Outline. Payroll Continuity Best Practices Guidelines. Payroll Continuity Planning

Transcription

1 36th Annual Conference & Trade Show June 27-29, 2018 Ottawa, Ontario Payroll Continuity Planning Presented by: Sandrine Lafleur Director of Regulatory and Compliance Alight Solutions (formerly AON) Outline The Task Force Background Definition of Business Continuity Process (BCP) Purpose of a Payroll Continuity Plan (PCP) Step by step approach to building a PCP Disaster Recovery Planning (DRP) Wrap Up Benefits of PCP inclusive of a DRP Questions/Comments/Feedback Payroll Continuity Best Practices Guidelines In 2007, the Canadian Payroll Association recognized how critical it was to ensure there was continuity planning within payroll. A Task Force was mandated to develop a series of guidelines to assist payroll professionals in developing a comprehensive and effective Payroll Continuity Plan. 1

2 Revised: Payroll Continuity Best Practices Guidelines In 2018, the Canadian Payroll Association once again engaged a Task Force to review and update the Guidelines. This presentation and documentation have been adapted and include the latest recommendations of the Task Force. Background Global organizations are faced with a variety of unexpected business interruptions from natural sources. Some examples relatable to Canada: Ice storms: Atlantic provinces, Quebec and Ontario Epidemics and pandemics: SARS in Ontario Droughts and devastating fires: Prairie provinces and British Columbia Hurricanes and floods: Prairies and Atlantic provinces plus Western Canada Background Other instances include forced or targeted events. Example: Extensive power grid failures and extended outages Aging and strained infrastructure Cyber attacks and security breaches Terrorist attacks and hate crimes Criminal activity 2

3 Key Functions of A Payroll Professional Produce payroll and related activities Balance, transmit, reconcile and payroll remittances Ensure accurate and timely payments to employees and third parties Whether the payroll function is managed internally or outsourced, using an on premise or hosted solution, the primary objective is to ensure payroll continuity with minimal disruption during a crisis or an unexpected event. Purpose of A Payroll Continuity Plan Critical function in a time of crisis than getting its employees paid Failure to do so may trigger detrimental impact to the business Other organizational services and functions are also critical; however the urgency and time sensitivity payroll production poses, is of the utmost priority Cloud Computing Software-as-a-Service (SaaS) Subscribed (Leased) Licensed/Central Host Device Accessibility via Internet/Web browser Added considerations for Payroll Continuity Plan: Data storage, security and access Data Servers Location Disclosure US Patriot Act EU General Data Protection Regulations 3

4 Defining and Refining Business & Payroll Continuity Planning Business Continuity Planning (BCP) is the process which defines contingent operating strategies, processes and procedures used to ensure the timely delivery and orderly continuation of critical business functions with minimal interruption to timesensitive business operations. Developing an Effective Payroll Continuity Plan (PCP) 1. Governance Define Roles and Responsibilities Assign Ownership 2. Risk Assessment/Management Business / Domains Impact Analysis Identify Critical Functions and Priorities 3. Strategy Development Develop Response / Recovery Plans Detail Ways and Means Testing Strategy / Contingencies 4. Readiness Plan Accessibility Trained Primary and Secondary Resources Communication Strategy 5. Quality Assurance Approach Plan Scheduled Audits and Maintenance Reviews Assess and Update for Continued Accuracy Relevance Effectiveness Threat and Risk Assessment External Threats: Loss of public, transportation and communication Infrastructures Travel and access restrictions Supply chain disruptions Social disruptions Government interruptions/shutdown Financial institutions interruptions/shutdown Health and safety 4

5 Threat and Risk Assessment Internal Threats: Dependencies: breakdown technology/external vendors Security and loss of access Key personnel and workforce disruptions Loss of corporate infrastructure i.e. facilities Communication breakdown Reduced levels of service inbound and outbound Flexible work arrangements virtual/remote access Authorization and Support of Senior Leadership and Key Stakeholders Where initiated/sponsored Senior Leaders Explicitly authorized when finalized Where initiated by Payroll Both plan development and deployment require explicitly supported by written authorization from senior leadership Support of Key Stakeholders IT, accounting and HR teams, and where applicable, union reps Documentation Payroll continuity plan must be: thoroughly documented kept current Payroll and related benefit processes including: inputs, outputs and their initiators must be fully detailed Must be maintained and revised: when any changes occur reviewed at least quarterly 5

6 Documentation Use preferred style: Point form, Flow charts, Tables, and Checklists Clear step by steps instructions Should be available in paper and/or electronic form. Location(s) and access should be available to all relevant stakeholders payroll, management, IT, accounting, HR and union reps (as applicable). What to Document Recommendations: End to end payroll cycle/pay frequencies Time collection and management processes Job data collection and approvals Remittance schedules and processes Must action activities/tasks versus may be suspended Direct deposit (and cheque) processes Record of Employment (ROE) production What to Document Continued recommendations: Relevant reports i.e.: Accruals report, Employee change reports General Ledger activities Third party payments/remittances: Must remit versus may be suspended/delayed Consider legislative requirements Timing and method of remittances 6

7 How to Document Consider audience and knowledge foundation: Create work flow charts All processes end to end Internal and external critical contacts with s and emergency numbers Utilize any current documentation for: Standard operating procedures (SOP) internal or external audit reports Include screenshots - step by step approach, where applicable Keep consistent in structure and language Scope Payroll continuity plan must: Respond to the organization s employee remuneration policies: Timely Prioritized manner Have objectives clearly defined Recommend best practice for payment: Advance that is a close approximation of net pay Scope Unexpected events can lead to full or partial business interruptions: Detail initiation Specific responses for various types Which employees are: Included in a PCP, and Under what circumstances does pay continue How to handle employees who cannot be located : If they continue to be paid and for how long? Exhaust an employee s vacation time first? 7

