D1.HFI.CL8.04 D1.HFA.CL7.06 Slide 1

Introduction  Classroom schedule  Trainer contact details  Assessments  Resources: Calculator, pen and paper Slide 2

Introduction Getting to know each other:  What is your name?  Where do you live?  Why are you doing this course?  Where do you work?  Have you studied a module or unit similar to this before? Slide 3

Introduction Unit comprises four elements:  Establish procedures for the management of payroll  Prepare payroll data  Authorise payment of salaries  Administer salary records Slide 4

Establish procedures for the management of payroll Introduction  What is payroll? Salaries and wages Other payments  What is the payroll system? Definition Slide 5

Establish procedures for the management of payroll Introduction continued:  Payroll and the hospitality and tourism industry High payroll costs High employee turnover Know your workplace! Slide 6

Establish procedures for the management of payroll Legislative requirements:  Labour laws, employment laws Unique to each country ASEAN charter  Privacy and confidentiality  Wage rates and conditions  Taxation rates and requirements  Codes of practice Slide 7

Establish procedures for the management of payroll Payroll information:  Organisational records and information Payroll register Passwords and other authorisation details Back up and storage Records of hours worked Reports  SECURE AND CONFIDENTIAL! Slide 8

Establish procedures for the management of payroll Security procedures:  Why are security procedures necessary?  Where do you find details of security procedures?  Internal controls  Privacy and confidentiality Slide 9

Establish procedures for the management of payroll Security procedures (continued):  Audit trail  Authorised access  Back up files and off site storage  Employee details Access Secure transfers Slide 10

Establish procedures for the management of payroll Security procedures (continued):  Processing payroll Numbered documents Physical location Storing reports and other data ACTIVITY Slide 11

Establish procedures for the management of payroll Internal control measures:  Internal control systems defined  Objectives of internal control Safeguard assets Valid, complete and accurate transactions Increase efficiencies Slide 12

Establish procedures for the management of payroll Internal control measures:  Principles of internal control Establish responsibility Separate duties Document procedures Use electronic equipment Slide 13

Establish procedures for the management of payroll Internal control measures and payroll:  The bank account  New employees or changes to employment conditions  Recording and authorizing hours worked Salary Wages Overtime Slide 14

Establish procedures for the management of payroll Internal control measures and payroll:  The bank account  New employees or changes to employment conditions  Processing payroll Preparing payroll Processing hours worked Processing cheque or electronic payments What about cash? Slide 15

Establish procedures for the management of payroll Internal control measures and payroll:  Distributing payroll Cheques Pay advice slips  Reconciling payroll Total hours Total amounts paid Correct errors Slide 16

Establish procedures for the management of payroll Internal control measures and payroll:  Budgetary controls Standards of performance Average hourly rate Average time to complete tasks Total budgeted payroll costs Slide 17

Establish procedures for the management of payroll Statutory obligations:  Conditions of employment  Labour management relations  Employment of migrant workers  Occupational health and safety Slide 18

Establish procedures for the management of payroll Statutory obligations:  Income tax  Payroll tax  Other deductions and relief ACTIVITY Slide 19

Establish procedures for the management of payroll Records and record keeping:  Types of records  Period of time to retain records  Storage  Destruction Slide 20

Establish procedures for the management of payroll Claims for allowances:  What is an allowance?  Allowance or employee benefit?  Examples of allowances  How are allowances paid  Categories of allowances (continued on next slide) Slide 21

Establish procedures for the management of payroll Claims for allowances (continued):  Set allowances Condition of employment Employee assigned relevant allowance code in payroll system  Specific event-linked allowances Action linked to a standard payroll process Supervisor approval – timesheet or other record of hours Slide 22

Establish procedures for the management of payroll Claims for allowances (continued):  Specific event or activity claimable allowance Application and approval process Standard form Supporting documentation  Implications for gross pay calculations Depends on location of business and definition of income Slide 23

Establish procedures for the management of payroll Claims for allowances (continued):  Creating allowances in the payroll system Unique code Authorised by payroll manager Supporting documentation Slide 24

Establish procedures for the management of payroll ACTIVITY Classify the following allowances into the appropriate category and detail the procedures for claiming allowances for each category  Travel allowance  Overtime meal allowance  Tool allowance  Laundry allowance  Relocation allowance Slide 25

