Perhaps you have taken over a payroll from someone, or when you were setting up your payroll, you were not aware of the specific industry rules.
Categorising employees correctly is VITAL to running a smooth payroll. If you do not do this right, then any or all of the following could happen:
- Your rates of pay could be wrong. If an employee is categorized as a higher / lower grade than what it is supposed to be you run the risk of underpaying or even overpaying him / her. This is very difficult to correct, especially if there is an overpayment that has been happening for some time.
- You could be applying the wrong rules to your employees. In many industries there are different sets of rules for different types of employees. If you categorise your employees incorrectly then you run the risk of non-compliance because you are looking at the wrong set of rules.
- Your disciplinary procedure might be unfair. Employees are graded according to their level of responsibility and authority. If you treat a lower grade employee as if his level of responsibility is higher, then it could lead to unfair labour practice.
- Incorrect classification of employees affect your Skills Development Reporting as well as your Employment Equity Reporting. This would be a case of non-compliance as well and could lead to fines and penalties.
So how should you approach an audit to establish whether your employees are classified correctly?
First, you should insure that you have a set of rules (recent) for the industry that you work in. Many Bargaining Councils have detailed definitions of employees and this is very handy. Then you need to look at your own in-house documents. Are there job descriptions and contracts of employment? What is being printed as a job title on the pay slips?
Set up an excel sheet with the above information in each column and do a comparison. Remember to discuss this with line managers, or operations managers in order to ensure that your understanding of a position is correct.
And lastly, if something has to change, the employee needs to be informed of this. If the change affects the employee’s pay package then consultations need to be held and you may need assistance from a labour relations consultant.