8 Roles and Responsibilities Senior leadership authorizes implementation: Based on defined triggers Have authority to proceed immediately Roles, responsibilities and accountabilities should be clearly defined: Who does what, In which order, Where, and how Payroll professionals are: critical employees part of the organizations Emergency Response Team Service Performance Assessment Internal/external service level and commercial agreements must: Be documented to enable the plan implementation Easily identify information flow for various payroll and benefits processes Identify what sources are required to generate the payroll Payroll dependencies and interdependencies have to be: clearly defined to provide required data to payroll provided with the information to implement the payroll continuity plan meet the needs of other domains business continuity plans Service Performance Assessment Emergency tool kit: List of vital materials Must be available in print (updated paper copy at home) Stored electronically flash/usb drive kept outside of workplace The tool kit must contain: Payroll continuity plan Location of, or access to: Equipment and tools Passwords or electronic keys Key contacts for communication 8

9 Define Service Priorities 1 Business Critical payment of approximation of net pay and benefits 2 Business Necessary payments to third party providers 3 Business Desirable transfer of payroll data to the accounting system Ø Unnecessary transfer of funds for the employee social club Define Service Priorities Defined for various employee segments such as full time, part time and casual employees Pre-determined in the plan, reiterated to the key stakeholders in payroll, management, HR, and accounting, employees, union reps and others Decide if, and how to provide emergency disaster relief funding if required Interruption of earnings (seven consecutive calendar days with no insurable earnings), issue the Record of Employment (ROE) Quick Response Guide Checklists and logs: are crucial should be readily available Required actions need to be defined and clearly stated What has to be done by whom, and in what order, documented How and why defined when the continuity plan was developed 9

10 Establish a Communications Plan Inform payroll resources of the PCP Initiation Inform employees of what can be expected regarding their pay Create call tree for activation and communication of plan status Ensure an up-to-date contact list in place to communicate with employees Robust and well executed communication plan is critical in an emergency situation Serve to strengthen payroll s credibility within the organization Implement Testing and Continuous Improvement Initiatives for a Table Top Test include: Test partial and complete interruption scenarios of the payroll and benefit processes Test using a sample of actual payroll data (Gross to net calculations) Test remote systems to take over processing in case the primary office is unable Test backup and key resources missing from the process; confirm adequate coverage and access to systems Maintain the plan - Review and test monthly (or at minimum quarterly) Develop Delegation and Backup Resources Train secondary and/or backup resources in other departments or cross-train payroll resources Identify secondary and/or backup resources Identify delegation process to initiate the plan Consider contracts for increased service levels from external payroll service providers and/or accountants. Consider escalation of a service agreement for the entire payroll function 10

11 Develop Delegation and Backup Resources Consider agreement with an external accountant to do the payroll processing Payroll will need approval from finance to process previous payroll or to obtain a letter of credit on file with the payroll software provider Verify and test the integrity of the backup process, resources, and the storage medium, to ensure that they can perform Backups of payroll processes and data could be stored out of province Organize Plan Resources Identify remote offsite location or locations Establish secure offsite storage/use safety deposit boxes to store emergency tool kit and other items for remote processing Confirm with financial institutions level of flexibility available to transmit a payroll deposit file and/or produce payments from a remote location Determine the flexibility of the pay deposit file Test external service providers ability to use data stored on laptops/flash drives/usb drives/cloud storage Organize Plan Resources Ensure or Establish: Complete access to security levels, key passwords, or de-encryption of data Systems access will function in various scenarios Access computer network from a home office: Validate system capacity and performance against increased remote traffic Validate restrictions of alternate security protocols, required permissions, ex. temporary Virtual Private Network (VPN) Licenses Ensure backups are done on an hourly, daily, or at least on a pay period Establish protocols for delivery of employees cheques and pay statements 11

12 Disaster Recovery Planning Define mission-critical operations, applications, processes and services Identify dependencies against significant risks and threats Assess business interruptions for direct impacts to operations, financials, legal and indirect impacts to social culture and external branding Prioritize recovery point objectives (RPOs) and recovery time objectives (RTOs) Disaster Recovery Planning REMEMBER, an effective DRP can be summarized as: Prioritize Mobilize Stabilize Restore Wrap Up 12

13 Benefits of a Payroll Continuity Plan Ensures Organizational Stability Protects the Organization Assets Minimizes Disruptions to Operations Builds Cross Functional Knowledge Promotes Engagement Plans for Service Continuance Enables Prompt and Relevant Decision Making Defines and Secures the Recovery Process Implementing Payroll Continuity Best Practice Guidelines Payroll professionals are encouraged to view the guidelines as a template in the development of their organization s specific Payroll Continuity Plan Every plan is different and contains its unique characteristics and commonalities Payroll Continuity Best Practices Guideline is available to download to Members under the Resources section at: Questions/Comments/Feedback 13

14 Payroll Best Practice Guidelines Setting up a New Payroll In Canada Mergers and Acquisitions Death of an Employee Employee or Self-Employed Statutory Holidays Salary Overpayments Social Insurance Number New Hire Termination Canada Pension Plan Changes Province of Employment Pay Statement Payroll Continuity Thank you for participating!! Please remember to complete your evaluations. 14