Prepare payroll data Prepare payroll data:  Calculate gross pay  Calculate deductions  Provide payroll data for processing Slide 26

Prepare payroll data Introduction:  What is gross pay? Gross pay is defined as the sum of an employee’s wages or salary earned in the payroll period plus any allowances, commissions, bonuses or entitlements before any deductions are made. Slide 27

Prepare payroll data Calculating gross pay:  Employment history records  Appropriate pay structure  Record of hours worked  Overtime  Penalty rates  Allowances Slide 28

Prepare payroll data Calculating gross pay:  Benefits in kind  Leave entitlements  Salary packaging or salary sacrifice  Termination payments  Tips gratuities and service charges Slide 29

Prepare payroll data Calculating gross pay: Activities  Calculate the gross pay for the following situations An employee works for 8 hours and is paid an hourly rate of XXX per hour for 5 days in total An employee works for 4 days, 10 hours per day. For every hour worked over 35 hours, the employee received overtime at 1.5 times normal hourly rate. The hourly rate is XXX Slide 30

Prepare payroll data Calculating deductions:  What are deductions?  When are deductions calculated  Categories of deductions: Statutory deductions Voluntary deductions Slide 31

Prepare payroll data Statutory deductions:  Income tax Deducted for every employee, each pay period Gross pay (inclusions and exclusions) Progressive taxation systems Some regions or countries do not deduct Slide 32

Prepare payroll data Statutory deductions:  Relief or rebates Reduces income tax calculated Gross pay Dependants Other reasons Slide 33

Prepare payroll data Statutory deductions:  Medical insurance Percentage of gross pay  Pension or retirement funds or schemes Percentage of gross pay  Other deductions Slide 34

Prepare payroll data Voluntary deductions:  Written authorisation only  Give rise to a rebate or relief  Pay advice slip always states: Name of deduction Monetary amount Slide 35

Prepare payroll data Voluntary deductions:  Insurance policies Health Life  Donations to charities  Union fees Slide 36

Prepare payroll data Voluntary deductions:  Additional taxes Means of saving  Social security payments  Pension or retirement fund contributions  Other deductions Slide 37

Prepare payroll data Payroll levies:  Business obligations  Social security  Pension or retirement funds or schemes  Medical insurance  Other taxes Slide 38

Prepare payroll data Providing payroll data:  Nature and size of organisation  Internal preparation  External company  The payroll register Slide 39

Prepare payroll data Preparing the payroll register:  Hours worked  Gross pay  Deductions  Net pay  Cumulative totals Slide 40

Prepare payroll data Key organisational timelines:  Work backwards from day employees need to be paid  Consider types of employees in hospitality and tourism organizations  Weekly, fortnightly, monthly  Distribution of payments – cheques or electronic transfer  Distribution of pay advice slips – post, internally, pick up Slide 41

Prepare payroll data Key organisational timelines:  New employee information  Income tax payments  Other statutory deductions  Other tax liabilities ALWAYS ALLOW FOR EXTRA TIME BECAUSE THINGS CAN GO WRONG! Slide 42

Prepare payroll data ACTIVITY  Provide a timeline for a weekly pay period where employees are expected to be paid on a Friday Slide 43

Authorise payment of salaries Authorising payment of salaries:  Check payroll for appropriate authorisations  Reconcile salaries and wages  Deal with payroll inquiries Slide 44

Authorise payment of salaries Check payroll for appropriate authorisations:  What are source documents  Adjusting information in the payroll system  Checking data Exceptions and variations Experience! Slide 45

Authorise payment of salaries Check payroll for appropriate authorisations (continued):  Authorising the payroll register Appropriately prepared Error free – reconciliations have been performed Who performs this task?  Arranging payment Method of payment Net pay on the payroll register Slide 46

Authorise payment of salaries Methods of payment (continued):  Electronic transfers Employee bank account details Authorised electronic or hard copy payment listing  Cheques Two authorised signatories Printed electronically Written manually Slide 47

Authorise payment of salaries Methods of payment (continued):  Cash payments CAUTION Cash analysis sheet Breakdown of notes and coins Stored in secure envelopes and collected. Slide 48

