Canadian Payroll Reporter

2 News problem, but also to find a way to meet their payroll obligations in the meantime, says Champagne. "You can't fool around with that side of it, number one, from an employment standards perspective, and number two, making sure you've got proper deductions being remitted on time," he says. "Otherwise, you can get yourself in a whole bunch other problems." Employment standards laws across the country require em- ployers to pay employees regu- larly within a specified time. "It's not possible just to say, 'You can work for me and I'll pay you when my system is up and running or when money is avail- able. There has to be a regular payday and the obligation is to make a payment," says lawyer Sean McGee of the firm Nelligan O'Brien Payne in Ottawa. "What flows from that is that anytime there is a payment that is missed, it's a breach of the con- tract that an employer has with the employee. There are legal consequences to that. One of which is the employment stan- dards legislation in the province is going to say that a failure to pay is a violation of the particular statute and so (an) enforcement mechanism can be brought to bear," he says. "It's also a violation of the con- tract and since it's a fundamen- tal term that you are going to be paid, there are all kinds of other things that can flow from that, like the possibility of construc- tive dismissal," says McGee. If a payroll problem persists and causes employees to have fi- nancial difficulties, they may opt to quit for another job and pur- sue legal action, he notes. "Courts might have some sym- pathy to the fact that there has been a constructive dismissal, that an employee hasn't been paid and has to go elsewhere to try to find some kind of income. If that somewhere else is a lower-paying job, the employer may be on the hook for a reasonable (termina- tion) notice period," says McGee. Financial hardship is a real possibility for some employees. "If one pay cheque isn't depos- ited, that can cause significant financial damage to people," says Champagne. "A lot of people have co-ordinated their mortgages, their rent, their car payments to their payroll deposit dates. If the money is not there on payday, it has a massive ripple effect." When a payroll-related change causes pay problems, Cham- pagne says the first thing to do is to identify the root cause and determine if it is a systemic prob- lem or a process issue. A systemic problem relates to something being wrong in the system itself, while a process issue can mean that employees or managers are not interacting with the new change correctly. "If you've converted (to a new payroll system), you've gone live and now people are not getting paid when they are supposed to be getting paid, your worst case scenario is going to be that this is not a process (problem), but it's systemic. That is, you have done something wrong in your set up and it wasn't discovered in your testing," he says. "If this is systemic, it's going to keep perpetuating itself, so you've got to go in and find the absolute source cause of the problem and fix it, no matter how long that is going to take," Champagne adds. To solve the problem, he rec- ommends payroll departments reach out to the company that helped implement the change (if there was one) or to another firm with expertise in the area. "You've got to bring the right people in and analyze exactly what is going wrong to find out how you are going to fix it. Going in blind and deciding, 'Let's just fix the back-end results,' is not a solution at all. You are just per- petuating the problem," Cham- pagne says. To help identify the source of the problem, he suggests payroll professionals look for patterns in employee pay complaints. "If you've got multiple people call- ing in and saying, 'This is wrong,' that's a good indicator of where you're going to start to look," says Champagne. "If people are saying, 'I am not getting paid for my overtime,' then you know where you are go- ing to start looking to trace back- wards to see if there's overtime sitting there (in the system), but it's not being approved. If it's not being approved, find out why. Is it system-related or is it process- related? If it is process-related, try to find out why people are not doing it," he adds. "I've seen clients where the department managers do not agree that it is their job to go into the system and do an online ap- proval of people's exception time or positive time. They think it's not their job to do it," says Cham- pagne. "They were supposed to be approving manual timesheets before. Now that it's online, it doesn't mean that it is something that is just not done," he says. At the same time that payroll is working to identify and fix the problem, it must also make sure it has a plan to get employees' pay to them. "As a provider of payroll ser- vices or as a payroll manager, it is your responsibility to get funds into the employees' bank accounts on a certain date," says Champagne. "The fact that your payroll system goes down or breaks or is not available for whatever reason doesn't change your responsibility." Both Champagne and Mc- Gee say employers would wise to have a plan in place for paying employees when there is a pay- roll problem, regardless of the cause. "It's always sound practice to not have to think these things through as people are running around," says McGee. "It is a good idea to have some sense of what would go on generally and, cer- tainly, if you are doing sometime like migrating to a new pay sys- tem or a new provider or restruc- turing the way that people are paid, having a contingency plan is absolutely critical," he adds. "Even something as simple as do we have enough cheques on hand? How many places will have enough cheques that if you have a workforce of 100 people and things go south for a month? That may be an issue," McGee says. Champagne recommends that all employers develop a payroll- business continuity plan that will enable them to pay employees when an unexpected event dis- rupts operations. While these plans generally focus on how to respond to a cat- astrophic situation that severely affects an organization's critical functions, such as a major elec- trical power failure, Champagne says employers can adapt it to apply to situations where pay- roll-related changes lead to pay problems. "Going through payroll busi- ness continuity planning would really help you analyze where the fail points would be and how deep you want to go into mitigat- ing those failure points," he says. "You've got to make sure that your payroll business continuity plan puts in play one or two al- ternatives that will let you accom- plish (your payroll) responsibility. Your responsibility doesn't end until the money gets into peoples' bank accounts," he adds. Issues to consider could in- clude whether the employer is willing to pay employees by manual cheque if direct deposit is not working. Employers may also want to decide whether they will pay salary advances and, if so, whether to base them on an employee's previous net pay or another amount. Champagne says continu- ity plans are important even if an employer has outsourced its payroll to a service provider since the employer is ultimately responsible for paying its work- ers. "What happens if their sys- tem goes down? What happens if they can't deliver a pay to a cer- tain bank?" Champagne says. He advises all employers to discuss continuity plans with their ser- vice providers. Canadian HR Reporter, a Thomson Reuters business 2016 October 2016 | CPR Payroll-business continuity plan recommended from CHANGE on page 1 "It is your responsibility to get funds into the employees' bank accounts on a certain date. The fact that your payroll system goes down or breaks or is not available doesn't change that."

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