October 30.2017, 6.48pm
7 Scarily Bad HR and Payroll Mistakes of 2017
It isn’t just ghosts or goblins that can cause you to wake up in a cold sweat at night. For HR professionals, ghouls aren’t nearly as scary as the thought of messing up payroll, or making a mistake that could cost your company millions.
Mistakes happen, but having the right systems in place can help you to avoid potential HR pitfalls. The following hair-raising examples show just how easy it can be to make an error which causes scarily bad results, and offers some tips on how to avoid a similar fate.
Company makes $2.6million severance overpayment
When Trico Products Corporate laid off Francois El-Hayek, his 34 weeks of severance pay entitled him to a total payment of $80,805.97. However, a mistake on his general release offered him $80,805.97 per week. El-Hayek happily signed a document that would entitle him to an overall payment of $2.7million. When his weekly cheques failed to reflect the terms on the general release document, he sued!
The lesson: This lawsuit was ultimately unsuccessful but it highlights the need to have legal oversight when dealing with legal documents. Even then, you should always check and double check documents before and after they are signed by an employee. Using standardised contract templates can also help to reduce the chances of technical errors or costly typos.
Ryanair forced to cancel thousands of bookings
Budget airline, Ryanair, was forced to cancel an estimated 700,000 flight bookings as a result of scheduling problems. The airline was forced to take the extraordinary measures after they claimed they “messed up” holiday scheduling for its pilots.
A backlog of staff leave led to large numbers of staff booking holidays at the same time, affecting the airline’s ability to provide flights.
The lesson: HR needs to have a clear holiday process and to regularly review allocations. Modern scheduling software allows organisations to easily identify issues such as increasing leave liability.
Demand-based rostering can also use predictive analytics to calculate staffing needs and let employees utilise self-service options for a more streamlined leave approval process.
Equifax data breach
US credit reporting agency, Equifax, revealed in September that its databases were hacked after it failed to fix a critical vulnerability in their software. An estimated 145 million consumers were left exposed by the data breach, which allowed hackers to access sensitive personal information like names, social security numbers and birth dates.
The lesson: The breach highlights the importance of having proper security policies and procedures in place in your organisation.
The other takeaway is that every organisation needs to have a secure HR software system to retain and organise your sensitive employee information, especially with the General Data Protection Regulation deadline looming.
One of the advantages of using cloud-based HR software is that suppliers invest massive sums of money in the security infrastructure needed to provide physical and virtual protection.
Payroll error costs Debenhams dearly
Retailing giant, Debenhams, was named and shamed earlier this year and fined £63,000 for accidentally paying employees less than the minimum wage. The department store chain was found to have underpaid 11,858 workers by a total of £134,894.83.
So, how did this happen? Debenhams said the problem arose from a “technical error in its payroll calculations” and confirmed that all of the workers had been reimbursed. The average underpayment was roughly £10 per person but the error led to negative coverage for the famous brand.
The lesson: This case highlights the need to have your payroll system properly configured to ensure that you are fully compliant and meeting all of your payroll requirements. Simple errors of this kind can impact on your brand reputation, lead to regulatory penalties and force organisations to make costly repayments.
Disability lawsuit leads to $2million settlement for UPS
UPS was forced to pay a $2million settlement to almost 90 current or former employees after a national disability discrimination lawsuit was brought against it. The lawsuit claimed that the company’s “inflexible” policies, which included automatically firing employees after 12 months of leave, violated the Americans with Disabilities Act.
The lesson: It’s vital that HR knows its legal obligations and considers all the legal implications before letting any of its employees go.
HR also needs to actively focus on helping employees with special needs within the workplace – and to help them get back to work if they’ve been forced to take a leave of absence. Actively working to manage your employees’ needs will ultimately help you to get the best results from your workforce.
Uber’s high-profile scandals
Uber hit the headlines for all the wrong reasons this year, with senior leaders within the organisation being fired and a series of public incidents that highlighted its need for more HR control. The full list of scandals shows that 2017 was an “annus horribilis” for the company
The lesson: Every company needs to have a strong HR department and clear HR guidelines that make it apparent to everyone what will and won’t be tolerated. Any organisation’s leaders need to work closely with HR to establish company values, which can then be supported with written policies and procedures that apply to everyone in the company.
An empowered HR department is a vital part of creating a company culture and identity that everyone can admire.
Essex County Council fail to pay staff
An “internal processing error” meant that 20,000 teachers and school staff in Essex were accidentally left with no wages. A payroll error by Essex County Council left many staff members struggling to pay their bills and facing the August Bank Holiday weekend with no money in their account.
The lesson: Nobody wants to make this mistake but the best way to avoid having to talk to disgruntled staff members is to use cutting-edge payroll software that doesn’t need to interact with outdated systems or legacy software.
CoreHR’s award-winning cloud payroll software makes payroll a simple 3-step process. This makes it easy to manage all pay groups across your organisation, maintain control of payroll costs and stay on top of regulation compliance.
Are you aware of the challenges and opportunities facing HR this year? Make sure you’re one step ahead of the curve. Download our Research Report today.
By Edel Walsh