HR VS Payroll

HR VS Payroll: What Is The Difference?

Contact Us

HR & Payroll

The HR function and the Payroll Services may seem to be the same but pretty different in a corporation. HR is typically responsible for settling any employee relations but payroll is very much involved in settling employee salary. However, it is very common in some small enterprises, the two tasks can be carried out by the same person. The system may be good only on paper because the number of staff on the payroll is smaller and there is the same approach as the integrated business operation but it can also lead to a range of problems.

The business leader must know the differences between these two roles and how they depend on each other to have the best results for the business.

What does the Payroll function entail?

Payroll is the term that is used to define the process of payment for employees whose salaries or wages are paid by the employer company. The payroll department is in charge of conducting payroll taxes and pay-out deductions, implementing payroll information from the accounting system, and ensuring to get the money into the employee’s accounts on the right schedule.

The payroll process covers such things as bonus, reimbursements (for example travel, mileage and meals), paid time off, overtime and other scheduled paychecks which are issued monthly, weekly or annually. Apart from entering data, the payroll team must also be able to keep the records, regulate wages, and confirm the initial payment particulars. Furthermore, the payroll department is meant to make sure that each of the employees gets their salary statements after their salaries have been calculated.

What does the role of HR involve?

HR departments are responsible for dealing with all types of employees and their issues, making them the best individuals that the company deserves and ensuring that the employees’ behavior and the management of the company are aligned with the labor laws and regulations.

The Human Resources department (HR), is in charge of recruiting new employees for the company either through processing resignations of current employees or new vacancies depending on the extent of the company expansion. 

Additionally, HR requires monitoring the employees’ behavior at the place of work and occasionally off-site. Based on the technological component and geographic area of the employee, certain issues from social media and other external sources might be included. 

The HR department should also pay attention to the required and timely training system. The third factor that they should pay attention to is a sufficient and timely training system. If employees are not given adequate training for their positions, it can lead to an increase in the expenses for the company since it recruits people for the roles they are supposed to fill. That is also bad with a disorganized training system. 

The HR department generally upholds the corporate policy and keeps on adding to the policy alongside the business growth.

The Human Resources department designs incentive or motivational programs, as well as cultural changes, to help the employees benefit from their working experience. HR department intends to help individuals grow in their chosen careers and open new horizons to employees by enabling them to show their best in the assigned duties and providing help when possible.

Additionally, the involvement of the HR management services in a diversity of functions cannot be underestimated such as recruitment of staff, providing training, forming work ethics standards, and internal implementation of various employment regulations. Additionally, a wide range of different activities include such as making reports, gathering HR data, solving pay issues and keeping records of employees information.

The Overlap Of HR vs Payroll Functions

A company would not work well if the HR and payroll departments did not have close cooperation. Human resource department provides hiring and firing of the emoloyees and set up the system for all employees. Subsequently, payroll department makes sure that their wages are paid now on time.

HR and payroll departments are allocated with the role of recording sick leave, vacation leave, other leaves and the information is passed on to the managers and supervisors who then arrange and ensure that time-off requests are handled timely.

One major area in which, joint efforts of both sides Human Resources vs Payroll will greatly benefit is personal information confidentiality. The agencies involved are both granted access to employee information, which may include Social Security numbers, personal financial details, and address. Both the HR payroll department are in joint pursuit of ensuring that classified information doesn’t land in the hands of people who are not allowed to have it.

Besides this, payroll and human resources also share the duties of defining the strategy for compensation that can be a task for either or both teams to deal with. Usually, the first step for managers is to use some extra compensation tools that can ensure that the employee will receive competitive and fair pay.

Payroll Services vs Human Resources

Sometimes the difference between the teams that process employee pay and those that determine pay can be subtle, and it can be hard to tell them apart. The major difference between HR and Payroll functions is their specialty, where HR focuses on people and Payroll focuses on financial. Nevertheless, in the context of linking resources to people, the difference may not be that important.

Basically, the distinction between Payroll and HR is related to the particular functions each department performs in an organization. Payroll is mainly concerned with payments to employees based on job specifications, while HR is in charge of recruitment of the best candidates for the available job.

This is how roles are generally defined within a corporation although there may be other variations. However, there are many cases of overlap of responsibility, which results in these functions being grouped together in organizations.

The direct communication between Payroll and Human Resources departments is required frequently, especially during significant employment events like the onboarding or departure of the employees. Besides, situations such as promotions or requests for leave, such as Paid Parental Leave, may need to be coordinated between the two departments.

Integration of HR and Payroll functions is common in small businesses to make the operations more simple and cost-effective. The main distinction between HR and Payroll is in the skill sets needed for each role. Payroll requires an in-depth knowledge of finance, accounting practices, tax laws, and the ability to work with numbers. On the other hand, HR needs organizational skills, proper communication and people management.

HR vs Payroll Integration

These are some of the differences between HR and Payroll integration that you might not realize. 

Along the business growth from micro to small to medium sized, the requirements of HR vs Payroll employees rises and the departments have to hire dedicated manpower to fill in the positions. The way these positions will work together will be affected by the size of these modules, the purpose of the organization itself and the overall requirements of the business establishment.

Though HR and Payroll do different things, they are very strong partners of the organization. Therefore, it does not matter how differently they perform their tasks to what extent, since they still can have more interactions.

1. Global Payroll As A Human Resource Function

Payroll process management is frequently linked with the employee benefit program and the compensation system administration. A vast majority of the HR activities like pay raises and requests for overtime declared fall under payroll.

On the other hand, an HRMS, which is a human resource management system, is based on precise and detailed payroll records that help the company to be compliant.

