Payroll Policies

Payroll policies describes the payroll process as it relates to administration of salaries, timekeeping, payroll schedules and payment methods. Since payroll is one of the biggest expenses within any organization, a structured policy establishes internal checks and balances to reduce the incidence of errors and possibility of fraud. Payroll procedures create efficiencies in terms of time tracking, document processing, data entry, payment and record keeping.

To minimize the risk of fraud, the payroll policy must include internal controls. One form of control is clear and separate job duties. For example, if there are two employees involved in payroll processing, one would prepare payroll reports while the other would authorize and approve. An approving authority must review all pay and leave information as well. Another group or department such as accounting can audit payroll transactions. Payroll procedures must also protect the confidentiality of payroll information, ensuring that only authorized persons have access to them.


Payroll Policies


The payroll department is responsible for managing work flow to ensure efficient and timely payroll processing. The payroll department is responsible for :

  • Creating  payroll schedules.
  • Deadlines for submission of payroll documents.
  • Processing new hires, terminations, employment status changes and tax information.

Payroll staff assign and control access to information in the payroll system. They enter information in the system and make changes as required. Managers must ensure that required payroll documents are completed and forwarded within set timelines. Employees are responsible for reviewing payments and deductions, and advising the payroll department of any discrepancies.

For more information about how to implement these policies, including forms, guides and tips please see the “Payroll & Time Management” in the accounting section of this site.