Does Payroll fall under Human Resources?
Across various clients over the years, I have encountered different departmental structures. Sometimes Payroll is housed in the HR department, other times HR is housed in the Finance department along with Payroll, or both functions are separated into two completely different departments.
There is no right or wrong way. What works, really comes down to what makes the most sense for your organization.
How Payroll & HR Work Best Together
As HR Consultants, we fill a variety of roles within the human capital spectrum. Although these roles many times do not include the Payroll function, HR and Payroll are closely intertwined. Sometimes this can create challenges when the functions aren't clear on responsibilities and the impact of their duties.
Here's what we have found to be best practices to make the two functions work harmoniously together:
Human Resources:
- Enters new hires/terminate employees
- Enters benefit deductions
- Processes salary/rate changes
- Uses PAF (Personnel Action Form) or another relevant form, to notify payroll of bonus or payouts owed to employees
- Verifies employee's addresses for year-end
- Works with Payroll to solve time issues
- Processes tax and direct deposit changes
Payroll
- Verifies new hires/terminate employees
- Verifies benefit deductions
- Verifies salary/rate changes
- Processes payroll and/or special payouts
- Mails out W-2s
- Sends timesheet reminder to employees
- Reviews timesheets/works with HR to solve time issues
In addition to the above responsibilities, a weekly or bi-weekly meeting may also be beneficial for the teams to stay in contact and keep lines of communication open so nothing falls through the cracks.
Recommended reading: Achieving Your Organizational Goals with Strategic HR
As stated above, there isn't a standard practice, only your team knows what is right for your organization. Use what works best for you!