It’s difficult to argue against the connection these two roles have:

  • HR enters the information for the employees and payroll confirms the information. 
  • Once HR enters the benefits deductions, Payroll confirms the information. 
  • When HR inputs the salary and rate adjustments, Payroll confirms them. 
  • HR approves bonus and incentive payments which Payroll processes.
  • Payroll uses employee data which is this month’s current information for deposits and tax reporting with HR validation.
  • While HR prepares timekeeping standards, Payroll generates timesheets and reports the attendance issue to HR. 

The communication span can become shorter if the Payroll and Human Resources functions are united under a single department. Employees in payroll have fast access to policies relevant to compensation and HR employees can be located closer to people who oversee compliance.

However integrating the two tasks in one department is accompanied by risk. Your accounting procedures may lead to errors that could be detrimental to your reputation and result in the loss of your best employees if non-accountants are given access to them.

2. HR Vs. Payroll As The Separate Functions

Mistakes in corporate accounting are not acceptable, therefore, it raises the question that is it really necessary to include non-accounting staff in payroll?

Perhaps it would be better to construct an organizational structure which is clearly defined and stands independently as individual units with human resource vs payroll operation under different hierarchical set-ups. There is no confusion to who must do what and assets like payroll data are never bundled with records of other employees. 

This separation can also causes less of a contact between the two jobs that increases the chance of your payroll department unintentionally violate an HR policy (or vice versa).

Separate functions can put expose you to errors such as : 

  • False benefit choices or a payroll related delay in implementing changes.
  • Slow and ineffective payroll process because of data or timekeeping errors.
  • Inconsistency between annual leave payments and leave policies.
  • Collecting errors that result in off-cycle payments or penalties and bonuses.

3. A Hybrid Approach Of The HR And Payroll Cooperation

Cooperating HR and Payroll can be achieved easily and effectively. The successful collaboration of HR vs Payroll requires a solid understanding of differences in those two functions, which includes the main goals and dependencies of each function.

For example, HR is the department that is in charge of the employee experience management such as onboarding, offboarding, and everything in between. The HR department must not only aspire to accuracy but also look beyond it. The goals of the Payroll team are accuracy, speed, and compliance.

The conflict might result from differences between the two departments; for example, the payroll department being might not enjoy having to clean data on the back end. At the same time, the HR department might find it irritating having to deal with bureaucracy in processing changes related to the payroll.

Being in the same department can be often the best option for these tasks to be performed, with some limitations to be kept the confidential and critical components separately.

With this method, your chances of success are higher if you have: 

This allows facilitating the reduction of the probability of HR and payroll mistakes which are the most expensive mistakes for the company in exchange for the improvement of communication and ideal relations.

The most ideal situation is probably to be put in one department, but with some limitation of basic elements of independence. 

This technique will work out effectively for you if any of the following apply to you : 

  • Clearly defined roles
  • Separation of responsibilities
  • Processes for the data integrity checking.
  • Collaborated KPIs (key performance indicators)

This setup helps to avoid potential HR vs. Payroll mistakes that usually can be very costly and as a result, communication is strengthened as the tensions are lessened.

Can HR Handle Payroll?

Probably, the most clear answer is “no” for the most businesses. 

HR take care of the onboarding process of new hires, and system setup. The payroll then has to verify that each aspect of the calculation is appropriately recorded. The harmony between two roles is crucial to the extent that they function together to provide a seamless and wonderful employee experience.

Example, the joint responsibility of HR against Payroll department is to help the employee to be able to smoothly switch to maternity pay in the event that the employee decides to take maternity leave.

Should Payroll Report To The HR Or Accounting Department?

For Payroll department, choosing between reporting to HR or accounting cannot be an easy step because each roles offer both positive and negative qualities.

For example, the limited knowledge of finance may result in a situation where the staff in the human resources (HR) department perform the tasks related to payroll reporting. Even the accounting section with technical and financial competence may not operate according to the stipulated ethical standard; such as matter confidentiality and employee management. This certainly means, there is a great risk if the other employee is the one who is having the payroll related problem. 

For those who are managing an organization, it becomes imperative to stay proactive and catch on the HR standards and rules. You have to ensure that managers or supervisors who don’t have an adequate amount of HR training are not employed or else they might not aware of the importance of the use of correct language. However, it means managing the accounting system without any expertise in this area at all is unacceptable.

It all boils down to the kind of business and how the organizational structure is set. It is also crucially important to consider the type of questions the employees ask about the payroll. In fact, it can be concluded that payroll should give out reports to the HR department. Both HR and Payroll department should work together as a single team to administer the payroll as conveniently as possible for that organization.

Indeed, the payroll function is commonly transferred to the HR department being responsible for all the human resources issues from hiring to processing a payslip, and others. The salaries and deductions, input, preparation of payslips, bonuses and incentives, expenses, and taxes are the fact sheets of finance department which also happens to oversee payroll on a required time. HR plays a crucial role when it comes to the adequate and timely accomplishment of payroll-related duties.

It can be quite confusing to differentiate between HR and Payroll duties. Through the years, the roles will evolve as business grows adding to the workload and depth of knowledge. No matter the size of the company, there is the need for the HR Vs Payroll/Financials operations to collaborate and share data where required.

How FastLane Group Can Help?

FastLane Group can provide professional HR administration & payroll solutions that ensure local regulations compliance for your business. Our experts are well-versed in both local and cross-border payroll, as well as HR regulations. We always pay attention to the accuracy and efficiency of our services so you can dedicate more time to your core business operations. Contact us now to discover how FastLane Group can support your business growth and provide seamless HR, payroll, and recruitment services.