How a global company saved over $6600/month in payroll costs using Africa HR Solutions
There is more to payroll in Africa than meets the eye. It is not only limited to running calculations or complying with labour laws: timeliness, deadlines, and unexpected changes all play a significant role in the standard payroll cycle. In some industries and even across different countries, some of these changes may be exacerbated, weighing heavily on the payroll process. This is what one of our South Africa-based clients discovered when they began losing amounts ranging from $5,500 to $6,600 every month through payroll.
The Premise
Our client is an international technology company that has been operating for 20+ years. They serve over 2000 brands internationally, including prestigious Fortune 500 listed companies. They have branches across the world, and the Africa HR Solutions team was tasked to take over payroll for their South African branch.
The Challenges
Our client was running payroll for its employees in the call centre sector – a particularly dynamic sector where employee turnover is high. This turnover rate means several things in terms of payroll: employees need to be removed from the payroll quickly, new employees need to be added to the payroll, and both new employees and departing employees need to have their salaries pro-rated according to the number of hours worked before the first or last salary payment. Naturally, calculations also need to account for any employee deductions and employer contributions that apply to a particular employee.
In South Africa, notice periods are relatively short: employees with 6 months or less of service need only submit one week’s notice, those with 6 months to 1 year of service must submit 2 weeks’ notice, and those with more than 1 year of service or those in managerial positions must offer 4 weeks' notice. To this, add the fact that some notice periods are never officially served, and you obtain a rather haphazard series of arriving and departing employees – a true challenge for any payroll provider in Africa or elsewhere.
“Our previous payroll vendor accepted changes on the cut off date only, and as you can imagine in our fast based ever changing line of work, sending in on the 10th every month really prevented us from capturing any late changes that would result in overpayments. This would include late terminations or someone going on AWOL with a sense they will not return.” Explains the Senior Payroll Manager for the company’s EMEA region.
“It was no small shock that we were spending on average about $5,500 to $6,600 in overpayments each month. In Mauritius, it seems you are not even able to claim this back from any payments still owing to the employees without their express agreement so as you can imagine, we would not see this returned.”
“Your team has allowed me to put pressure on the local site leaders to focus on the gaps that were causing these overpayments, they are being very diligent in entering terminations on time, reaching out to us to tell of possible AWOL situations. And once they have done this, being allowed to send these last minute changes have really made a difference. As we continue to grow, I am so happy to be working with your team. They have truly made a difference with such an accurate coverage, output is great. They understand what we send, and they have open communication with us so we can address everything immediately and not only on certain dates of the cycle that only delay getting it correct. I have not had to hold my breath wondering if I will make the pay date as there has never been the last moment completion.”
Bryan Dean
Senior Payroll Manager
The Solution
As is standard procedure when taking on a new client, our payroll team ran a payroll audit to pinpoint the causes of these overpayments, and to craft a custom solution to remedy the issue. Upon understanding that the high turnover rate could only be countered by a flexible and adaptable payroll solution, our team offered greater room for logging in late changes regarding terminations and onboardings. Knowing that they were being fully supported, our client felt more empowered to work on the origins of these systemic issues.
“Working with Africa HR, the team is absolutely fabulous with their quick responses, support and delivery of output each month. Not only is it accurate from the 1st batch, but they support us in allowing us to send in late terminations, requests to put the current month on unpaid leave for those that have gone AWOL. This alone has brought down our negative salary rate to average $2200 each month in the past three months. The last month though was already under $1330 so we are definitely seeing great steps in the right direction.” Shares the Senior Payroll Manager.
The Conclusion
Our payroll team in Africa runs payroll audits on your existing payroll system to determine the causes of any issues or to find areas of improvement, ultimately saving you either time, money, or both. Because our team also runs payroll simulations for up to a whole year, they can easily prevent certain payroll errors from occurring, for instance where public holidays are concerned.
