPA Certification, we have developed an assessment portal where candidates can be put from our online certification (Level 4 NZPPA Certified Payroll Consultant). This enables an employer when recruiting for a role or even just wanting to assess a contractor’s level of knowledge, some confidence that they have in-depth knowledge of legislative requirements. To find out more click here.
In conclusion, don’t take any payroll consultant at face value. Do the hard yards to ensure you get a consultant with the experience and skills to help you achieve what you need. Focus on a consultant with New Zealand payroll experience, question and ask for evidence on what they state they can do and what you need them to do. Hopefully, more work done at the beginning of the process will ensure you don’t get a FAKE PAYROLL CONSULTANT.
NZPPA supporting NZ payroll since 2007!