Authorise payment of salaries Pay slips or advices:  Formal record of gross pay, deductions and net pay  Details that are included on a pay slip  Electronic or manual distribution Post payroll errors:  Electronic transfer rejections  Monitoring overtime Slide 49

Authorise payment of salaries Reconcile salaries and wages:  What is a reconciliation of salaries and wages?  Internal control measure  Timelines  Authorisations  Standard forms  What reconciliations are performed? (continued on next slide) Slide 50

Authorise payment of salaries Reconcile salaries and wages:  Employee numbers  Normal and overtime hours  Leave entitlements  The number of pays prepared  Statutory deductions  Voluntary deductions  Gross payroll and the general ledger Slide 51

Authorise payment of salaries Deal with payroll related inquires - Activity: 1) I didn’t get paid 2) My leave has been approved but I want to change the dates I will be away 3) I need to change my bank details 4) My income tax rate has changed 5) My details have changed – can I claim a rebate or relief? 6) Why is medical insurance deducted from my gross pay? 7) I wasn’t paid for the correct number of hours worked 8) I was expecting a meal allowance but I can’t find it on my pay advice Slide 52

Authorise payment of salaries Deal with payroll related inquires:  For each inquiry on the previous slide, explain the following: Policy or knowledge required Possible responses Slide 53

Administer salary records Administer salary records:  Process declaration forms  Forward periodic deductions to nominated creditors  Prepare payments to government authorities  Calculate group tax amounts  Prepare and reconcile employee payment summaries Slide 54

Administer salary records Process declaration forms:  What is a declaration form?  Income tax declaration form Employee details  Unique code or number  Personal details  Employment status  Eligible income, deductions, rebates or relief Slide 55

Administer salary records Process declaration forms:  Income tax declaration form Employer details  Business name  Address of the business  Employment status of employee ALWAYS SIGNED BY EMPLOYEE AND EMPLOYER Slide 56

Administer salary records Process declaration forms:  Rebate or relief forms Personal details of employee Indication of rebates or relief claimed Names of dependants where relevant Details required to show eligibility for other rebates ALWAYS SIGNED BY EMPLOYEE AND EMPLOYER Slide 57

Administer salary records Process declaration forms:  Other forms Bank account details Emergency contact information Other deductions  Disposal of declaration forms Record management policies Slide 58

Administer salary records Forward periodic deductions to nominated creditors:  What is a creditor?  What is a periodic deduction? Statutory Voluntary  How are deductions forwarded? Documentation Monetary amounts Slide 59

Administer salary records Forward periodic deductions to nominated creditors:  Non government authorities Pension funds and schemes Insurance companies Unions Charities Employer benefits Slide 60

Administer salary records Prepare payments to government authorities:  Government authorities Income tax payments Other taxes Medical fund payments Pension funds Other agencies Slide 61

Administer salary records Calculate group tax amounts:  What does group tax mean?  Group tax can include Income tax Rebates and relief Other taxes Slide 62

Administer salary records Calculate group tax amounts:  Income tax Tax table or schedule for pay period Use whole numbers Sum income tax for each employee and report periodically Forward total monetary amount collected from employees Slide 63

Administer salary records Calculate group tax amounts:  Rebates or relief Separate tables or schedules Included in income tax tables Sum rebates or relief for each employee and report periodically with income tax deductions Slide 64

Administer salary records Calculate group tax amounts:  Other taxes Medical insurance Pension or retirement funds or schemes Tables or schedules for appropriate amounts depending on gross pay Sum amounts collected for each employee and report periodically Slide 65

Administer salary records Prepare and reconcile employee payment summaries:  What are employee payment summaries?  What information do they contain? Total income Deductions Allowances Employee benefits Slide 66

Administer salary records End of year checks and processes:  Employee details Check employee records to payment summary  Employee entitlements Compare amounts paid during the year to each employment summary  Payroll processing is complete Confirm that there are no outstanding pays to be distributed to employees Slide 67

Administer salary records End of year checks and processes:  Reconcile payroll Payroll register to source documents General ledger  Produce payment summaries Final check Duplicate or multiple copies Forward and file appropriately Slide 68