When and How to Change Payroll Frequency?
How often you pay your employees can be just as important as how much you’re paying them. Pay frequency can be a sensitive issue for both management and employees since it can lead to many complications if you’re not careful and considerate about its implications. And that’s for a good reason, too—employees heavily rely on the pay schedule and build their monthly budget and spending around it.
If you think the current pay frequency for your company isn’t working out anymore, then you probably need to transition to a different pay schedule. However, it will take some time and a lot of planning to execute the change effectively. It’s just not a decision to be taken lightly! You will need to make sure that all your employees, as well as the provider of accountancy services for your business, are fully informed of what you intend to do.
Follow these steps to ensure a smoother transition into your new payroll frequency.
Create a Task Force to Guide the Implementation
Changing pay period frequencies is a big change for any company. It’s quite a significant change that will definitely affect many areas in your business—including your finances. Having a dedicated team in charge of the transitions will decrease the likelihood of any mistakes. It will also increase the ease of implementation since a single group of people dedicated to the transition will answer all of your employee questions and concerns.
Know the Legal Implications
It’s best to assign one individual with the job of researching the legal ramifications surrounding the change in payroll frequency. That person should also confer with your company’s legal counsel to verify any information. This will help you anticipate any possible legal issues.
Set a Date
The timing of the transition can have a significant impact on how easy the execution will be. If you want to make things just a little easier, set the transition date as close to the end of your fiscal year or the end of a quarter. This will lessen some of the burdens in record-keeping.
Develop a Communication Plan
Changing the pay schedule isn’t as easy as sending an FYI to all your employees in an email. This is a significant change that requires a carefully thought out communication plan.
Communicating your goals, motivations, and objectives for the change should be delivered clearly and compassionately to your employees. This is especially important if you plan to decrease the frequency of pay, as this will have a more severe impact on your employees’ monthly budgets. If you hired accountancy services for your business, they should also be included in your communication efforts.
After you’ve developed a communication plan, announce the transition months in advance so your employees can plan accordingly.
Communicate and Educate
It is essential to educate your employees with everything they need to know about your plans for changing the pay schedule. Hold multiple question and answer sessions as you get closer to the date of implementation. In fact, you can hold Q&As a month or two after the implementation to see how your employees find the new change. Remember, it’s vital for employees to be heard and informed about everything to avoid any confusion and panic!
Review Your Contracts
Integrate the planned changes into new contracts rather than rewriting all the existing ones. Write the new pay schedule into contracts offered to newly hired employees, gradually phasing out the old pay frequency. This will help you convert to your new schedule over time.
Conclusion
When you’re running a business, it’s impossible to not make mistakes along the way. If you think the pay frequency you’ve established is the wrong choice because of contractual or financial reasons, then switching to a different schedule may be the right thing to do.
Remember, changing the pay frequency isn’t something you do haphazardly. It takes time and a lot of planning to make sure you implement the change effectively while ensuring your employees understand the need to do so.
If you need accountancy services for a limited company, then turn to 1to1 Accountants! We are a trusted modern accountancy practice offering solutions for your payroll, bookkeeping, and other company start-up services and solutions. Whether your business is a small one, an LLC, a partnership, or a freelancer, we are here to help. Schedule a free consultation today!
