Should payroll rollup to Finance or Human Resources?

The argument that payroll services should stay within HR is very often exactly the same reason why recruitment, training and development, compensation and benefits etc.

  HR Payroll   Apr 22, 2024   0   35  Add to Reading List

Payroll from an HR Perspective :

For many HR professionals, processing payroll is one of the many deliverables required of their roles. The argument that payroll services should stay within HR is very often exactly the same reason why recruitment, training and development, compensation and benefits etc. (you get the drift…) are HR’s responsibilities.

  • Employee confidentiality should be managed at HR level, so payroll would naturally reside with the HR department.
  • HR primarily deals with employee relations, so if there are queries on payroll, HR should be responsible.
  • HR is best positioned to deal with payroll, since the majority of payroll data originates from HR activities such as recruitment, terminations, promotions, unpaid leave, benefits, deductions etc.
  • HR has competency in labor laws pertaining to pay, medical, leave (time off) etc., which forms a big part of payroll legislative compliance.

Payroll from a Finance Perspective :

On the other hand, there are advocates who believe that payroll processing should always be an accounting function’s responsibility within the finance department.

  • Running payroll involves accounting functions and knowledge such as reconciliations, posting to general ledger etc., which are the core responsibilities of the finance department.
  • Taxation issues on payroll matters mean that finance professionals are better placed as expert advisors for the organization.
  • Strong internal controls would dictate that payroll is generally a finance job, as HR professionals are not usually aware of the strict legal and audit procedures that payroll must follow to be in compliance.
  • Payroll is often the largest expense for most organizations and it should therefore report to finance for budgetary reporting and monitoring purposes.